So I'll do a split combo.

Would you like five, six, eight, 10, or 12?

Eight, this sounds great.

What began as a buffalo chicken wing restaurant in 1994 in Texas has now grown to more than 2,000 restaurants nationwide.

Right now, we're just dropping some chicken.

I love this.

Any other flavor, hot honey, oh man.

I'll take it.

I'll take hot honey more than anything, ever.

That's the lemon pepper.

It's one of their most popular.

It's delicious.

Since initially going public in 2015, Wingstop's stock price is up over 1,100%.

Over the past five years, it's up nearly 300%.

And in the past year alone, it's more than doubled.

So Wingstop's growth is really unprecedented in the restaurant industry.

You know, if I went back to Chipotle in the 2000s when the brand was emerging, we saw growth almost at Wingstop's levels.

But what's different about Wingstop is the fact that it's over 2,000 stores.

You know, there's no other brand that scales with the growth that Wingstop's doing.

The company's system-wide store count reached over 2,300 at the end of June.

That's about 1,000 more locations than it had in 2019.

Consequently, revenue has more than doubled in that same time period.

On average, our franchisees invest about $500,000 to open a Wingstop, and they're basically getting that entire investment paid back to them in less than two years because the income statement is so strong.

With chains like Starbucks and McDonald's facing consumer pullback, how did Wingstop become one of the hottest restaurant chains in the country?

Across fast food chains, chicken has been a hit, especially this year.

And with school coming back around, football scaling back up, and it's starting to pick up in the morning, they love chicken in the morning.

They love chicken in the morning.

I love chicken, but, you know, love chicken in the morning.

That's good news for Wingstop because, well, chicken is about all it sells.

Its menu also lends itself well to an experiential offering for hanging out with friends or watching a football game.

If you're thinking about someone who has to make a decision on where to trim spending, the likelihood that they're gonna give up something that is associated with a social event is much lower than, hey, I'm gonna forego my Starbucks coffee this morning.

Wingstop is a special occasion.

Our frequency over my 10 years has really averaged about three times a quarter or once a month, a low-frequency occasion.

And we're just now, for the first time, starting to see that tick upwards, which we're pretty excited about.

Going beyond just wings has helped drive that uptick.

The chicken sandwich wars took off right before the pandemic.

And as chain after chain vied for market share, Wingstop eventually got in on the game.

The chicken sandwich.

This was introduced in the middle of 2022.

Chicken is a very popular protein with the consumer, particularly fried chicken.

And so the ability for Wingstop to offer their chicken sandwich in 11 flavors, you know, really an opportunity for continued utilization.

Wingstop has seen an increase in new guests visiting its locations ever since the chicken sandwich was introduced.

And those new customers are visiting more frequently than its traditional wing customer.

The company reported same-store sales growth increasing nearly 30% in the U.S. for the second quarter of this year.

That means that the company generated more sales per store compared to last year.

The company says that this growth was driven by increased transactions.

I would say, dependent on the day, we will receive typically around 300, 400 transactions.

Investors look at same-store sales as the key metric for health of a restaurant concept.

Wingstop has experienced same-store sales growth for 20 years.

The stores themselves require relatively low operational costs.

We run a very efficient labor profile.

You can run that Wingstop that's doing on average $2 million, you can run that with as few as four team members in the restaurant.

We run in a very efficient box on average about 1,600, 1,700 square feet.

And so our occupancy cost where we target B, B minus real estate is extremely efficient.

So this Wingstop in Neptune, New Jersey opened a few years back.

And I initially thought it was a very interesting location choice.

It's set off from the main road, across from a grocery store, in the middle of a shopping center.

But that's exactly the type of real estate that Wingstop targets.

It doesn't need to target prime real estate because last quarter, nearly 70% of its sales came from digital orders, meaning people were not just impulsively stopping by.

They were coming here intentionally.

The use occasion or the consumption occasion for Wingstop is the consumer coming to them.

And so I don't care if I have to go next to the pet store to pick up my wings because I'm going there to pick it up.

Whereas, like I said, if a McDonald's was in the middle of a strip mall, you lose a lot of those impulse purchases because there's not a drive-thru.

Brand awareness is growing.

Franchisees contribute a percentage of sales into the National Advertising Fund.

So as system sales grow, so does ad spend, which nearly doubled from 2021 to 2023.

From about five years ago to now, not a lot of people knew about Wingstop, but now everybody know about Wingstop.

The viral nature of the brand and how it's cropped up so many different times on social media has really helped feed into the customer acquisition.

