Q4 2023 Wingstop Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Wingstop fiscal fourth quarter and full year 2023 earnings conference call. All participants will be in listen-only mode.

Good morning, ladies and gentlemen, and thank you for standing by.

Speaker Change: Welcome to the Wingstop fiscal fourth quarter and full year 2023 earnings conference call.

Speaker Change: All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note that this conference is being recorded today, Wednesday, February 21st, 2024. On the call today are Michael Skipworth, President and Chief Executive Officer, and Alex Kaleida, Senior Vice President and Chief Financial Officer. I would now like to turn the conference over to Alex. Please do so.

Speaker Change: Please note that this conference is being recorded today Wednesday February 'twenty, one 'twenty 'twenty four on.

Speaker Change: On the call today are Michael Skipworth, President and Chief Executive Officer, and Alex Collider, Senior Vice President and Chief Financial Officer.

Alex Collider: I would now like to turn the conference over to Alex. Please go ahead.

Alex Kaleida: Thank you, and welcome to the fiscal fourth quarter and full year 2023 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 conditions. 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 gap measures are contained in our earnings. Lastly, for the Q&A session, we ask that you please each keep to one question and a follow-up to allow as many participants as possible to ask a question. With that said, I would like to turn the call over to Michael.

Alex Collider: Thank you and welcome to the fiscal fourth quarter and full year 2023 earnings conference call for Wingstop.

Alex Collider: Our results were published earlier this morning and are available on our Investor Relations website at IR Dot Wingstop dotcom.

Alex Collider: 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.

Alex Collider: Our SEC filings describe various risks that could affect our future operating results and financial condition.

Alex Collider: 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.

Alex Collider: Reconciliations to comparable GAAP measures are contained in our earnings release.

Alex Collider: Lastly for the Q&A session. We ask that 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.

Michael J. Skipworth: Good morning, everyone, and thank you for joining our call. 2023 marked the strongest year on record for Wingstop. These industry-leading results showcase the strength and staying power of the strategies we are executing and are a true demonstration of Wingstop's Category of One position. We delivered an unprecedented 20th consecutive year of same-store sales growth with a comp of 18% for the full year, primarily driven by transactions. We opened a record 255 net new restaurants, fueling system-wide sales growth of 27% to more than $3.5 billion. Company-owned restaurant margins were 26%, a proof point of the effectiveness of our supply chain strategy and our industry-leading unit economy. This translated into adjusted EBITDA growth of 39% when excluding the benefit of the 53rd week during 2022. 2023 started strong as we delivered a 20% domestic same-store sales comp in the first quarter. That was driven entirely by transaction growth.

Michael J. Skipworth: Good morning, everyone and thank you for joining our call.

Michael J. Skipworth: 2023 marked the strongest year on record for Wingstop.

Michael J. Skipworth: These industry, leading results showcase the strength and staying power of the strategies, we are executing and there are a true demonstration of Wingstop category of one positioning.

Michael J. Skipworth: We delivered an unprecedented 20th consecutive year of same store sales growth with a comp of 18% for the full year, primarily driven by transactions.

Michael J. Skipworth: We opened a record 255, net new restaurants fueling system wide sales growth of 27%.

Michael J. Skipworth: More than $3.5 billion.

Michael J. Skipworth: Company owned restaurant margins were 26%.

Michael J. Skipworth: Proof point of the effectiveness of our supply chain strategy and our industry, leading unit economics. This translated into adjusted EBITDA growth of 39% when excluding the benefit of the 53rd week during 2022.

Michael J. Skipworth: 2023 started strong as we delivered a 20% domestic same store sales comp in the first quarter that was driven entirely by transaction growth. We saw the strength of our business build as we progress through the year, while we lapped a couple of key growth levers we executed in 2022.

Michael J. Skipworth: We saw the strength of our business build as we progressed through the year, while we implemented a couple key growth levers we executed in 2022, such as the launch of Uber Eats and the addition of the Wingstop chicken sandwich. This momentum was demonstrated with the fourth quarter marking our strongest quarter of the year. Our domestic same-store sales growth in the quarter was 21.2%, driven almost entirely by transaction growth.

Michael J. Skipworth: Such as the launch of Uber eats and the addition of the Wingstop chicken sandwich.

Michael J. Skipworth: This momentum was demonstrated with the fourth quarter, marking our strongest quarter of the year.

Michael J. Skipworth: Our domestic same store sales growth in the quarter was 21, 2% driven almost entirely by transaction growth.

Michael J. Skipworth: Based on the visibility into our development pipeline at the beginning of 2023, we knew our openings would be weighted toward the end of the year, and we are pleased with a record 115 net new restaurant openings in the fourth quarter. This is a great demonstration of the strength of our unit economics and the excitement of our brand partners, who are expressing a strong desire to open more restaurants. It's truly an exciting time at Wingstop.

Michael J. Skipworth: Based on the visibility into our development pipeline at the beginning of 2023 we knew our openings would be weighted towards the end of the year and we are pleased with a record 115 net new restaurant openings in the fourth quarter.

Michael J. Skipworth: This is a great demonstration of the strength of our unit economics, and the excitement of our brand partners, who are expressing a strong desire to open more restaurants.

Michael J. Skipworth: It's truly an exciting time at Wingstop, our strategies of sustaining same store sales growth maintaining best in class returns for our brand partners and accelerating growth have remained consistent over the years at the foundation of our strategies are our people and culture.

