Operations

Wingstop investing $50M in tech

Provided

February 16, 2022

Although Wingstop's Q4 domestic same-store sales increased 7.5%, the Texas-based chain suffered a net income loss of $6.4 million, or 21 cents per share, finishing the quarter at $6.9 million or 23 cents per share. Revenue, however, was $72 million, an increase over last year's $63.3 million.

Despite the company's shares being down 8.8% on a year-to-date basis, CEO Charlie Morrison said the numbers revealed brand momentum, which will be fueled by the brand's heavy investments in marketing and technology. It has earmarked over $100 million for marketing in 2022 and over $50 million in technology over a five-year horizon.

"Our brand partners understand the strength and resiliency of our simple operating model and are increasing new unit investments based on the sustaining topline growth and in anticipation of improving bottom-line performance," Morrison said in a company press release.

The funds will go toward creating the infrastructure to convert Wingstop's marketing approach from a promotional brand to a true "MarTech/platform focus," which refers to a close-knit connection of marketing and technology.

"This MarTech approach is frequently seen in tech companies, but it's disruptive within our space," a Wingstop spokesperson told FastCasual. "With more than 27 million users in Wingstop's database, we have a unique opportunity to connect with fans on a personal level and continue to sustain digital sales above 60% and drive toward our goal of 100% digital transactions."

Although proactive investments in digital and technology have already helped the brand sustain digital sales above 60%, improvements are coming.

"In 2021, we built foundational elements of our global tech platform to ensure all components will seamlessly integrate and will leverage the power of the cloud," the spokesperson said. "We also invested in richer data analytics to have a better view of our customers and our performance."

Other highlights for the fiscal fourth-quarter ending Dec. 25, 2021, were:

58 new openings in the fiscal fourth quarter 2021.
Two-year domestic same-store sales increased 25.7%.
Domestic average unit volume increased to approximately $1.6 million.
System-wide sales increased 19.8% to $601.9 million.
Digital sales were 61.3% of sales, comparable to the prior fiscal fourth quarter.
Net income increased to $6.9 million, or $0.23 per diluted share, compared to net loss of $6.4 million, or a loss of $0.21 per diluted share in the prior fiscal fourth quarter.
Adjusted EBITDA, a non-GAAP measure, was $20.2 million (inclusive of a $1.2 million accrual adjustment in the fourth quarter of fiscal year 2021 for incentive compensation driven by outperformance), an increase of 24.5%

Highlights for the fiscal year 2021 compared to the fiscal year 2020:

System-wide restaurant count increased 12.5% to 1,731 worldwide locations with 193 net openings.
System-wide sales increased 20.2% to $2.3 billion.
Domestic same-store sales increased 8%.
Two-year domestic same-store sales increased 29.4%.
Total revenue increased 13.5% to $282.5 million.
Net income increased to $42.7 million, or $1.42 per diluted share, compared to $23.3 million, or $0.78 per diluted share, in the prior fiscal year
Adjusted EBITDA, a non-GAAP measure, increased 23% to $88.4 million

The company, which has 1,731 locations, is reaffirming its three-to-five-year outlook of mid-single-digit domestic same-store sales growth. Additionally, it expects the following for 2022: