Wingstop Inc 2026 Q3 Earnings Call

Please go ahead. Thank you, and welcome to the fiscal third quarter 2026 earnings conference call for Wingstop.

Our results were published earlier this morning and are available on our investor relations website at ir.wingstop.com. Our discussion today includes forward-looking statements. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties that could cause our actual results to differ materially from what we currently expect. Our SEC filings describe various risks that could affect our future operating results and financial condition. We use certain non-GAAP financial measures that we believe can be useful in evaluating our performance. Presentation of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are contained in our earnings release.

Lastly, for the Q&A session, we ask that each of you please keep to one question and a follow-up to allow as many participants as possible to ask a question. With that, I would like to turn the call over to Michael.

Thank you, Sarah. Good morning, everyone, and thank you for joining us. I would like to start by taking a moment to recognize our brand partners, restaurant team members, and global support center team members for their continued commitment to Wingstop. We've asked a lot from our team this year as we've advanced several important strategic initiatives across our business, and I genuinely appreciate their focus, hard work and dedication. This year, we've made significant investments in our talent, our operations, launched our first loyalty program, and continued building capabilities that we believe will support our next phase of growth. Our top priority is improving sales performance and rebuilding transaction growth. We are moving with urgency on the actions we can control in this current operating environment. During the third quarter, domestic same-store sales declined 5.4%, below our expectations.

While we are beginning to see positive signals from the changes we have made, the improvement in sales performance is taking longer than we initially anticipated, and the macro trends we are seeing among customers have intensified over the last few months. With that in mind, we have updated our full year domestic same-store sales outlook to a decline of approximately 6.5%-7%. This does not change our focus on returning to sustained same-store sales growth, and we are confident the actions we are taking will do just that. We also are not waiting for the consumer environment to improve. We are taking deliberate action across our business to strengthen performance, drive greater guest frequency, and acquire new guests.

Over the past several quarters, as the operating environment has continued to evolve, we have continued to deepen our understanding of our guest behaviors, key choice drivers for restaurant occasions, and what Wingstop can do better to more consistently win those occasions. Last quarter, we outlined actions to sharpen our creative messaging and media mix, more clearly connecting the quality and bold flavor our guests expect with the compelling value Wingstop can deliver. As you will hear today, we are encouraged by the early response to those actions while recognizing there is more work to do. In addition to marketing, we are also intensified our focus on operations, bringing in new talent and capabilities to strengthen our execution across the business. One of the key things we have learned is that our marketing campaigns over-index on building awareness. The opportunity in front of us is around driving consideration.

We recognized that our marketing wasn't consistently connecting our differentiated food, flavor, and value into a compelling reason to choose Wingstop, particularly around occasions where we have the greatest opportunity to win. As we discussed in our second quarter earnings call, we needed to do a better job of clearly communicating the value we offer beyond price alone while giving guests more reasons to return. We have put those insights into action by sharpening our marketing approach to drive greater consideration and acquisition, leveraging Club Wingstop and personalization to test and learn how we can deepen guest relationships and drive greater frequency and strengthen restaurant execution through Wingstop Smart Kitchen. Ultimately, our objective is to give consumers more compelling reasons to choose Wingstop more often. We are doing this by concentrating our media investment on occasions where guests' interests and Wingstop's relevance are the highest.

We are layering in menu, value, and promotional levers that are being amplified by more compelling creative and paid media. Most of the changes in our marketing came to life in the second week of September with the kickoff of the NFL regular season, with limited impact on our third quarter results. The initial readout suggests we are on the right track and reinforce our conviction in this strategy. I am excited to lay out more detail on our messaging approach, which we believe is beginning to gain traction with our guests. Our marketing strategy is to build reach by front-loading our video investment with more premium placements and leveraging 30-second spots. From there, we plan to sustain efficient reach and frequency through a weekly presence of 15-second spots and an always-on social strategy to keep Wingstop top of mind.

We are concentrating investments around high relevance occasions, pairing it with creative that more clearly communicates Wingstop's quality, bold flavor, and compelling value, and sustaining engagement through paid and owned channels between those moments. We are leaning into our brand strengths, bone-in wings, flavor, and quality, while ensuring we are clearly communicating value. The response to the Watch Party Bundle and our Thursday Night Football activation suggest we are on the right path. The objective is not a short-term promotion. This is just the first step to establish with guests repeatable group occasions that build transactions, frequency, and long-term brand relevance. We are supporting this strategy with incremental investment from our G&A dollars. As we continue to execute our plan, we will continuously measure results and sharpen our marketing investment based on the data.

Flavor innovation has always been core to Wingstop's identity and remains one of our greatest points of differentiation alongside our ranch, Seasoned Fries, and bone-in wings. We know continued innovation and product news is key to driving consideration. We are taking a more integrated approach to flavor innovation, including dedicated creative support for flavor LTOs like our recent Lemon Pepper Trio. Part of this is doubling down on what we know our customers already love, our Lemon Pepper, and giving them reasons to reengage through LTOs, which are both new and familiar at the same time. This brings me to Club Wingstop's first-ever loyalty program. Club Wingstop is another way we can deliver additional value to our guests and keep them coming back for more. Our initial priority following the national launch in May was to build awareness and drive enrollment into the club, and we have made great progress.

Enrollment continues to pace ahead of our plan, giving us a solid foundation to where we are now focused on strategies and tactics that most effectively engage our members and drive frequency. We are seeing evidence of stronger retention among Club Wingstop members. New guests who enroll in the program are returning within 30 days at 13 points higher than non-members, a trend that has remained consistent across enrollment cohorts. There are also positive signs of behavioral changes, with purchase frequency increasing almost 20% among members who have completed a full 90 days in the program. We are building on these early learnings with initiatives designed to give members more reasons to return. Over the past several weeks, we have introduced exclusive offerings like Wing Pass, which sold out in less than one minute.

The Wingstop Watch Party Bundle punch card, merchandise drops, early access to new flavors, and unique experiences that leverage our partnerships across sports and entertainment. As we progress beyond the initial launch of Club Wingstop, our focus is now on testing and learning exactly which tactics increase purchase frequency and maximize the lifetime value of our members. When we consider the typical maturity curve for loyalty programs, we are happy with the direction of this initiative, including the early response from our most loyal guests. In September, we activated our AI-driven personalization engine, initially focusing on testing more relevant offers and messages with targeted guest segments. In those initial tests, guests receiving personalized offers generated higher total sales compared to those who did not receive offers.

This demonstrates the value of more relevant messages and the offers at the individual guest level and give us a foundation to scale this capability. As our marketing strategy drives guests to our restaurants, it is paramount that every guest who chooses Wingstop has a great experience. The Wingstop Smart Kitchen is an enabler for our back-of-house operations, and now it is up to our restaurant team members to deliver that guest experience consistently. Along with our brand partners and restaurant team members, we are laser-focused on delivering great-tasting, cooked-to-order wings, hot Seasoned Fries, and an accurate order every time. To deliver on that consistently, we have retrained the entire system in the last 3 months and established new operating standards.