Michael J. Skipworth: Our strategies of sustaining same-store sales growth, maintaining best-in-class returns for our brand partners, and accelerating growth have remained consistent over the years. At the foundation of our strategies are our people and culture, which we believe is our competitive advantage. And I'm truly humbled by what our global support team, brand partners, and team members in the restaurants accomplished in 2023. As we look at the opportunity to more than triple the size of our existing Wingstop footprint, that was 2,214 restaurants at the end of 2023. It all starts with the strength of unit economics.

Michael J. Skipworth: Which we believe is our competitive advantage and I'm truly humbled by what our global support team brand partners and team members in the restaurants accomplished in 'twenty two 'twenty three.

Michael J. Skipworth: As we look at the opportunity to more than triple the size of our existing wingstop footprint that was 2214 restaurants at the end of 'twenty two 'twenty three.

Michael J. Skipworth: It all starts with the strength of unit economics.

Michael J. Skipworth: Our AUVs are now above $1.8 million, and we believe we have a clear line of sight to expanding AUVs well north of $2 million. Our supply chain strategy is creating greater predictability with restaurant margins. And combined with our AUV growth, our brand partners saw return strength and are now enjoying an unlevered cash-on-cash return of more than 70% on a low upfront investment of still less than $500,000 on average, a less than two year payback. Wingstop's best-in-class returns have translated to a record development pipeline.

Are these are now above $1.8 million and we believe we have clear line of sight to expanding the suvs well north of $2 million.

Michael J. Skipworth: Our supply chain strategy is creating more greater predictability with restaurant margins and combined with our a Z grows our brand partners saw returns strengthened and are now enjoying an unlevered cash on cash return of more than 70% on a low upfront investment that is still.

Less than $500000 on average.

Michael J. Skipworth: Less than two year payback.

Michael J. Skipworth: Wingstop is best in class returns have translated to a record development pipeline.

Michael J. Skipworth: We believe the progress we have made against our strategies positions us well to continue to deliver on our long-term targets. At our Investor Day in 2022, we outlined our strategies to increase system AUVs to more than $2 million. Those strategies consist of increasing brand awareness, menu innovation, expanding our delivery area, data-driven marketing, and a digital transformation that further expands our best-in-class digital platform.

Michael J. Skipworth: We believe the progress we have made against our strategies position us well to continue to deliver on our long term targets.

Michael J. Skipworth: At our Investor day in 2022 we outlined our strategy to increase system au vs to more than $2 million. Those strategies consist of increasing brand awareness menu innovation, expanding our delivery occasion data driven marketing and digital.

Michael J. Skipworth: Formation that further expands our best in class digital platform.

Michael J. Skipworth: As we demonstrated in 2023, our proven strategies are designed to have multi-year benefits and give us confidence to further scale AUV. In the last year, we made great progress against these strategies, increasing AUVs by more than $200,000 to $1.8 million. AUV growth that was fueled primarily by transaction growth, double digit transaction growth, which is against an industry backdrop that is seeing a decline in traffic. And another unique part of the Wingstop story is that we are seeing transaction growth across all ventures. In fact, even in our original, we continue to see healthy transactions.

Michael J. Skipworth: As we demonstrated in 2023, our proven strategies are designed to have multi year benefit and give us confidence to further scale.

Yes.

Michael J. Skipworth: In the last year, we made great progress against these strategies, increasing <unk> by more than $200000, so $1.8 million.

Michael J. Skipworth: E V growth that was fueled primarily by transaction growth double digit transaction growth, which is against an industry backdrop that has seen a decline in traffic.

Michael J. Skipworth: And another unique part of the Wingstop story is that we are seeing transaction growth across all vintages in fact, even in our original restaurant, we continue to see healthy transaction growth.

Michael J. Skipworth: Our always-on media strategy is helping us make great progress against our awareness gap, which remains a meaningful opportunity. With system-wide sales growth of nearly 30% during 2023, this gives us the firepower in our national ad fund to invest behind this strategy and continue to expand brand awareness. Our menu innovation with the chicken sandwich continues to bring new guests into Wingstop. As these new guests experience our flavors for the first time with a chicken sandwich that is cooked to order and hand-sauced and tossed in one of our 11 bold and distinctive flavors, they are learning to navigate the rest of our menu and enjoy that indulgent Wingstop occasion our core guests have come to appreciate over the years.

Michael J. Skipworth: Our always on media strategy is helping us make great progress against our awareness gap, which remains a meaningful opportunity with.

Michael J. Skipworth: With system wide sales growth of nearly 30%. During 2023. This gives us the firepower in our National AD fund to invest behind that strategy and continue to expand brand awareness.

Michael J. Skipworth: Our menu innovation with chicken sandwich continues to bring new guests into Wingstop.

Michael J. Skipworth: As these new guest experience our flavors for the first time with a chicken sandwich that is cooked to order enhance sauced and tossed in one of our 11 bold and distinctive flavors. They are learning to navigate the rest of our menu and enjoy that indulgent wingstop occasion, our core guests have come.

Michael J. Skipworth: To appreciate over the years.

Michael J. Skipworth: Our new chicken sandwich guests are demonstrating higher frequency than our traditional guests, as well as a skew towards higher bonelessness, which has helped us increase our bonus mix to now 47%. And as a reminder, greater utilization of breast meat helps advance our supply chain strategy and will further strengthen our unit economy. We have many examples today where restaurants operating with a boneless mix that exceeds 50% are enjoying a food cost in the low 30%. Our strategies have led to higher new guest acquisition along with an increase in frequency. And the fourth quarter marked one of our highest guest acquisition periods on record. We also saw an increase in frequency across all income cohorts, including low-income.

Michael J. Skipworth: Our new chicken sandwich guests are demonstrating a higher frequency than our traditional guests as.

