Where one Wingstop goes, another will follow. The company is employing a familiar real estate strategy to further solidify its dominance in the chain's most successful U.S. markets.
— Erika Adams
Wingstop knows that it needs to grow its store footprint, and it plans to execute on that by building up a familiar real estate strategy: fortressing its key domestic markets.
The brand currently operates 1,100 restaurants in the U.S. and 150 international locations, and Wingstop’s leadership still sees plenty of opportunity for growth. The company has publicly set a goal of growing to 2,500 restaurants domestically and 3,000 overall. To reach its U.S. store count goal, Wingstop plans to start planting new restaurants right next to each other within its strongest sales markets in the country.
The real estate strategy, known as fortressing, aims to further establish Wingstop’s position as a market leader in the areas in which sales are already high for the brand. Nationwide pizza chain Domino’s has been utilizing a fortressing strategy over the past few years to specifically cut down on delivery times and better serve its off-premise customers.
Wingstop is going to make sure “that our focus and priority is in markets that we believe we can take from a position of strength to a position of truly strong performance where others can’t get into the market and impact our business,” CEO Charles Morrison said during a company presentation at the annual industry ICR Conference in Orlando, Fla., on Monday.
By constructing restaurants in close proximity to one another, Morrison believes that the resulting spread of sales won’t cannibalize business, but rather keep customers repeatedly coming to Wingstop if it’s always within easy reach.
“We’ve learned over the years that as we add more Wingstops to a particular market, that market tends to get stronger, the average unit volumes continue to grow and that creates a stronger unit economic model for our emerging franchisees who are able then to accelerate the pace of their development,” Morrison said.
Wingstop’s restaurants are currently 98 percent franchise-owned.
Positive Sales Growth
The company released preliminary fourth-quarter financial results ahead of its conference presentation on Monday, demonstrating healthy increases in same-store sales — a metric that many larger U.S. restaurant chains have been reporting as flat or just slightly positive throughout 2018.
U.S. same-store sales increased by six percent in the fiscal fourth quarter of 2018, as compared to the fourth quarter the year prior. Overall, same-store sales increased by 6.5 percent throughout 2018 as compared to sales growth in 2017. The relatively strong sales numbers indicate that there is high demand for Wingstop, and likely there’s still room for the brand to grow in a significant way.
Wingstop opened 119 new locations in 2018, and 520 locations are currently in the development pipeline in the U.S. alone, according to Morrison.
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