Wingstop Inc. (NASDAQ:WING) Q3 2019 Earnings Conference Call - Final Transcript

Oct 30, 2019 • 10:00 am ET

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Wingstop Inc. (NASDAQ:WING) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Charlie Morrison

through brand awareness and innovation. As you may recall, on January 1st of this year, we increased the national advertising fund contribution rate from our brand partners from 3% to 4% of top line sales. This additional funding enabled us to make key strategic investments to increase our level of TV, media purchases and upgrade the quality of our creative messaging platform. This investment allowed us to deliver two 12-week national TV campaigns, maintain our always-on digital presence, and increase our local market advertising in the periods, where we are not on national TV, yielding a fully integrated advertising effort to drive sustained top line growth.

We launched our second 12-week national TV campaign of the year at the beginning of September. The campaign is focused on continuing our brand building message Where Flavor Gets Its Wings, which highlights the first bite experience of the craveable flavors that makes Wingstop so popular. This campaign has been successful building awareness and the increasing conversion of those aware to more occasions, as we have seen our frequency levels increase along with the addition of new guests to the brand, all of which tied back to the acceleration in our same-store sales.

We also launched a national test during the quarter leveraging whole three-part chicken wings. This test is key to our strategy of mitigating the volatility that we see in commodity markets due to the price of bone-in chicken wings and improving the overall unit economics for our brand partners. We bundle these smaller whole wings in a value offering that's promoted on our app, as well as digital messaging, all-in an effort to gauge guest engagement of the product, while taking pressure off the jumbo chicken wings during their strongest seasonality.

Overall, we were pleased with what we learned from the test and we'll use our learnings to continue to find ways that we can leverage purchasing whole birds, as a way to mitigate the volatility of wing prices. Michael, will update you later on the progress we are seeing during the fourth quarter on jumbo wing prices that we believe is indicative of the impact this strategy can have.

We also continue to focus on technological innovation as a key driver of long-term sustained growth for Wingstop. We have previously stated the goal of digitizing every transaction at Wingstop. At the beginning of 2019, we launched our proprietary custom-built online ordering site and mobile app, which has improved the guest experience and resulted in increased conversion from users, who visit our consumer-facing digital assets.

Digital orders are important because they carry a $5 higher average ticket and we think we can continue to drive digital sales without employing discounts or incentives like other brands do. As you may have seen in our earnings release, digital sales accounted for 36% of domestic system-wide sales in the third quarter, an increase of over 1,000 basis points compared to the prior-year.

The other area of innovation is the roll-out of delivery to our