Michael J. Skipworth: As well as its skewed towards higher boneless mix, which has helped us increase our boneless next to now 47%.

Michael J. Skipworth: And as a reminder, greater utilization of breast meat helps advance our supply chain strategy and will further strengthen our unit economics, we have many examples today, where restaurants operating with the boneless mix that exceeds 50% are enjoying our food cost in the low 30% range.

Michael J. Skipworth: Our strategies have led to higher new guest acquisition, along with an increase in frequency in the fourth quarter marked one of our highest guest acquisition periods on record.

Michael J. Skipworth: We also saw an increase in frequency across all income cohorts, including the low income guests our digital sales surged past $2 billion in the last 12 months and we exited 2023 with a digital sales mix at 67% up from 63%.

Michael J. Skipworth: Our digital sales surged past $2 billion in the last 12 months, and we exited 2023 with a digital sales mix at 67%, up from 63% at the end of 2022. Our digital guest database is now over 40 million users strong. And combined with the investments we are making in technology, we have the ability to create a hyper personalized experience with our customers. One that we believe, over time, will drive conversion, retention rates, and frequency. This industry-leading transaction growth in our business is supported by record brand health metrics. We know consumers remain selective with their restaurant spend, and they continue to prioritize quality and value.

Michael J. Skipworth: At the end of 2022.

Michael J. Skipworth: Our digital guest database is now over 40 million users strong.

Michael J. Skipworth: And combined with the investments we are making in technology, we have the ability to create a hyper personalized experience with our guests and one that we believe over time will drive conversion retention rates and frequency.

Michael J. Skipworth: This industry, leading transaction growth in our business is supported by record brand health metrics, we know consumers remain selective with their restaurant spend and they continue to prioritize quality and value.

Michael J. Skipworth: Wingstop has measured improvements in both of these categories as we progress through 2023. We believe improvements in quality and value scores have been supported by a measured and disciplined approach to pricing, as well as a relentless focus on operating restaurants with excellence. I want to thank our team members in the restaurants and brand partners for their dedicated focus on serving our guests and providing a best-in-class experience.

Michael J. Skipworth: Wingstop has measured improvements in both of these categories as we progressed through 2023.

Michael J. Skipworth: We believe improvements in quality and value scores have been supported by a measured and disciplined approach to pricing as well as a red wentland focus on operating restaurants with excellent.

Michael J. Skipworth: Want to thank our team members in the restaurants and brand partners for their dedicated focus to serve our guests and provide a best in class experience.

Michael J. Skipworth: Our brand partners recognize both the strength in our unit economics and that Wingstop is operating in a category. 95% of the net new restaurant openings in 2023 were from existing brand partners reinvesting back into Wingstop. This demand for growth was also showcased in the fact that we exited the year with approximately 1,400 restaurant commitments under development, representing nearly 600 new commitments during the year, a record year that positions us to continue to accelerate growth. And this success extends beyond our domestic business. We are now in 10 markets outside of the U.S., and our success in Canada is another proof point for the growth ahead. Average weekly sales already exceed those of established markets, and the Canadian consumer is lining up to get their hands on our flavors as we open more restaurants in Toronto.

Michael J. Skipworth: Our brand partners recognize both the strength in our unit economics and that Wingstop is operating in a category of one.

Michael J. Skipworth: 95% of the net new restaurant openings in 2023 were from existing brand partners reinvesting back into Wingstop.

Michael J. Skipworth: This demand for growth was also showcased in the fact that we exited the year with approximately 1400 restaurant commitments under development agreements, representing nearly 600, new commitments during the year a record year that positions us to continue to accelerate growth.

Michael J. Skipworth: And this success extends beyond our domestic business. We are now in 10 markets outside of the U S. Our success in Canada is another proof point for the growth ahead average weekly sales already exceed those of established markets and the Canadian consumer is lining up to get their hands on.

Michael J. Skipworth: Our flavors as we opened more restaurants in Toronto.

Michael J. Skipworth: This is an example of the response from consumers across the globe that is incredibly exciting for us. In 2023, our international business generated same-store sales growth consistent with the domestic business, also driven primarily by transaction. International markets are executing our proven playbook, with guests enjoying our flavor for the first time. And we're providing greater access through our development pipeline. I continue to believe our international business is supercharged for growth, and 2024 is set up to capitalize on this moment. Alex will provide specific details on our 2024 outlook shortly, but we remain confident in our long-term targets and believe our growth algorithm combined with our return of capital strategy will deliver best-in-class shareholder returns. While we have clearly strengthened brand partner returns, a core tenet of our strategies is to also enhance shareholder returns. In 2023, we launched our first share repurchase program set at an authorization level of $250 million. To demonstrate our commitment, we completed an accelerated share repurchase program totaling $125 million in the fourth quarter. This is another example of the strength of our asset-light model and our ability to maximize shareholder revenue. I truly believe Wingstop is in a category of its own.

Michael J. Skipworth: This is an example of the response from consumers across the globe that is incredibly exciting for us in 'twenty two 'twenty three our international business generated same store sales growth consistent with the domestic business also driven primarily by transaction growth.

International markets are executing our proven playbook with guests enjoying our flavor for the first time and we're providing greater access to our development pipeline I continue to believe our international business is super charged for growth in 'twenty 'twenty four is set up to capitalize on this momentum.

Michael J. Skipworth: Alex will provide specific details on our 'twenty 'twenty four outlook shortly but we remain confident in our long term targets and believe our growth algorithm combined with our return of capital strategy will deliver best in class shareholder returns.

