Wingstop Inc. (NASDAQ:WING) Q1 2019 Earnings Conference Call - Final Transcript

May 07, 2019 • 04:30 pm ET

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Wingstop Inc. (NASDAQ:WING) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Charles Morrison

overwhelming success our brand has experienced since our last earnings call. The additional 1% of sales in the national advertising fund, the brand awareness acceleration from our national TV advertising strategy and the growth of delivery, we're all showing early signs of success. Since the last time we spoke. On the last call, we gave you a qualitative indication of what we were seeing in Q1 today. But for the rest of the quarter, our momentum has accelerated as evidenced by the strong one and two year same-store sales growth numbers we delivered. While times are extremely good, we owe it to you and ourselves to take stock of where we are headed in the long-term and how we're going to get there. We believe we have reached an inflection point as a company and without the necessary investments that I'm going to discuss next, we risk not reaching the full potential of the Wingstop brand. It's a play that we have run before with great success. Prior to our IPO, Wingstop was achieving best-in-class growth and in 2014 and 2015 we made investments to ensure success in our next phase of growth as a public company.

It's now prudent to undertake similar levels of investment so that our growth and success continue on pace. The investments that I'm talking about all support our long-term strategy and drive toward our continued vision of becoming a Top 10 global restaurant brand.

In rough numbers, that vision means we plan to grow to six times our size today. We believe we will achieve this kind of growth with our franchise partners who by the way are getting approximately 50% returns at our current average unit volume of $1.1 million. We believe we will drive even higher average unit volumes and continue to drive Wingstop as a destination for leading franchise partners because we are going to invest as we did several years ago and continue to deliver best-in-class unit level economics.

So we are going to invest in order to accommodate that growth broadly the investments fall into three categories; digitizing every transaction, simplifying our great guest experience with technology and kitchen enhancements and building the organization for the next level.

We are well on our way to digitizing every transaction. In the first quarter, over 30% of our sales are coming through digital channels. This is up 640 basis points from Q1 last year. We launched our new consumer facing web and app at the beginning of the first quarter and we are seeing best-in-class app ratings and an over 3 percentage point improvement in guests visiting our digital properties and then converting to an order. Consistent with other brands that leverage technology as a strategic advantage, there will be ongoing investments necessary to continue to offer best-in-class experience to our guests and we believe that technology is the right area for us to continue to invest as well as innovate. To that point, while very early, we just started testing