Wingstop CEO sticks by plans for new stores, hires as industry struggles
Wingstop is forging ahead with plans to expand its footprint and increase its head count as demand remains high amid the coronavirus pandemic, CEO Charlie Morrison told CNBC on Wednesday.
The chicken chain has brought on about 6,000 new employees in the U.S. since the start of the pandemic and does not expect to slow down as the company bets on its delivery strategy to reach customers in a physical distancing culture.
“We anticipate continuing to hire, not only just to service the demand we’re seeing now, but our franchisees are doing a fantastic job of reigniting growth in new restaurants,” Morrison said in a “Power Lunch” interview. “During the last quarter, we opened 23 net new restaurants when many concepts weren’t opening any of them.”
For years, Wingstop has consistently opened at least 20 restaurants each quarter. The company in July reported fiscal second-quarter domestic same-store sales growth of nearly 32% powered in large part by digital sales, which made up a healthy majority of U.S. sales. Wingstop, beating Wall Street estimates, posted $66.1 million in revenue, up 36% from a year earlier, and had earnings of $11.5 million, or 39 cents per share, more than double from $4.9 million a year ago.
The coronavirus lockdown earlier this year forced Wingstop to slow down its expansion plans due to delays in permitting and construction activity during the first quarter. Of the nearly two dozen new stores opened in the second quarter once states allowed some nonessential business activity to resume, 17 came in the month of June alone.
Meanwhile, the broader restaurant industry continues to face headwinds as establishments grapple with capacity limits and other restrictions in efforts to contain the Covid-19 outbreak, as new daily U.S. cases continue to hover in the 30,000 to 40,000 range. The daunting signs and approaching winter are creating headaches for commercial landlords, who run into their own challenges of finding tenants in a recession, as diners lose access to outside seating to augment business.
Industry experts are warning of another potential wave in restaurant bankruptcies without more government aid and with colder months around the corner.
Wingstop, on the other hand, plans to add as many as 130 total new locations to its roster in 2020. Morrison said each store needs a workforce of about 25, and the company, which has an exclusive delivery partnership with DoorDash, continues to lean heavily on delivery.
Wingstop has 1,436 total locations, including 1,244 in the U.S., as of June 27. That’s up from 1,385 at the end of December.
“We see that [hiring] trend continuing well into this year and next year,” Morrison said. “We expect to continue to hire here and into the future.”
Wingstop shares closed down 3.7% on Wednesday at $160.04. The stock is up more than 80% year to date.