Michael J. Skipworth: While we have clearly strengthened brand partner returns a core tenet of our strategy is to also enhance shareholder returns in 2023 we launched our first share repurchase program set at an authorization level of $250 million to demonstrate our commitment we completed in <unk>.

Michael J. Skipworth: Celebrated share repurchase program totaling $125 million in the fourth quarter. This is another example of the strength of our asset light model and our ability to maximize shareholder returns.

Michael J. Skipworth: I truly believe Wingstop is in a category of 120 23 established another base layer of cells that is positioning us to advance au vs well north of $2 million.

Michael J. Skipworth: 2023 established another base layer of sales that is positioning us to advance AUVs well north of $2 million. We will continue to invest in building brand awareness and increasing guest acquisition and frequency. Our supply chain strategy is mitigating volatility in food, which maintains brand partner returns on their investments and has them excited to open more Wingstop.

Michael J. Skipworth: We will continue to invest in building brand awareness and increasing guest acquisition and frequency.

Michael J. Skipworth: Our supply chain strategy is mitigating volatility and food costs, which maintains brand partner returns on their investments and have them excited to open more wingstop.

Michael J. Skipworth: And importantly, we continue to invest in our team, and I believe we have the best team in the industry that is motivated to achieve our vision of becoming a top 10 global restaurant brand. I want to thank the entire Wingstop team, all of our team members in the support center and in the restaurants, our supplier partners, and our brand partners for their dedication to serving the world's flavors. With that, I'd like to turn the call over to Alex.

And importantly, we continue to invest in our team and I believe we have the best team in the industry that is motivated to achieve our vision of becoming a top 10 global restaurant brand.

Michael J. Skipworth: Want to thank the entire Wingstop team all of our team members and the support center and in the restaurants, our supplier partners and our brand partners for their dedication to serving the world flavor.

Michael J. Skipworth: With that I'd like to turn the call over to Alex.

Alex Kaleida: Thank you, Michael. 2023 was a standout year on all accounts for Wingstop, whether it's our unit growth or AUV expansion. Brand Health Metrics Operations or Financial Performance, We hit our 20th consecutive year of same-source sales growth with an 18.3% comp for 2023. That was driven primarily by a double-digit increase in transactions. We opened 255 net new units and generated adjusted EBITDA of $146.5 million. Before I dive into quarterly results in our 2024 Outlook, I want to remind everyone fiscal year 2022 included a 53rd week, so the fourth quarter in 2022 includes 14 weeks as compared to 13 weeks in the current year. Therefore, year-over-year results are not strictly comparable unless specifically identified.

Alex Collider: Thank you Michael.

Alex Collider: 2023 was a standout year on all accounts for Wingstop, whether it's our unit growth easy expansion brand health metrics operations or financial performance.

Alex Collider: We hit our 20th consecutive year of same store sales growth with an 18, 3% comp for 2023 that was driven primarily by a double digit increase in transactions.

Alex Collider: We opened 255 net new units and generated adjusted EBITDA of 146, and a half million dollars.

Alex Collider: Before I dive into quarterly results in our 'twenty 'twenty four outlook I want to remind everyone fiscal year 2022 included a 50 <unk> week. So the fourth quarter. In 2022 includes 14 weeks as compared to 13 weeks in the current year.

Alex Collider: Therefore year over year results are not strictly comparable unless specifically identified.

Alex Kaleida: Please review our earnings release for the impact of the 53rd week in 2022. Our growth in system-wide sales during the fourth quarter was 24.5% versus the prior year. Royalty revenues, franchise fees, and other revenue increased by $10.6 million in the fourth quarter due to domestic same-source sales growth of 21.2%, primarily driven by transaction growth, and 249 net franchise openings since the prior year comparable period, offset by an estimated $3 million of additional revenue associated with the 53rd week in fiscal year 2022. Company-owned restaurant sales increased by $3.8 million in Q4, due to a 10.8% increase in same-source Cost of sales, a percentage of company-owned restaurant sales, decreased by 130 basis points in Q4 compared to the prior year, primarily driven by sales leverage on labor and operating expenses.

Alex Collider: Please review our earnings release for the impact of the 50 <unk> week in 2022.

Alex Collider: Our growth in system wide sales during the fourth quarter was 24, 5% versus the prior year royalty.

Alex Collider: Royalty revenues franchise fees and other revenue increased by $10.6 million in the fourth quarter due to domestic same store sales growth of 21.2%, primarily driven by transaction growth and 249 net franchise openings since the prior year comparable period.

Alex Collider: Offset by an estimated $3 million of additional revenue associated with the 50 <unk> week in fiscal year 'twenty to 'twenty two.

Alex Collider: Company owned restaurant sales increased by $3 $8 million in Q4 due to a 10, 8% increase in same store sales, primarily driven by transaction growth.

Alex Collider: Six net new restaurants versus the prior year comparable period.

Alex Collider: And offset by $1.5 million of additional sales from the 53rd week.

Alex Collider: Cost of sales as a percentage of company owned restaurant sales decreased by 130 basis points in Q4 compared to the prior year, primarily driven by sales leverage on labor and operating expenses.

Alex Kaleida: Our supply chain strategy to mitigate the volatility and bone and wing costs is yielding the results we anticipated. The progress we have made is carrying into 2024, and for modeling purposes, we anticipate company-owned restaurant food costs to be approximately 35%.

Alex Collider: Our supply chain strategy to mitigate the volatility in bone in wing costs is yielding the results we anticipated.

Alex Collider: The progress we have made is carrying into 2024 and for modeling purposes, We anticipate company owned restaurants food costs to be approximately 35%.