Hashtag Wingstop has been tagged in over 150,000 TikTok videos that have garnered millions of views.

The company has leaned heavily into marketing with live sports.

It has official partnerships with multiple NBA teams and its free wing promotions have led to viral moments with top athletes.

He wants to get the QR code to get his free wings.

Although the chain saw its U.S. same-store sales grow over 28% last quarter and beat Wall Street earnings expectations, the stock price has actually fallen more than 10% from the highs that were seen in June.

Wingstop is still one of the best-performing restaurant stocks.

I think as of recent, you've seen a big divergence in the valuations of restaurant stocks.

So a stock like Wingstop, a stock like Sweetgreen, a stock like Caba have very premium valuations relative to the overall restaurant space.

And then other more mature restaurant stocks like McDonald's, like Starbucks, have seen their stocks have their valuation beat down.

Take a look at Wingstop's stock price.

Now look at the company's earnings per share over the last 12 months.

That price-to-earnings ratio is high.

Now take a look at the same valuation for stocks like McDonald's and Starbucks.

Trading at a higher premium means more volatility in its share price.

The risk to the story, though, is really macro, that the consumer base for Wingstop historically skewed more lower income.

And on a price-per-calorie basis, it's just cheaper to go to a quick-service drive-thru to get food relative to a Wingstop.

However, Charles says that Wingstop is seeing a shift from a middle-to-higher-income consumer with increased transaction on third-party delivery apps.

Plus, unlike its fast-food competitors, Wingstop has kept a tight leash on prices.

Since 2019, Wingstop has only increased prices by around 15%, while its peers in the quick-service restaurant category fall into the 30% to 40% range.

The reason we think quick service is underperforming Wingstop is really about the amount of price that quick service has taken and that there is a lot less discipline relative to what Wingstop has done in recent years.

In 2021, wing prices soared, so Wingstop pushed chicken thighs instead.

To combat this type of volatility going forward, the company changed the way it sourced its chicken wings.

They shifted from a spot, you know, where they're just buying whatever the market price is, to negotiating that price, you know, for the whole bird.

They'll use the parts of the bird they need for their operations, the wing, the breast, et cetera, and they'll effectively sell the remains to either a soup or pet food company that can use or make a part of the birds.

And that's allowing us to create predictability, and most importantly, it's minimizing the volatility that our franchisees see on their income statement within their food cost line.

In its most recent earnings call, Wingstop raised its store count goal to reach a domestic total of 6,000 locations.

That would be about triple its current total, and more locations than Kentucky Fried Chicken currently has in the U.S.

However, that kind of growth could be a long way out.

TD Cowan anticipates the chain to have about 4,000 locations domestically and 5,000 locations globally by 2030.

You know, I don't think this is gonna be the new Kentucky Fried Chicken or some big chain, but they've got another two or three years of packing on 250, 300 stores before they start saturating America.

The company also says it has room for growth within the world of third-party delivery systems.

On DoorDash and on Uber Eats, our awareness levels are still really low.

Our delivery channel mix is about 30% today.

When we benchmark delivery channel mix to other more mature, heavy off-premise businesses, think Big Pizza, their delivery channel mix is north of 50%, so we see a lot of runway there.

Wingstop is still relatively low awareness.

Even as the broader consumer is maybe pulling back from spending on food away from home, Wingstop has the opportunity to gain incremental consumers that have never heard of the brand before.

Skipworth says that Wingstop has a goal of transitioning entirely to digital ordering.

Does that mean you would eliminate that face-to-face interaction and it would be more of just kind of a pickup model?

Is that the goal?

We're not holding chicken that's been previously cooked.

We're making it to order, and on average, it takes about 18 minutes to get your order at a Wingstop.

So training guests to order ahead through our digital platform, it's actually just a better guest experience, but then for our perspective, we tend to see a higher average check.

The average annual sales per store is over $2 million, and the company now aims to make that $3 million.

About 98% of Wingstops are franchises.

And as we grow our average sales per restaurant, it's continuing to make those income statements for our franchisees better, and that's gonna make them want to open more Wingstops.

And that's how I think we'll continue to be able to scale Wingstop into what our overall vision is is to become a top 10 global restaurant brand.

In order to be a top 10 restaurant brand, you're talking about roughly about $10 billion in scale.

And so this is an ambition that getting to $18 billion based on their long-term target will put them pretty solidly there.

And just to give you some perspective, the $18 billion target puts them right now in between Chick-fil-A and Taco Bell in terms of what they'll be for today.