Wingstop Inc. Q1 FY2025 earnings call

• Macro Environment: 2025 has a different macro operating environment with low consumer sentiment, but Wingstop's brand shows resiliency. - Strategy Updates: Opened 126 new units in Q1, digital sales at 72%, adjusted EBITDA up 18.4%. - Wingstop Smart Kitchen: New kitchen operating platform aims to enhance guest experience, with over 200 restaurants deployed by end of Q1. - Loyalty Program: Planning to pilot in Q4 2025 and launch system wide in 2026, leveraging data from 50 million users. - Development: Opened a record 126 net new restaurants in Q1, updated unit growth guidance to 16%-17% for 2025, with over 2,000 restaurant commitments in the global development agreement pipeline. - International Expansion: Strong performance in international markets, with a record opening in Kuwait, and new markets like Australia launching soon. - Tenders Relaunch: Relaunch of crispy tenders showing early positive results with record new guest acquisition in March.

In the first quarter, system wide sales increased 15.7% reaching $1.3 billion, the highest system sales in the brand's history. Total revenue was $171 million, up 17.4% versus the prior year. Adjusted EBITDA was $59.5 million, an increase of 18.4% versus the prior year. Domestic same store sales grew 0.5%. Company owned restaurant sales increased $1.5 million due to same store sales growth of 1.4%, primarily driven by transactions and one net new restaurant. Digital sales increased to 72%. Revenue contribution from different segments: royalty revenues, franchise fees and other revenues increased by $11.7 million in Q1 driven by net franchise openings and same store sales growth.

• Domestic same store sales growth of approximately 1% for fiscal year 2025, previously low to mid-single digits. - Net new global unit growth rate increased to 16% to 17%, previously 14% to 15%. - Net interest expense anticipated to be approximately $40 million previously $46 million. - SG&A estimated to be approximately $140 million including non-recurring system implementation costs of $4.5 million and ~$26 million of stock based compensation. - Adjusted EBITDA growth rate estimated at 15% versus 2024, consistent with prior earnings call guidance.

• Macroeconomic uncertainty affecting certain geographies, with consumer pullback in specific pockets. - Variability in quote times during busy hours leading to inconsistent guest experience with the current kitchen operating setup. - Geopolitical challenges in international markets like China, impacting the pace of expansion and market entry strategies.

Q: Jeffrey Bernstein asked about the comp outlook for 2025 and sequential trends.

A: Alex Kaleida said it's a function of the numbers being grown against, with first half tougher than second half due to two-year comps.

Q: Jeffrey Bernstein followed up on franchisees.

A: Michael Skipworth said conversations with brand partners are centered around unit growth, with strong pipeline and demand for growth.

Q: David Tarantino asked about the Smart Kitchen's impact.

A: Alex Kaleida said there's a lag but seeing positive sales divergence vs control restaurants and 5% increase in conversion in Dallas.

Q: Danilo Gargiulo asked about international expansion and tenders.

A: Michael Skipworth talked about strong international performance, new markets, and positive early learnings from tender relaunch.

Q: Brian Harbour asked about delivery trends.

A: Michael Skipworth said consistent growth in delivery, with early indication of opportunity in DFW.

Q: Andrew Charles asked about sales transfer and CRM.

A: Alex Kaleida said it's a mix of hyper personalization and loyalty program efforts.

Q: Chris O'Cull asked about addressing Hispanic consumer pullback and kitchen system rollout.

A: Michael Skipworth said targeted tactics and focusing on indulgent Wingstop occasion.

Q: Andy Barish asked about ad fund and same-store sales.

A: Michael Skipworth talked about ad fund strategy and Alex Kaleida mentioned second half implies high 30% range on three-year basis.

Q: Sara Senatore asked about same-store sales mix.

A: Alex Kaleida said it relates to individual eater occasions from tenders.

Q: Christine Cho asked about tender mix.

A: Michael Skipworth said early results are encouraging with tenders mixing higher than sandwich