Alex Kaleida: Additionally, our boneless mix for the system reached a new high of 47% in Q4, which helps advance our whole bird strategy. This underscores our progress in our supply chain strategy, and with a predictable food cost, this will further strengthen our best-in-class unit economy. Q4 SG&A increased by $9.7 million versus the comparable prior year period to a total of $28.1 million.

Alex Collider: Additionally, our boneless mix for the system reached a new high of 47% in Q4, which helps advance our whole bird strategy.

Alex Collider: This underscores our progress in our supply chain strategy and with a predictable food costs. This will further strengthen our best in class unit economics.

Alex Collider: Q4, SG&A increased by $9.7 million versus the comparable prior year period to a total of $28 $1 million.

Alex Kaleida: It was driven by an increase in professional fees of $2.9 million associated with the company's strategic initiatives, an increase in short-term and long-term incentive-based compensation of $2.7 million as a result of the company's performance, and a $1.7 million increase in headcount-related investment. Additionally, Q4 lapped the prior year benefit of $1.3 million in stock forfeitures, offset by an approximately $1 million impact from the 53rd week. Adjusted EBITDA, a non-GAAP measure, was $39.1 million in the quarter, an increase of 13% versus the prior year on a reported basis.

Alex Collider: Driven by an increase in professional fees of $2 $9 million associated with the company's strategic initiatives and increase in short term and long term incentive based compensation of $2 $7 million as a result of the Companys performance and a $1.7 million increase in head count related investments.

Alex Collider: Additionally, Q4 lap the prior year benefit of $1.3 million and stock forfeitures offset by an approximately $1 million impact from the 50 <unk> week.

Alex Collider: Adjusted EBITDA, a non-GAAP measure was $39 $1 million in the quarter, an increase of 13% versus the prior year on a reported basis.

Alex Kaleida: When excluding the estimated $2.6 million impact associated with the 53rd week in 2022, adjusted EBITDA growth was 22.6% versus the comparable period last year. And to put this in context, this growth is on top of the fourth quarter that grew Adjusted EBITDA by 58% in 2022. We delivered adjusted earnings per diluted share, a non-gap measure of $0.64, a 6.7% increase versus the prior year and 14% growth versus the prior year when excluding the estimated $0.04 impact associated with the 53rd week.

Alex Collider: When excluding the estimated $2 $6 million impact associated with the 50 <unk> week in 2022, adjusted EBITDA growth was 22, 6% versus the comparable period prior year.

Alex Collider: And to put this in context. This growth is on top of the fourth quarter that grew adjusted EBITDA by 58% in 2022.

Alex Collider: We delivered adjusted earnings per diluted share a non-GAAP measure of 64 cents is six 7% increase versus the prior year.

Alex Collider: And 14% growth versus prior year, when excluding the estimated four cent impact associated with the 50 <unk> week.

Alex Kaleida: Our highly franchised asset light model continues to generate strong free cash flows that position us to support strategic initiatives while maximizing shareholder return. In 2023, we announced our inaugural share repurchase program authorized at $250 million. To demonstrate our commitment, in August, we launched a $125 million accelerated share repurchase program that concluded on December 21st. In connection with our ASR program, we repurchased a total of 645,952 shares of common stock at an average price of $193.51. Additionally, our regular dividend program is targeted at 40% of free cash flow. Our board of directors authorized our next quarterly dividend of 22 cents per share, which will be paid on March 29th to shareholders of record as of March.

Alex Collider: Our highly franchised asset light model continues to generate strong free cash flows that position us to support strategic initiatives, while maximizing shareholder returns.

Alex Collider: In 2023, we announced our inaugural share repurchase program authorized a $250 million.

Alex Collider: To demonstrate our commitment in August we launched a $125 million accelerated share repurchase program that concluded on December 21st.

Alex Collider: In connection with our ASR program, we repurchased a total of 645952 shares of common stock.

Alex Collider: At an average price of $193.51.

Alex Collider: Additionally, our regular dividend program is targeted at 40% of free cash flow.

Alex Collider: Our board of directors authorized our next quarterly dividend of 22 cents per share.

Alex Collider: Which will be paid on March 29 to shareholders of record as of March eight.

Alex Kaleida: Our balance sheet is in a position of strength that will continue to enable investments in our strategies to maximize shareholder return. Now, turning to our outlook for 2024. As you heard from us today, we believe our strategies can deliver another industry-leading year. Consistent with our three to five-year targets, we are guiding for mid-single-digit domestic same-source sales growth. And we anticipate approximately 270 net new restaurants worldwide, which represents a growth rate of 12%. SG&A guidance is estimated to be approximately $108 million, including an estimated $19 million of stock-based compensation expense.

Alex Collider: Our balance sheet is in a position of strength that will continue to enable investments in our strategies to maximize shareholder returns.

Alex Collider: Now turning to our outlook for 2024.

Alex Collider: As you heard from US today, we believe our strategies can deliver another industry leading year.

Alex Collider: Consistent with our three to five year targets, we are guiding to a mid single digit domestic same store sales growth.

Alex Collider: And we anticipate approximately 270 global net new restaurants, which represents a growth rate of 12%.

Alex Collider: SG&A guidance is estimated to be approximately $108 million, including an estimated $19 million of stock based compensation expense.

Alex Collider: By utilizing these inputs adjusted EBITDA growth translate to approximately 15% in 2024.

Operator: Adjusted EBITDA growth will translate to approximately 15% in 2024. I'd like to thank the incredible team members at our support center and in the restaurants, our supplier partners, and brand partners that have helped us deliver another record year. We are truly fortunate to have such talent throughout Wingstop, and their dedication and commitment gives us confidence in achieving our vision of becoming a top 10 global restaurant brand. With that, I'd like to now turn to Q&A. Operator, please open the line for questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key.

