Wingstop Inc.

and thank you for standing by. Welcome to the Wingstop Fiscal Second Quarter 2024 Earnings Conference Call. All participants will be in less than a limon. 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, July 31st, 2024. On the call today are Michael Skipper, 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 second quarter 2024 earnings conference call for Wingstop. Our results were published earlier this morning and are available on our investor relations website at ir.wingsop.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 of 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 in 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. Our second quarter results were truly remarkable. I want to start by recognizing the incredible work by the entire Wingstop team. Team members in the restaurant and in the global support center, our brand partners, and our supplier partners. Their relentless focus on executing our long-term strategy and living the Wingstop way has delivered another industry-leading quarter. In the second quarter, we delivered 28.7% same-store sales growth, which was almost entirely driven by transaction growth. This sustained top-line growth continues to strengthen our unit economics and is increasing demand for growth from our brand partners as our development pipeline strengthens. We opened 73 net new restaurants, a record Q2. and we delivered adjusted EBITDA of $51.8 million, representing a 50.7% growth rate over the prior year. I am truly humbled to be part of a brand that is experiencing such unprecedented growth. Earlier this month, we celebrated our 30th anniversary. The first Wingstop opened in Dallas, which began our journey pioneering wings as a center-of-the-plate mill occasion. Over the last 30 years, not a lot has changed with our brand. We added boneless wings, tenders, and the chicken sandwich. And we have remained focused on our simple operating model and delivering guests that indulgent Wingstop occasion that is centered around quality, cooked-to-order wings, soft and tossed in our bold, distinctive flavors. That original Wingstop remains open today. doing roughly $4 million in sales out of that simple, efficient footprint, and is still experiencing transaction growth 30 years later. While we have a lot to celebrate and be proud of over the past three decades, I can confidently say that we are just getting started here at Wingstop. A little over two years ago at our investor day, and shortly after assuming the role as CEO, We outlined several multi-year strategies that supported Wingstop's category of one positioning and AEV growth from the then system average of $1.5 million to a target of $2 million. These are the same strategies we are executing against today that consist of scaling brand awareness, new innovation, expanding our delivery channel, data-driven marketing, and our digital transformation. We were confident that our multi-year strategies would lead to strengthened returns for our brand partners, which in turn would create significant demand for growth. Fast forward to today, just two years later, and our AUVs are now above $2 million. Yet, as we look at the success of these strategies we are executing against, we see meaningful runway in front of us. I can sit here today with the same level of confidence in these sustaining sales strategies as I did two years ago at our investor day. And this is what gives us confidence to announce today a new AUV target of $3 million. Brand awareness is a great example of a strategy we see sustaining same-store sales growth. We are making great progress in scaling brand awareness as we work towards closing the gap in awareness to more mature national brands. But our opportunity remains meaningful. In 2024, we have been delivering more than 20% same-store sales growth, but yet we have only moved brand awareness by a couple of percentage points year over year. The impact from closing this gap is significant. During the quarter, system-wide sales grew by 45%. which delivers additional firepower in our advertising fund, which allows us to invest meaningful dollars to expand brand awareness. To provide some perspective, the growth in system sales over the past couple of years has fueled a media investment in 2024 that is double what we invested in 2022. Our media strategy focused on live sports and a very targeted approach in streaming and online video placement. combined with breakthrough creative has proven to be highly effective. We continue to measure strong levels in value and quality scores as our brand partners and team members are focused on operational excellence and delivering a great guest experience. Our disciplined approach to menu pricing over the years is paying dividends. The consumer is continuing to prioritize quality and value when deciding how to spend their discretionary dollars. We believe that indulgent Wingstop occasion delivers upon both value and quality and has us uniquely positioned, which is evident in our second quarter results where our 28.7% comp was almost entirely driven by transaction growth. Our menu innovation with our chicken sandwich is attracting a new guest into the brand who is experiencing our quality and flavor