Knapp June CASUAL DINING
COMPARABLE SALES COMPARABLE GUEST COUNTS
USA 0.7% -5.9%
CALIFORNIA 9.1% 2.7%
TEXAS -0.8% -8.2%
FLORIDA -0.5% -6.9%
We remain broadly short of the Casual Dining industry and can see our updated SHORT Casual Dining REPLAY below.
CLICK HERE FOR THE WEBCAST REPLAY AND MATERIALS. |
WING Black BOOK on Thursday
CALL DETAILS:
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WINGSTOP (WING) LONG THESIS:
Wingstop, Inc., with an enterprise value of $2.9 Billion, is a franchisor and operator of restaurants, which engages in cooked-to-order, hand-sauced, and tossed chicken wings. It operates primarily through 1,754 Franchise stores, or 97% of the total store base. The Franchise segment consists of both domestic and international franchise restaurants. The company was founded in 1994 and is headquartered in Addison, TX. We like the setup for WING as a strong Quad 4 name for these reasons:
- MINING THE DIGITAL CONSUMER: WING is a company with a robust platform for monetizing data, focused on engaging with the consumer and managing the brand, but digitally tech-enabled in a way that gives the company a 360 view of the consumer. In 1Q22, 62.3% of sales were digital, up 10% YoY.
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WING DEFLATION: The pandemic drove a significant increase in the number of restaurants selling chicken wings driving down supply and driving up the price of wings. Those dynamics are reversing in 2022, and WING should be able to recapture lost margin thru lower food costs in 2H22 and into 2023. In addition, the company is in a unique spot and can lean into value to drive incremental traffic, while others in the industry are taking more price.
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SAME-STORE SALES AND TRAFFIC: WING posted the slowest SSS for 1Q22 at 1.2% in some time and has a challenging comparison in 2Q22 at 31.9%. But the traffic remains strong. While this is a concern for the upcoming quarter, we believe the company has seen accelerated traffic since the end of 1Q22 and that the improvement in profitability will overshadow the difficult comparison.