Alex Collider: I'd like to thank the incredible team members at our support center and in the restaurants, our supplier partners and brand partners that have helped us deliver another record year.

Alex Collider: We are truly fortunate to have such talent throughout wingstop and their dedication and commitment gives us the confidence in achieving our vision of becoming a top 10 global restaurant brand.

Speaker Change: With that I'd like to now turn to Q&A operator, Please open the line for questions.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Michael J. Skipworth: To withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up. If you have further questions, you may re-enter the question. Our first question today comes from David Tarantino with Baird. Please go ahead. Hi, good morning, and congratulations on 2023. My question is about the outlook for 2024 and specifically the same store sales outlook of mid-single-digit. I was wondering, Michael, if you could kind of frame up your thoughts on that range relative to the type of momentum that you've been delivering recently and specifically talk about your confidence in being able to drive traffic growth again this year, especially as you think about the tough comparisons exiting the year. Good morning.

Speaker Change: Please limit yourself to one question and one follow up if you have further questions you may reenter the question queue.

Speaker Change: Our first question today comes from David Tarantino with Baird. Please go ahead.

David E. Tarantino: Hi, good morning, and congratulations on a great 2023.

David E. Tarantino: My question is about the the outlook for 2024, and specifically the same store sales outlook of mid single digits.

David E. Tarantino: I'm wondering Michael if you could kind of frame up your thoughts on on that range relative to the type of momentum that you've been delivering recently.

David E. Tarantino: And and specifically talk about whether kind of your confidence in being able to drive traffic growth again. This year is especially as you think about the tough comparisons exiting the year. Thanks.

Michael J. Skipworth: Good morning, David. Thank you for the question. We're really excited and very pleased with the results we delivered in 2023. And I think not only was it an incredible year delivering plus 18% same-source sales growth that was primarily driven by transactions, but that was against an industry backdrop that, for the most part, was measuring declines in transactions. And so I think it really solidified the category one positioning for Wingstop.

Michael J. Skipworth: Good morning, Good morning, David and thank you for the question.

Michael J. Skipworth: The.

We're really excited and very pleased with the results. We delivered in 2023 and I think not only you know it was an incredible year delivering a plus 18% same store sales growth that was primarily driven by transactions, but that was against an industry backdrop that for the most part was measuring.

Michael J. Skipworth: Declines in transactions and so I think it really solidified the category one positioning for for Wingstop.

Michael J. Skipworth: We are excited about the momentum we saw build throughout 2023, as well as into Q4 itself, and we're encouraged by the progress we're making against the strategies that we're executing. We highlighted it in our prepared remarks, but Q4 was our highest acquisition period of new guests and something we're pretty proud of that really showcases the strength of the strategies that we're executing against. And so we're confident in our ability to continue to drive the business and advance our growth strategies towards our goal of exceeding AUVs of north of $2 million. That said, you know, we know that we're growing on top of a record year but yet have confidence in our ability to deliver on our three to five year outlook. When we compare that on a two-year basis, we know that's remarkably strong compared to the industry and something we're pretty proud of. Thank you. The next question is from Jeffrey Bernstein with Barclays. Please go ahead.

Michael J. Skipworth: We are excited about the momentum we saw build throughout 2023 as well as into the Q4 itself.

Michael J. Skipworth: And we're encouraged by the progress we're making against the strategies that we're executing we highlighted it in our prepared remarks, but Q4.

Michael J. Skipworth: It was our highest acquisition a period of new guests.

Michael J. Skipworth: And something we're pretty proud of that really showcases the strength of the strategies that we're executing against and so we're confident in our ability to continue to drive the business and advance our growth strategies towards our goal of exceeding <unk> of north of $2 million that said you know we know that.

Michael J. Skipworth: Where we're growing on top of a record year, but yet have confidence in our ability to deliver on our three to five year outlook. When when do we when we compare that on a two year basis, we know that's remarkably strong compared to the industry and something we're pretty proud of.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: The next question is from Jeffrey Bernstein with Barclays. Please go ahead.

Michael J. Skipworth: Great. Thank you very much. Question on the unit growth side of things as we look to 24. If you look back to 23, you provided initial guidance for 240 global openings. I think we ultimately did 255.

Jeffrey A. Bernstein: Great. Thank you very much.

A question on the unit growth side of things as we look to 'twenty four.

Jeffrey A. Bernstein: If you look back to 'twenty three you provided initial guidance for 240 global openings. Thank you.

Jeffrey A. Bernstein: When we get to 55.

Michael J. Skipworth: If you flash forward to today, you provided initial guidance for 270. I was wondering if you could talk about the pipeline as we try and gauge your confidence in these openings, which equates to 12% growth. But just your thoughts on where that growth comes from, I guess, U.S. versus international. And whether we should really care so much, whether it comes from the U.S. or international, if you think about the AUVs and the royalties coming from each, just trying to gauge whether a... You're indifferent to where that growth comes from and the potential upside there. And then I have one follow-up. Hey, Jeff, good morning.

Jeffrey A. Bernstein: Forward to today, we provided initial guidance to 270 <unk> wondering if you could talk about the pipeline as we try and gauge your confidence in these openings.

Jeffrey A. Bernstein: K, 12% gross.

Jeffrey A. Bernstein: But just your thoughts on where that comes from I guess U S versus international.

Jeffrey A. Bernstein: And whether we should really.

Jeffrey A. Bernstein: Care, so much whether it comes from U S or international if you think about the <unk> and the royalties coming from each.

