Wingstop Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Wingstop Fiscal First Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note that this conference is being recorded today, Wednesday, May 1st, 2024. On the call today are Michael Skipworth, President and Chief Executive Officer, and Alex Kaleida, Senior Vice President and Chief Financial Officer. I would now like to turn the conference over to Alex. Please go ahead.

Thank you and welcome to the fiscal first quarter 2024 earnings conference call for Wingstop. Our results were published earlier this morning and are available on our investor relations website at ir.wingstop.com. Our discussion today includes forward-looking statements. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties that could cause our actual results to differ materially from what we currently expect. Our SEC filings describe various risks that could affect our future operating results and financial condition. We use certain non-GAAP financial measures that we believe can be useful in evaluating our performance. Presentation of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations and comparable GAAP measures are contained in our earnings release. Lastly, for the Q&A session, we ask that you please each keep the one question and a follow-up to allow as many participants as possible to ask a question. With that, I would like to turn the call over to Michael.

Thank you, Alex, and good morning, everyone. Thank you for joining our call. Our first quarter results showcase the continued strength and staying power of the strategies we are executing against and further solidify Wingstop's category of one positioning. Coming off of an industry leading year in 2023, the momentum in our business continued into our first quarter as we delivered 21.6% same-store sales growth, which was almost entirely driven by transaction growth. We opened 65 net new restaurants, a 14% growth rate. Company-owned restaurant margins were 25.5%, highlighting the effectiveness of our supply chain strategy and our best-in-class unit economics. And we delivered adjusted EBITDA of $50.3 million, representing a 45% growth rate over the prior year. As a result of the strength in our business and the strong start to the year, we are increasing our 2024 comp guidance from mid-single digits to low double-digit same-store sales growth. I am extremely proud of our team members, brand partners, and supplier partners for delivering these results and truly humbled to be part of a brand that is experiencing such unprecedented growth. And yet, we believe we have so much more growth in front of us. It's hard to believe that just a little over two years ago, we hosted an investor day and outlined our path to grow average unit volumes to $2 million. from roughly $1.5 million at the time. At that investor day, we shared our multi-year sales driving strategies of scaling brand awareness, expanding our delivery channel, menu innovation, leveraging our digital guest database to fuel data-driven marketing and digital transformation. Fast forward to today, two years later. And our AUVs are now over $1.9 million and quickly approaching our $2 million target. And while our execution against these strategies has delivered two-year stacked same-store sales growth in Q1 alone in excess of 40%, we believe we have meaningful growth in each of these strategies as we look ahead. It's an incredibly exciting time at Wingstop. As we scale toward our vision of becoming a top 10 global restaurant brand, we remain anchored in the foundation of our strategy, our people, and our culture, what we refer to as the Wingstop way. The pillars of our strategy have not changed over the years, sustaining same-store sales growth, maintaining best-in-class returns, and accelerating growth. We are very pleased with our first quarter results. and excited to be measuring record levels within our brand health metrics. Importantly, we continue to measure record levels in value and quality scores as our brand partners and team members are focused on operational excellence and delivering a great guest experience. And our disciplined approach to menu pricing is paying dividends. The consumer continues to prioritize quality and value When deciding how to spend their discretionary dollars, we believe that indulgent Wingstop occasion delivers upon both quality and value and has us uniquely positioned, which you can see in our first quarter results where our 21.6% comp was almost entirely driven by transaction growth. We are making great progress in closing the gap in awareness to top QSRs, but our opportunity remains meaningful. During the quarter, system-wide sales grew by 37%, which delivers additional firepower in our advertising fund to invest meaningful dollars behind our opportunity to expand brand awareness. Our increased media investment is providing new opportunities, such as advertising in the NFL playoffs. and becoming the presenting sponsor for the NBA's Wednesday primetime matchup. Just to highlight a couple of examples. Our highly effective media strategy focused on live sports combined with breakthrough creative is driving brand awareness. We are making Wingstop more top of mind and filling the top of the funnel with new guests. It's especially evident with the expansion of our digital database. which has surged to more than 40 million users. In fact, Q1 marked our highest level of new guest acquisition on record. While we are seeing growth across all cohorts and income levels, these new guests we're bringing into the brand are demonstrating a higher frequency than our traditional guests. But yet, I believe we are just scratching the surface on the opportunity to leverage our digital database. As our restaurant AUVs expand, digital sales also continue to increase, now accounting for 68% of sales in Q1. This record level of digital sales comes at a time when we are rolling out our proprietary tech stack, My Wingstock, which we believe is an enabler to our aspirational goal of digitizing every transaction. My Wingstop has created a great deal of excitement with our brand partners and restaurant team members. I'm excited to report our rollout is on track to be completed by the end of the second quarter, and early results are encouraging. The investments we are making in technology allows us to leverage our growing database and create an entirely new level of personalization with our guests, one that we believe over time will drive conversion, retention rates, and frequency. We believe the brands that will win drive the most relevant and personalized message, as well as create ease of accessibility for the consumer. The database we have amassed, combined with the investments we have made in technology, provide an incredible advantage for Wingstop. Our top line sales growth and AUV expansion has strengthened the Wingstop unit economics. Brand partner returns have also been bolstered by the progress we have made against our supply chain strategy, a strategy that is designed to minimize volatility in food costs and create greater predictability within restaurant margins. With an AUV of $1.9 million and a low upfront investment of around $500,000 on average, Our brand partners are enjoying industry leading unlevered cash on cash returns of more than 70%, which has fueled significant demand for growth. Our brand partners recognize how unique these returns are in our focus on accelerating growth, which is showing up in our development pipeline. We had a record 1400 restaurant commitments under development agreements at the start of 2024. Brand partners are eager to put more restaurants in the ground and reinvest back into Wingstop. Our vision is to scale Wingstop into a global brand, and I've shared in prayer calls how we believe our international business is supercharged for growth. There is tremendous excitement across the globe as consumers have the opportunity to experience our flavor for the first time. Same-store sales trends resemble that of the U.S. business. Double-digit growth stacked on top of double-digit growth in the prior year and primarily driven by transaction. Averaging across all markets outside of the U.S., we have nearly doubled our AUV since the start of 2022. In the U.K., AUVs now exceed $2.5 million, leading our U.K. brand partner to accelerate growth and expand to more than 40 units. Our newest markets? Canada, Puerto Rico, Korea are executing that UK playbook and achieving record sales weeks. We believe our new markets are scaling awareness on a curve that draws parallels to the success we are experiencing in the UK. The strength we're having in our global development and visibility into our pipeline gives us the confidence to increase our 2024 outlook to a range of 275 to 295 net new restaurant. This implies a unit growth rate well above our three to five year target of 10% plus. The strength of the Wingstop business and our execution against our strategy that has proven staying power continue to position us on a path to achieve our vision of becoming a top 10 global restaurant brand. I truly believe at Wingstop we have the most talented team in the industry. I want to thank the entire Wingstop team, all of our team members in the restaurants and in our global support center, our supplier partners, and our brand partners for their dedication to serving the world's flavor. With that, I'd like to turn the call over to Alex.