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Wingstop CEO on chicken thigh testing, consumer preferences

Wingstop CEO Charlie Morrison joins Yahoo Finance’s Julie Hyman, Myles Udland, and Brian Sozzi to discuss the company’s latest earnings report, and the restaurant’s trial of bone-in thighs.

Video Transcript

BRIAN SOZZI: Wingstop continues to put up some spicy sales gains during the pandemic. Third quarter sales surged 25.4%. Wingstop CEO Charlie Morrison is here with us now. Charlie, always good to speak with you. Listen, I've been talking to you since the June 2015 IPO, and I know you as Wingstop, but you've got a whole newsroom talking right now, because now I have to think a little bit as Thighstop. Why are you selling thighs?

CHARLIE MORRISON: Well, we're not changing our name to Thighstop.

BRIAN SOZZI: OK, good.

CHARLIE MORRISON: But we do believe that thighs present another protein option for us that does well with our core offering, which is bone and chicken wings as well as boneless and our chicken tenders. The thighs present a great juicy product, crispy skin, everything you want that goes with a wing occasion. But for us, alternatively, takes some of the pressure off bone and wings, which we've seeing those prices go pretty high. They're a fan favorite. We're testing it in seven markets right now. We'll see how that goes, and then perhaps next year fans will get a chance to enjoy this great product as well.

JULIE HYMAN: I'm a thigh fan in particular. I always thought thighs were better than wings, but that's a whole other discussion, I think, Charlie, thanks for being here. What kind of flows are you going to expect tonight, election night, because I know going back to 2016, you said that perhaps election night didn't perform as well as you had thought. Certainly, it seems like people are going to be indulging this evening as they await results, so what are you expecting?

CHARLIE MORRISON: Yeah, if you go back to the 2016 election, certainly our brand saw a pretty quick change in its performance overnight based on the outcome of the election. But surrounding that election was a lot of rhetoric around border security, the risks of deportation, things like that that really caused some of our core customers to think twice about their eating occasions, and I don't think Wingstop was alone. Other brands did see that.

But as you look to where we are now, just going back to March and the reality of this pandemic we're in, I think Wingstop has been able to demonstrate that we can really navigate any challenge that's in front of us. We've had 16 and soon to be 17 consecutive years of positive same store sales growth. Our brand continues to grow. We just opened our 1,500th location this last week. So we believe that regardless of the outcome of the election, what we want to strive for is peace and everybody having an opportunity to enjoy our great wings.

MYLES UDLAND: And then, Charlie, thinking about the delivery part of your business and some of the dynamics you've seen there with the third party competitors that are coming in and they're all kind of, they have their own sort of battle going on, but from your vantage point, how are you seeing that play out, and how are you seeing consumer preferences I guess towards delivery changing over time? Is it as durable as I think some of these DoorDashes who you work with and, you know, Uber Eats and others would like to be.

CHARLIE MORRISON: I definitely think it's here to stay. You know, our business has more than doubled in delivery this year because of the impact of the pandemic. But we were prepared to start to grow it. So if anything, we're about two years ahead of the schedule that we had in front of us in terms of delivery being a mix of our business. I think it's here to stay. I think consumer trends are changing. Their behaviors are going to change. More food is going to be consumed at home. And you know, no telling where we're going to be here in the next few months, quarters or otherwise.

But again, a testament to our brand partners, our franchisees and their support of our investments in technology to really make Wingstop stand out amongst so many other brands. Today, 62% of our sales come from digital. Of that, 23% of those sales are coming from delivery. And so we believe it's going to be a strong platform well into the future. We love our partnership with DoorDash. They're doing an exceptional job of making sure that they're taking care of our guests the way we would like for them to.

MYLES UDLAND: And then I guess thinking about, you know, trends that the business is riding, am I imagining it, or is chicken kind of having a moment here? Because I mean, I remember a comment, I think it was from someone at Shake Shack maybe five or six years ago, is they were so excited about chicken, because you know, you can put all kinds of things on chicken. You guys have all your sauces and so on. Is that like a consumer trend that is actually happening? We see it with Popeyes, what they've done. Chick-Fil-A is certainly part of the conversation. It seems like chicken is just top of mind for consumers right now.

CHARLIE MORRISON: Well, it's a comfort food for sure. And in these difficult times, chicken is a go to for comfort food, but it also feeds large groups of people. And so what we're seeing in our business is our ticket averages are up, because we're feeding more people on each occasion. With Wingstop with our 11 bold and distinctive flavors, fries, sides, multiple proteins, we offer quite a variety for everybody in the family or your group get together, no matter what that is. Individual occasions are still part of our game, but with a brand like ours and with chicken, it becomes a very attractive option for consumers and also fits that comfort food that we all desperately need in these tough times.

BRIAN SOZZI: Charlie, for the first time on the earnings call, I heard you talk a little bit more about China. What's the growth development plan there? How many restaurants can you have in China over the next year?

CHARLIE MORRISON: Yeah, we rolled out a completely new strategy for our international development efforts in our analyst day back in January, and this is one of those steps in the process. We believe that China represents a great opportunity for Wingstop. Chicken is the most consumed protein in the world. Bone in chicken is much preferred outside of the US, and China has demonstrated time and again that US brands can be highly successful there, so we are going to start the work now to prepare ourselves. Probably still a couple of years out before we're opening restaurants and moving forward, but we want to, like anything else we do, put in the diligence necessary to make sure that when we hit the ground, we do so in a fast way and can explode to as many as 1,000 restaurants over time in China.

BRIAN SOZZI: Well, I am glad, Charlie, you are keeping the name Wingstop. Good luck on selling thighs, good quarter, and we'll talk to you soon. Have a great rest of the day.

CHARLIE MORRISON: Thank you so much.