Jeffrey A. Bernstein: Trying to gauge whether.

Jeffrey A. Bernstein: You're indifferent where that growth comes from and the potential upside there and then I had one follow up.

Jeffrey A. Bernstein: Hey, Jeff Good morning, and thank you for the question we're.

Michael J. Skipworth: And thank you for the question. We're really proud of the development number we were able to deliver in 2023, a record year 255 net. Obviously, when we guided at the beginning of the year, it was based on the visibility we had in the pipeline at that time. But I think it really speaks to the excitement with our brand partner community that wants to grow with Wingstop in those 255 net new restaurants. Over 95% of those openings were existing brand partners reinvesting in Wingstop, which really is a testament to the strength of the unit economics, the progress we've made in scaling AUVs combined with the progress against our supply chain strategy is translating to truly industry-leading returns for our brand partners, a less than two-year payback on average. And so I think that really showed up in our development agreements that we cited in our prepared remarks, That reflects when you count the restaurants that we opened compared to where we started the year. That reflects almost 600 new commitments.

Jeff: We're really proud of the of the development number we were able to deliver in 'twenty two 'twenty three a record year of 255 net obviously when we guided at the beginning of the year. It was based on the visibility we had in the pipeline.

Jeff: At that time, but I think it really speaks to the excitement with our brand partner community that want to grow with Wingstop in that 255, net new restaurants over 95% of those openings were existing brand partners reinvesting in Wingstop, which really is a testament to the strength of.

Jeff: The unit economics, the progress we've made and scaling au vs combined with the progress against our supply chain strategy is translating to truly industry, leading returns for our brand partners are less than two year payback on average and so I think that really showed up in our in our development agreements that we cited in our prepared remarks.

Jeff: Mark's approximately 1400 commitments at the end of 2023 that reflects when you count the restaurants that we opened compared to where we started the year that reflects almost 600, new commitments. Our brand partners are signing up for more so our guide this year, it's a guess again above our long.

Michael J. Skipworth: Brand partners are signing up for more. So our guide this year is again above our long-term target of 10% plus, something we're confident in as we sit here today. And as the pipeline takes shape throughout the year, obviously, we'll provide any updates that we can, but we're pretty excited about being able to sit here today with confidence from the level of demand we have from our existing brand partners to grow with us in our initial guide of 270, roughly 270 restaurants in 2024. And just that mix you're thinking of for the U.S. and international in 24. Yeah, I think you should expect to see a pretty similar mix to what we saw in 2023 as far as how that 270 estimate for 2024 breaks out.

Jeff: Term target of 10% plus something we're confident as we sit here today and as the pipeline take shape throughout the year. Obviously, we will provide any updates that we can but we're pretty excited about being able to sit here today with confidence from the level of demand we have from our existing brand partners to grow with us and our initial guide.

Jeff: 270, roughly 270 restaurants in 2024.

Speaker Change: Got it and just that mix, you're thinking of the U S and international and 24.

Speaker Change: Yeah, I think you should expect to see a pretty similar mix as what we saw in 2023 as far as how how that 270.

Speaker Change: <unk> for 'twenty 'twenty four breaks out.

Alex Kaleida: My follow-up was just on the balance sheet. I think last quarter you talked about being at four turns-ish, so just trying to get an update on the fourth quarter. But either way, well below the six to seven times target you've historically talked about. And I know in recent quarters you mentioned the board wanted to retain flexibility on the balance sheet to quote-unquote navigate uncertainty ahead. I was wondering whether that's still the current thinking or whether we should expect a return to some more aggressive leverage levels as we think about 2024. Thank you. Hey Jeff, this is Alex.

Speaker Change: Got it and my follow up was just on the balance sheet.

Speaker Change: I think last quarter you talked about.

Speaker Change: Four turn ish it was trying to get an update on the fourth quarter, but.

Speaker Change: The way well below the six to seven times target, you've historically talked about.

Speaker Change: I know in recent quarters.

Speaker Change: And the board want to retain flexibility on the balance sheet to quote unquote navigate uncertainty ahead, which just wondering whether that's still the current thinking or whether we should expect a return to a more aggressive leverage levels do you think about 2024. Thank you.

Speaker Change: Hey, Geoff this is Alex good morning.

Alex Kaleida: Good morning. Yeah, I think you pointed out a position of strength for us with our balance sheet. And we took a position, if you'll recall, a couple years ago in our last recapitalization to build cash ahead of this elevated interest rate environment, and that has, in turn, given us the flexibility to invest behind our strategies, which include our first share repurchase authorization of $250 million in 2023. And I think if you trace back to what was different for us a few years ago, we're generating cash flow at 2x the rate of where we were, which has given us that fuel to continue to invest without the need to necessarily take up leverage. That being said, we are comfortable at historical leverage levels. And I think it'll be predicated upon the opportunity we see to maximize shareholder return. Thank you. The next question is from Andrew Charles with TD Cowen. Please go ahead.

Alex Collider: Yeah, I think you pointed out a position of strength for us with our balance sheet and we took a position if you'll recall a couple of years ago and our last recapitalization to build cash ahead of this elevated interest rate environment and.

Alex Collider: And that is in turn giving us the flexibility to invest behind our strategies, which include our first share repurchase authorization of $250 million in 2023.

Alex Collider: If you if you trace back to what's different for US a few years ago, we're generating cash flow of two extra rate of where we were which has given us that fuel to continue to invest without the need to necessarily take up.

Alex Collider: That being said we are comfortable at historical leverage levels, and I think it'll be predicated upon.

Alex Collider: The opportunity, we see to maximize shareholder returns.

Alex Collider: Okay.

