Wingstop CEO Shares Details of DoorDash Partnership
Buried in a very nice fourth quarter for Wingstop were some key details about a smart partnership between the brand and delivery provider DoorDash.
Wingstop, the laser-focused chicken wing and fry concept, announced a fantastic 12.2 percent same-store sales growth in the fourth quarter and system sales of $ 397.2 million or 21.2 percent growth. The company now counts 1,385 restaurants globally, 1,200 franchised in the U.S. and 154 international franchise locations.
The location count represents 10.6 percent unit growth over the prior year. Annual sales grew 20.1 percent to $1.5 billion. In all, it’s a nice end to 2019 that represents 15 consecutive years of same-store sales growth and 19 percent year-over-year earnings growth. Investors also appreciate the 290 percent total shareholder return.
An especially interesting note in the quarter was digital sales growing to 39 percent. That was one key part of the annual same-store sales growth.
“The success of sustaining same-store sales growth was highlighted by the strengthening same-store sales performance throughout 2019, fueled by the effectiveness of our national advertising, the expansion of our digital sales mix and the phased approach to our national rollout of delivery, culminating in an 11.1 percent comp for the year,” said Wingstop CEO Charlie Morrison during the fourth quarter earnings call.
The company is putting a lot of resources into delivery and off-premises operations in general, including new food lockers for takeout customers to remove any friction in the pickup.
A partnership with DoorDash announced in November 2018 has been largely rolled out across the country and provided some real digital traffic growth. There was an especially large surge in digital delivery in May, as DoorDash promoted the brand within the delivery marketplace.
Not long ago, that would have been some mixed news: more traffic is always nice but the 20 to 30 percent commission common in the delivery world is not so nice. But as a part of the partnership, Morrison said utilizing DoorDash for delivery orders placed on Wingstop.com and a better contract kept the surge of orders largely a positive.
“Because of our negotiated—renegotiated contract—with DoorDash we’re a bit agnostic as to what channel the business comes through,” said Morrison. “Now, the commission rates are pretty similar.”
For brands trying to figure out how to make sense of delivery, this model is a smart option. DoorDash gets the volume it wants as the exclusive delivery partner for the brand and Wingstop gets a more sensible rate for those deliveries.
Another perk in that contract is data sharing. According to Morrison, Wingstop gets access to anonymized data about customers who order Wingstop on DoorDash to enhance what it gets from internal orders on the Wingstop website.
“That’s a reciprocal. So, we also can provide them with information about the type of customers that use Wingstop.com to purchase our products as well. But that is not specific to exactly their name, address, email address and everything else, it’s more descriptive information that we can use in our marketing efforts to make sure we’re pointing to the right type of user. But it is sufficient for us to be able to make good decisions on where we point our marketing efforts,” said Morrison.
If the executive team is really “agnostic” about where those orders come from and they’re padding their marketing data with every order, Wingstop might have found a truly mutualistic way to work with third-party delivery.