Wingstop Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Wingstop Inc's fiscal second quarter 2025 earnings conference call. All participants will be in 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, July 30th, 2025. On the call today are Michael Skipworth, President and Chief Executive Officer, Alex Kalida, Senior Vice President and Chief Financial Officer, and Kristen Thomas, Senior Manager of Investor Relations. I would now like to turn the conference over to Kristen. Please go ahead.

Thank you, and welcome to the Fiscal Second Quarter 2025 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 conditions. 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 to comparable GAAP measures are contained in our earnings release. Lastly, for the Q&A session, we ask that you please each keep to 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, Kristen, and good morning, everyone. Before we jump into our second quarter results, I want to start today's call by acknowledging the horrific events that took place earlier this month in our home state of Texas with the devastating floods in the Texas Hill Country. None of us can imagine what those families and communities are going through after such a tragedy. However, we, along with our brand partners, are here to support our fellow Texans and are keeping all of those impacted in our thoughts and prayers. Now, shifting to our second quarter results. I believe 2025 will be another differentiated year for Wingstop, showcasing the resiliency of our model and the opportunity we have to scale into a top 10 global restaurant brand. Our second quarter was a great example of this. System-wide sales increased 13.9% to $1.3 billion, while same-store sales declined 1.9% for the quarter. To put our Q2 comp in perspective, we lapped 28.7% same-store sales growth in 2024 and a 16.8% comp in 2023, both of which were primarily driven by transactions. I believe this highlights the effectiveness of our multi-year strategies. And our brand partners couldn't be more excited about the future with Wingstop. The demand for opening more Wingstops is the strongest it's ever been. We opened 129 net new restaurants globally in the second quarter, a nearly 20% growth rate. The 129 net new units was the highest number of restaurants open in a single quarter in our history. I'm incredibly proud of how our team members and brand partners executed in the second quarter and the continued shared confidence they have in Wingstop and our long-term strategies. As we look ahead to the second half of the year, we have the utmost confidence in our proven long-term strategies, which consists of scaling brand awareness, driving menu innovation, expanding our delivery channels, leveraging data-driven marketing, and investing behind our digital transformation. I also want to acknowledge there remains a good deal of uncertainty with the consumer behaviors and implications to their spending habits. Through our regular consumer research, we hear concerns about elevated prices, future job prospects, and general anxiety about the future. But we remain focused on what we can control in this environment and executing our strategies. Fundamentals are strong across the board for Wingstop. We're seeing improvements in brand health metrics, restaurant operations, digital guest engagement, and unit economics. We continue to measure strength within our brand health metrics, including within quality and satisfaction scores. I also will share more about the tremendous progress we're making with speed and consistency from markets that have implemented our game-changing new kitchen operating platform that we are calling the Wingstop Smart Kitchen. While we've made considerable improvements in brand health metrics, there remains significant opportunity to narrow the gap to brand awareness when benchmarked to more established, larger restaurant brands. This past quarter, we took an opportunity to amplify our brand presence and connect us more deeply with current and future fans by leveraging our NBA partnership. With this partnership, we gained access to in-game brand placement throughout the NBA playoffs as well as becoming the presenting sponsor during the second round of the playoffs. We're just scratching the surface on this partnership with the NBA and look forward to our activations for this upcoming season. Our new crispy chicken tenders are quickly becoming a fan favorite. Since their relaunch in the first quarter, we've seen strong guest engagement, particularly with new guests, and we're excited by the unique value they offer. In true Wingstop fashion, guests can order their tenders in any of our 12 bold, distinctive flavors, setting us apart in the category. We're seeing encouraging signs, including higher new guest retention, strong satisfaction scores compared to our previous tenders, and a healthy mix of day part occasions. Most notably, our tenders are driving reactivation of lapsed users at a level we haven't seen from any menu innovation in the past two years. In fact, the number of new and reactivated guests has tripled since launch compared to the run rate at the end of 2024. While frequency hasn't yet reached the level of our core guests, the early results are promising. And we plan to continue leveraging tenders to unlock our fair share of this demand space and its 1.6 billion annual tender servings. This past quarter, we welcomed many of you to Dallas to showcase our new kitchen operating platform, the Wingstop Smart Kitchens. It didn't take long for those in attendance to see what a game changer it is for our guests and team members. I'm excited to say that today the Wingstop Smart Kitchen is live in 1000 restaurants across the US. And we are on track for a full system implementation by year end. Although still early, the results from our initial markets are encouraging. Just four weeks into their implementation, we're measuring 40% reductions in average ticket times with restaurants ramping faster towards our steady-state operating model. Markets with the Wingstop Smart Kitchen are delivering faster speed, a more consistent guest experience, and sales-out performance, and all of this without additional advertising to the guests. Our restaurants are more consistent with ticket times in the range of 10 minutes, which compares to a prior quote time that was 18 to 22 minutes on our best days. Restaurants with the new Wingstop Smart Kitchen are outperforming, and in our 160-plus restaurants in the Dallas-Fort Worth market, we are seeing meaningfully higher