Wingstop CEO Wants to ‘Digitize Every Transaction’

Wingstop believes the future of dining is digital. “Our goal is to digitalize every Wingstop transaction,” said CEO Charles Morrison on Wingstop’s third quarter earnings call.

The wing restaurant, which does three-quarters of its business as takeout, has plenty of reason to embrace digital efficiency. Digital sales through the app and website comprised just over 25 percent of sales in the third quarter. For 80 percent of Wingstop restaurants, over 20 percent of sales come via digital channels. Plus, Wingstop sees a $20 average check on digital orders, $5 higher than the non-digital average of $15.

According to Morrison, a large percentage of Wingstop orders come in over the phone. In order to digitize those transactions, the chain has invested in artificial intelligence — voice recognition for the phone to convert orders phoned into the restaurants to its digital sales pipeline.

This is a long-term and large investment for Wingstop, which has been building its own mobile app and ordering website to replace a third-party white label solution. “We’re going to change completely the presentation to our guests,” said Morrison. “And it will have fewer clicks and scrolls than what we had before.”

Owning the Channel

The new, in-house channels “will provide improved guest experience and will be optimized to support our national rollout of delivery,” he said. Assuming no technical trouble, the new app and site should launch in early 2019. The custom builds are currently in the testing phase.

By the end of 2018, Morrison said delivery will cover 25 percent of its domestic footprint including the launch of Los Angeles in November, Wingstop’s largest domestic market by number of restaurants.  By the end of 2019, delivery will cover 80 percent of the restaurant’s domestic footprint.

Delivery is good for Wingstop’s growth, too. Morrison said that delivery orders are “highly incremental,” with an even higher check lift than the $5 average lift on digital orders. Two-thirds of delivery customers arrive via Wingstop’s channels, with the remaining third coming through its partner DoorDash. “The majority of [those new customers] are going to customers that data we own,” he said. “But we technically don’t own that data if it comes through a secondary source.” Many restaurant chains are navigating this issue, working to strike a balance between ceding customer data to a third party service with the incremental lift in business that third-party delivery services often provide.

“Long-term, we see no reason why our digital sales cannot approach and perhaps exceed the levels of some national pizza chains,” said Morrison. Earlier this year, Domino’s CEO Patrick Doyle said digital sales accounted for 60 percent of its orders. In a similar strategy to Wingstop, Domino’s tapped robots to answer its phones.

Of course, all of this new technology won’t help if customers don’t know about Wingstop. Franchisees can expect a one percent fee increase in order to support national advertising, beginning in January 2019.

Earlier this month, Wingstop stock received three downgrades on valuation. The company beat expectations with 15.5 percent revenue and 6.3 percent same-store sales growth.