Wingstop hit the cover off the ball during 3Q22, reporting same-store-sales of +7% y/y (+36% y/y on a 3-year basis) with growth mostly driven by traffic as the chain refrained from taking any menu price increases (not exactly generous as the price of wings declined by -43% y/y during the quarter). The chain also reported that it sold out of 4 weeks supply of its new chicken sandwiches in 6 days during a launch at the end of August.
Wingstop’s results are very informative as the chain is generally oriented towards a lower-income demo which is supposed to be struggling in the current economic environment. To be fair, management indicates that Wingstop benefits from its consideration as an indulgent treat that its lower-income customers are less likely to sacrifice (when money is tight) compared to their higher frequency QSR occasions which are considered more expendable.
We are beginning to suspect that the lower-income demo does not struggle so much from food inflation & higher interest rates as they do from gas prices. With at least a temporary reprieve in gas prices, the lower-income demo is not holding back from their wings. In a way, this parallels Starbucks’ success which we suspect is a function of the brand’s positioning as an affordable, indulgent treat for the more affluent.