same-store sales growth relative to control restaurants. The Wingstop Smart Kitchen is clearly delivering the game-changing expectations that we established, enabling operational excellence, elevating the guest experience and fueling growth. The guest is experiencing improved speed of service, consistency, and accuracy, which is reflected in our guest satisfaction scores, and the Wingstop Smart Kitchen restaurants are about eight points higher than restaurants that do not have our new kitchen operating platform. We are also seeing improvements in all day parts, including our lunch and late night day parts, which we believe is an untapped opportunity for us. Without the benefit from the Wingstop Smart Kitchen, our delivery times can be in excess of 40 minutes, resulting in us not being in the consideration set for many delivery consumers. With Wingstop Smart Kitchen, we are unlocking delivery times under 30 minutes on the third-party delivery marketplaces, and we are now in the consideration set for those guests. For our restaurants in the Dallas-Fort Worth market, year-over-year sales growth in the delivery channel is outpacing the U.S. average growth rate by mid-single digits. What's more, our brand partners see the impact of the kitchen operating platform in their team member experience and training, guest feedback, as well as insight from the new reporting capabilities, all contributing to enhanced profitability. I can't tell you how many brand partners have told me how much they love the new system and how much of a game changer it is for their restaurant operations. But most importantly, the results we are seeing from the Wingstop Smart Kitchen are exactly what we had anticipated and are validating the opportunities we have within our strategies supporting our long-term target of scaling AUVs to $3 million. Our commitment to innovation is proven, and we have focused investments aimed at driving long-term, sustainable value. One of those investments was in our proprietary tech stack, My Wingstop, which recently marked its first full year in operation. In that time, we have harnessed the data gathered to provide our guests with relevant, personalized, and optimized content. We have been continuously fine-tuning our robust guest segments, leveraging our segmentation to reach guests and give them a more meaningful experience while mining for additional insights to inform future strategies. Since the launch, our digital database has grown by 30%, now approaching 60 million. We will continue to invest as we advance towards our aspirational goal of digitizing every transaction. With the launch of My Wingstop, coupled with our rich database of digital guest insights, we are uniquely positioned to build and subsequently launch a differentiated loyalty program designed to strengthen guest engagement by encouraging repeat visits and deepening the emotional connection guests have with our brand. It's a clear example of how we're leveraging technology to create lasting value for our guests. We're excited about this next phase in our digital journey and remain on track to pilot our new loyalty program in the fourth quarter with a full system-wide launch plan for 2026. Our ongoing investments in technology continue to advance us on our path to $3 million AUVs and further strengthen unit economics for our brand partners. which are translating to industry-leading, unlevered cash-on-cash returns of 70%. Brand Partners' confidence in our model is showing up in our 2025 pace of new restaurant development. We have opened 255 net new units through the first half of 2025, which is equivalent to the number of units opened during the entire year in 2023, just two years ago. And over 95% of those openings are from existing brand partners reinvesting, furthering their commitment to Wingstop. The level of reinvestment by our brand partners truly speaks to the strength of our unit economics. After delivering a record 129 net new restaurants in Q2, we updated our guidance again to 17% to 18% unit growth for 2025. This implies net new units of between 435 to 460 globally. And demand for additional growth with our brand partners remains strong as we replenish our development agreement pipeline, which now has grown to the highest level of sold restaurant commitments on record. In addition to the strength in our domestic business, A key contributor to our growth is the exciting progress we continue to make within our international business. Demand is strong, and our first half results were impressive. Last month, we hosted our international summit in Toronto, where Wingstop brand partners and team members from around the world came together to connect, share ideas, and spotlight their early successes. It was especially rewarding to see our more seasoned brand partners share insights and advice with those newer to the brand, delivering confidence into the playbook we are executing. But what stood out most? The passion for the brand is real, and it's growing fast. In the second quarter, we opened our first restaurant in Sydney, Australia, where new Wingstop fans lined up around the block, in the pouring rain, just to get a taste of that bold, distinctive Wingstop flavor. Another example is in Paris, where more Wingstop fans lined up for our first flagship restaurant in the city, building on the momentum we established from last year's House of Flavor event at the Olympics. Our new international markets are opening at levels surpassing domestic average unit volume. And in more established markets like the U.K., we continue to see strength, where our newest restaurant shattered Kuwait's recent record for highest global weekly sales. That's brand love in action, and we are just getting started. We've officially signed two additional markets, and we are set to open the first Wingstop this year in Italy and the Netherlands, with several more markets in the pipeline. The world is craving our flavor and Wingstop is delivering. While we recognize the challenging macro environment we're navigating, the resiliency of our model and disciplined focus we have on executing our strategies as well as the game-changing initiatives such as the Wingstop Smart Kitchen and loyalty give us the confidence in our path to $3 million AUVs. I want to thank our team members in the restaurants and at the Global Support Center brand partners, and supplier partners for their ongoing commitment and collaboration in advancing our vision to become a top 10 global restaurant brand. With that, I'd like to turn the call over to Alex.