- With guests cutting back on visits, Wingstop's new CEO explains his playbook for boosting sales.
- One move is ending an exclusive delivery partnership with DoorDash and adding Uber Eats.
- Last week Wingstop also entered the chicken sandwich wars, years after competitors.
Wingstop was among several tech-savvy restaurant chains that became a pandemic winner, logging more than $ 1 billion in digital sales in 2020.
But as consumers deal with record inflation this year, many are cutting back on restaurant visits. That's hurting chains like Wingstop, which installed a new chief executive, Michael Skipworth, in March. In its last earnings call in late July, the company said customer visits are down.
In an interview last week with Insider, Skipworth said he's betting on three plays to reverse that trend – entering the chicken sandwich wars, introducing bundled meal deals, and adding Uber Eats as a new delivery partner. That latter is a significant move as DoorDash has been the chain's exclusive delivery partner for years.
"We have a proven playbook," said Skipworth, who was previously Wingstop's chief operating officer and finance chief.
Skipworth explains his three-pronged approach to increasing sales at Wingstop, which operates more than 1,800 restaurants worldwide. The majority of Wingstop stores are franchised locations in the US.
Now is the right time to enter the chicken sandwich wars
Three years ago, Popeyes introduced a spicy chicken sandwich that broke the internet and launched a war with Chick-fil-A. Other national fast food chains introduced their versions of chicken sandwiches over the course of a year, including Wendy's, Sonic, and KFC.
Even Taco Bell wanted a piece of the action, launching a chicken sandwich taco in Tennessee and North Carolina in early 2021.
Wingstop didn't move on a chicken sandwich at the time because "we didn't need it," Skipworth said.
Last week, the chain rolled out 12 chicken sandwiches offering the same flavors as their wings.
Skipworth said the company rarely adds new items to its menu. Last year, it introduced the delivery-only brand Thighstop, a supply chain hack created to save the brand from soaring chicken wing prices. Before that, he said the previous new menu item the company launched was more than a decade ago when it introduced boneless wings.
Skipworth said he expects the chicken sandwich to bring "meaningful growth" to the brand because price-conscious consumers will be excited about the value of the new menu item.
"We felt now is the right time for a chicken sandwich. We were able to leverage our size and scale and negotiate really good pricing with our strategic supplier partners," Skipworth said.
The a la carte price of Wingstop's chicken sandwich is $ 5.49. By comparison, spicy chicken sandwiches cost $ 5.29 at Chick-fil-A and $ 4.49 at Popeyes. The crispy chicken sandwich at Shake Shack cost $ 7.79, according to prices found at those restaurants in Southern California.
Wingstop expects to reach more delivery consumers with Uber Eats and DoorDash
DoorDash introduced its white-label delivery platform, DoorDash Drive, in 2016. Fast-casual chains Wingstop and Chipotle were early adopters of the program.
DoorDash delivers orders made through Wingstop's app or website for a fee.
Skipworth said that Wingstop had used DoorDash as an exclusive delivery partner since at least 2017. He described the nation's top delivery provider as "an incredible partner for us."
But, with the "challenging backdrop in 2022," Skipworth said this summer was "a good opportunity" to look at adding another delivery operator.
Wingstop chose Uber Eats because, like DoorDash, it has been "really smart about building loyalty" to its platform through subscription services that reach millions of consumers. DoorDash's DashPass, for example, has over 10 million members globally.
"We knew there was this consumer base out there that we weren't serving today," Skipworth said of Uber Eats. "And we felt this was the right time to pull that lever in and again, bring more guests into Wingstop through the Uber platform."
While there's some overlap between consumers who use DoorDash and Uber Eats, Skipworth said the data shows that both delivery apps serve "two distinct consumer groups."
He said he doesn't expect a "meaningful impact to our existing DoorDash business."
"While it's only a couple of weeks into the Uber Eats national launch, and without any advertising support, we are encouraged by the early results," Skipworth told investors during a conference call in July.
By adding Uber Eats, Wingstop joins a fray of chains that have been breaking away from exclusive delivery partnerships to boost delivery sales. McDonald's dropped Uber Eats as an exclusive partner in 2019. During the pandemic, Chipotle added Uber Eats as a delivery partner after working with Postmates and DoorDash.
Wingstop is leaning into value deals thanks to wing deflation
Wingstop developed the virtual brand, Thighstop, last year to save money on soaring chicken wing prices, which reached $ 3.25 a pound in 2021.
By creating a thigh-focused menu, a part of the bird the company never used, Wingstop saved money by buying whole chickens from suppliers. A year later, the price per pound is now $ 1.15 as demand for chicken wings cools, causing excess inventory and deflation, the CEO said.
That is allowing Wingstop to "lean into" adding value deals to the menu, Skipworth said. One example that is driving traffic is the recently introduced Boneless Meal Deal. The $ 15.99 value meal includes 20 boneless wings and a large fry.
"We saw a marked improvement in the sales trends during the quarter," Skipworth said.
In 2021, Wingstop recorded its 18th consecutive year of same-store sales growth, a vital indicator of a company's financial health. By adding Uber Eats, leaning into value, and introducing chicken sandwiches, Skipworth said he's got a playbook that "sets the stage for 19 consecutive years of same-store sales growth."