for the first time, which has made Wingstop unique over the years. and what's driving an incredible stickiness with this new guest. While we continue to see growth in our chicken sandwich guests, we still haven't come anywhere close to reaching our fair share of the 2.8 billion chicken sandwich servings annually in the U.S. What excites me the most about this new guest is they're demonstrating a higher frequency than our traditional guests and index higher on boneless. These guests are moving up the frequency curve faster than what we've witnessed before. For the first time in my 10 years at Wingstop, we're beginning to see frequency tick upwards. Digital sales for the second quarter represented 68.3% of sales, and our database now stands at over 45 million users strong. We have been investing in the technology and data to enrich our digital guest profiles and optimize our engagement with our digital guests. We recently completed the rollout of our My Wingstop platform in Q2, migrating more than $2.5 billion of digital sales through our platform. I couldn't be prouder of what the team accomplished, and I believe we executed a best-in-class rollout. My Wingstop is our proprietary tech platform that we started building over three years ago and invested nearly $60 million. It is a platform that is built for Wingstop with the most modern technology and allows us to more quickly adapt to changing consumer needs. While early, we are very excited about the long-term impact MyWingstop will have on our digital business. And with the launch of MyWingstop, we believe we can unlock a new level of hyper-personalization that can allow us to increase conversion rates and frequency, something we view as a multi-year sales driver as we continue to execute against our aspirational goal of digitizing 100% of our business. Delivery occasions remain another core tenant of our strategy to sustain sales growth. We continue to see transaction growth in both DoorDash and Uber Eats and have a lot of white space in our delivery channels. as we reach more consumers within their platforms. We view this as an opportunity to make Wingsup more top of mind and fill the top of the funnel with new guests. It's truly been remarkable to see these multi-year sales growth levers in action. While we have made great progress, I'm energized by the amount of growth that lies ahead of us. When you combine this with the team's consistent execution, It gives us confidence in our ability to scale ADVs to our new target of $3 million. Based on the strength we see in the business and the effectiveness of our strategies, we are raising our comp guidance for 2024 to approximately 20%, setting us up for our 21st consecutive year of same-store sales growth, further demonstrating that Wingstop is operating in a category of one. The combination of our AUV growth and strengthening unit economics is fueling a record pace of development. In the last 12 months, we have opened more than 300 net new restaurants, showcasing the excitement of our brand partners to open more wing stops. And it is important to note that over 95% of our restaurants were opened by existing brand partners reinvesting. Our pipeline for future restaurant commitments is the strongest it's ever been. Our brand partners are enjoying industry leading unlevered cash on cash returns of more than 70%, which has fueled significant demand for growth. As this demand for growth has taken shape in our new restaurant pipeline, we are increasing our outlook to a range of 285 to 300 net new restaurants for 2024. As we have scaled the brand in a meaningful way over the past couple of years, continue to bring record levels of new guests, and further expand our restaurant footprint, we have taken a hard look at the unit opportunity we have in front of us domestically. We re-evaluated our total addressable market in the U.S. through a combination of a top-down and bottoms-up build from a trade area-specific standpoint. This work has led to refreshed market plans and playbooks, and I'd like to announce an updated unit potential in the U.S. We now believe we can support over 6,000 restaurants domestically, more than tripling our current U.S. footprint. When you combine this with our opportunity outside of the U.S. and the early success we're having in markets from the Asia Pacific region to Western Europe, to North America, we believe we can scale Wings Up to more than 10,000 restaurants globally. Similar to the U.S., we are seeing double-digit same-store sales growth trends, which is primarily driven by transaction growth. Our international AUV growth have grown more than 82% in the last two years. We have a clear playbook for our international markets, and I believe our international business is supercharged for growth. We remain anchored in the foundation of our strategy, investing in our people and our culture, what we refer to as the Wingstop way. We view our people and our culture as a competitive advantage. As we look towards Wingstop's opportunity to scale globally, we believe we have clear line of sight to scaling Wingstop into a top 10 global restaurant brand. It is an incredibly exciting time at Wingstop. With that, I'd like to turn the call over to Alex.