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Wingstop targets urban expansion as cities start to recover

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By Hilary Russ

NEW YORK, July 28 (Reuters) - Fast-growing chicken wing chain Wingstop Inc is rushing to expand in urban areas as central business districts make a comeback from the pandemic.

Wingstop will open its first "ghost kitchen" for delivery only in Manhattan in the next couple of weeks, one of 25 locations in the New York City borough it hopes to open "as fast as we can," Chief Executive Charles Morrison said during a quarterly earnings call with analysts on Wednesday.

Urban restaurants were hit hard in the pandemic as commuters retreated to their suburban homes, prompting some big chains to shift development plans to suburban markets where drive-thrus and pick-up lanes lifted sales.

Shake Shack Inc for example - founded by restauranteur Danny Meyer as a burger stand in the middle of Manhattan - recently opened stores in the suburbs of Indianapolis and Portland, Oregon.

Now as pandemic restrictions lift, city business is starting to return. Starbucks Corp's comparable sales in urban U.S. markets turned positive for the first time since the pandemic hit early in 2020, the coffee chain said on Tuesday.

Chipotle Mexican Grill Inc Chief Executive Brian Niccol said last week that lunch business was coming back in cities.

Wingstop aims to take advantage of the trend. It now has more than 1,600 locations, mostly franchised U.S. restaurants, and expects new unit growth of 12% in 2021.

It already has restaurants in Brooklyn, the Bronx and Queens, the boroughs that ring the central downtown district of Manhattan.

Manhattan's normally exorbitant real estate prices have plummeted during the pandemic, allowing Wingstop to move in, Morrison said.

The company will model urban expansion on its strategy in London, England, where it established both traditional restaurants with seating and ghost kitchens for delivery only.

Ghost kitchens require fewer employees, cost less to open, and will make up roughly 40% of new urban market locations, he said, adding the company is using the same playbook to expand in Boston, Philadelphia, San Francisco, Los Angeles and Toronto. (Reporting by Hilary Russ in New York Editing by David Holmes)