Q3 2024 Earnings Summary
- Consistently strong same‐store sales growth and rising AUVs: Executives repeatedly highlighted robust 20%+ comp growth driving AUVs above $2.1 million, which bodes well for sustainable top‐line performance and margins.
- Robust expansion supported by existing brand partners: With 95% of new restaurant openings coming from reinvestments by current partners and a record development pipeline, the growth engine and market confidence remain very strong.
- Effective supply chain management mitigating input cost pressures: Despite wing inflation peaking over 200%, strategic actions kept company food costs around 37% and secured brand partners a 300‐basis point cost advantage, supporting long‑term profitability.
- Potential Deceleration in Same-Store Sales Growth: Analysts questioned whether Q4 same-store sales comps might slow from the robust 20% growth seen in Q3 to around 10%, raising concerns about sustainability on a quarterly basis.
- Margin Pressure from Volatile Food Costs: Company restaurants reported food costs of 37% amid wing price inflation peaking over 200% in the spot market. Despite supply chain strategies, further cost volatility could pressure margins if not effectively contained.
- Reliance on Existing Brand Partners: With approximately 95% of new restaurant openings coming from existing brand partners, the company faces concentration risk. If these partners slow their reinvestment or experience market saturation, future growth may be adversely impacted.
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Comp Guidance
Q: Reason for slower Q4 comps?
A: Management stressed they aren’t managing for one quarter; despite hints of a Q4 slowdown, the focus remains on sustaining over 20% same‐store sales over a two‐year span, reflecting a resilient business model. -
Unit Growth
Q: Will mid-teen unit growth persist?
A: Leaders expressed confidence in a disciplined, record‐strong pipeline driven by existing brand partners, supporting sustained mid-teen new store growth into 2025. -
Margins & Food Costs
Q: How are food costs trending?
A: Company restaurants reported food costs around 37%—with expectations for a slight Q4 improvement—while brand partners benefit from a 300bps lower rate due to a favorable product mix. -
AUV Expansion
Q: Is there more AUV upside?
A: With AUVs currently at $2.1M, the team remains focused on pushing toward a $3M target through strategic initiatives and digital enhancements. -
International Growth
Q: Which markets drive 750-unit opportunity?
A: The opportunity spans new international markets including France, several Gulf countries, and Australia, aggregating to over 750 future restaurants. -
SG&A Guidance
Q: Any surprises in SG&A spend?
A: Increases stem mainly from performance-based stock compensation; overall, SG&A is showing improved leverage relative to rising sales. -
NBA Partnership
Q: Impact of NBA sponsorship on brand?
A: The NBA deal is set to boost visibility via TV integrations and event activations, strengthening top-of-mind brand awareness. -
Volume & Frequency
Q: Are new or repeat orders driving volume?
A: Both new guest acquisitions and a rise in existing customer frequency are fueling sales growth, reflecting a balanced volume driver mix. -
Advertising Strategy
Q: Future ad fund and media plans?
A: Management plans to continue robust investments in live sports and breakthrough creative placements, enhancing overall media efficiency without reallocating dollars from core spend. -
International Economics
Q: What returns do international franchisees see?
A: International units offer cash-on-cash returns comparable to the U.S., supported by high AUVs nearing $3M, delivering strong economic performance. -
G&A Leverage
Q: How sensitive is G&A to sales changes?
A: G&A increases are largely incentive-driven, and as sales grow, fixed expenses will yield better leverage and improved profitability. -
Cannibalization Risk
Q: Is there risk of store cannibalization?
A: Management indicated minimal cannibalization risk, noting that 95% of new openings come from existing brand partners reinvesting in growth. -
Media Efficiency
Q: How does TRP relate to sales growth?
A: Although traditional TRP metrics aren’t as directly applicable, increased spot buying in live sports continues to efficiently drive broad brand awareness and system sales growth. -
Digital Platform Impact
Q: How is MyWingstop bolstering digital sales?
A: The MyWingstop tech stack has processed over $2.5B in digital sales, improving guest engagement through personalized content and heightened operational efficiency. -
Customer Order Trends
Q: Any shifts in order frequency?
A: Despite competitive pressures, order frequency is steady, underpinned by strong quality and value perceptions that continue to attract both new and repeat customers.
Research analysts covering Wingstop.