The next question is from Andrew Charles with TD Cowen. Please go ahead.

Michael J. Skipworth: Great, thanks. Michael, can you walk us through a preview of the My Wingstop tech stack launch on April 1? You know, I'm curious, what will guests see change? And really, the question is, what is the key to this initiative to help drive ticket sales and traffic? And then Alex, this is a related follow-up, please help us walk through modeling the tech fee of 0.3% of sales that begins at the end of March. You know, what should that benefit from a sales perspective? And where's the cost of the expense that you'll be netting that out? Hey Andrew, good morning.

Andrew Charles: Great. Thanks, Michael.

Andrew Charles: Michael can you walk us through a preview of the my Wingstop Tech stack launch on April 1st you know I'm curious what guests C change and really the question is what is the key with this initiative to help drive ticket and traffic and then Alex just as a related follow up please help us walk through model to protect the 0.3% of sales that begins at the end of March.

Alex Collider: What should that benefit from a sales perspective, and whereas the cost of the expense that you'll be a netting that out. Thanks.

Alex Collider: Hey, Andrew Good morning, we are really excited about my Wingstop, it's something we've been working on for the last few years, a big capital investment for Us and it's it's our our investment that we've made in building our.

Michael J. Skipworth: We are really excited about Wingstop. It's something we've been working on for the last few years, a big capital investment for us. And it's our investment that we've made in building our own eCommerce and digital experience that's customized specifically for Wingstop's business. And we built that in a very modern architecture or modern, modern technology stack that allows us to focus on investing in the strategic component parts and then, where it makes sense, leveraging third parties and other elements of the tech stack. But with my Wingstop, our pilot is going great.

Andrew Charles: Our own e-commerce, and digital experience, that's customized specifically for Wingstop business and we've built that in in a very modern.

Andrew Charles: Architecture of modern modern technology stack that allows us to focus on investing in the strategic component parts, and then where it makes sense leveraging third parties and other elements of the tech stack, but with my Wingstop. Our pilot is going great. We're on schedule. We're encouraged by the progress we've made and you're right.

Michael J. Skipworth: We're on schedule. We're encouraged by the progress we've made. And you're right, we're on track to roll this out, begin rolling this out system-wide in the beginning of April. And something we're really encouraged by is the ability that it's going to unlock for us as it relates to really leaning into that first-party data that we have and our ability to really create a hyper-personalized customer experience, customer journey, which we think, in turn, will impact conversion over time, will impact And those are things that we're in retention for. Those are things we're excited about. Obviously, there will be some elements of it that are consumer-facing, and they do see a different and a little bit more of an innovative and relevant customer ordering experience. But a majority of this works behind the scenes, building the infrastructure and technology behind that.

Andrew Charles: We're on track to roll this out begin rolling this out system wide beginning of April and something we're really encouraged by is the ability that it's going to unlock for us as it relates to really leaning into that first party data that we have and our ability to really create a hyper personalized customer.

Andrew Charles: Customer journey, which we think in turn will impact conversion over time will impact our frequency and and those are things that were in retention. Those are things we're excited about it.

Andrew Charles: We assume there will be some elements of it that are consumer facing and they do see a different and a little bit more of an innovative and relevant customer ordering experience, but a majority of this works behind the scenes building the infrastructure and technology behind that but where we're excited about that and this is just part of.

Michael J. Skipworth: But we're excited about that, and this is just part of the journey we're on to digitize every transaction. And we exited the fourth quarter at 67% of our digital mix. That's continuing to grow and something we're pretty proud of in an industry backdrop where most folks are measuring declines in their digital business. And so we're encouraged by the progress we continue to make there. And then I'll let Alex jump into the second part of your question.

All of our our journey, we're on to Digitize every transaction and we exited the fourth quarter at 67% digital mix that's continuing.

Andrew Charles: Continuing to grow and something we're pretty proud of them in an industry backdrop that most folks are measure and declines in our digital business and so we're encouraged by the progress we continue to make there and then I'll, let Alex jump into the second part of your question.

Alex Kaleida: Yeah, and Andrew, to address your question on the technology fee, at the start of the quarter coinciding with the launch, our advertising fund contribution rate will move from 5% of sales to 5.3%, and the intent of this fee is to cover ongoing operating expenses associated with the maintenance of our MyWingstop platform. And it will look very, it will be consolidated in our advertising revenue and expense line so that it's neutral to RP&L, similar to what you see today. And ultimately, we view, to Michael's point on what the opportunity is, we view, you know, my Wingstop as this opportunity to enhance profitability for the restaurants and the unit economics. Thank you. The next question is from Joshua Long with Stevens. Please go ahead.

Alex Collider: Yeah, and Andrew to address your question on the technology fee at the start of the quarter coinciding with the launch our advertising fund contribution rate will move from 5% of sales of five 3% and the incentive this fee is to cover ongoing operating expenses associated the main source of our or my wing Som platform.

Alex Collider: And it all looks very it'll be consolidated in our advertising.

Alex Collider: Revenue and expense line. So that's neutral to our P&L are similar to what you see today.

Alex Collider: And ultimately we view.

Alex Collider: To Michael's point on what the opportunity is we view you know my Wingstop is this opportunity to enhance profitability for the restaurants and the unit economics.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: The next question is from Joshua long with Stephens. Please go ahead.

Michael J. Skipworth: Great, thank you for taking my question. I was curious if you could talk a little bit about the ad fund. When we think about this always-on premium approach to advertising, it clearly seems to be working. But then also, as I look at the dollars, compared to the last several years, those have grown meaningfully. Can you talk a little bit about how this is performing versus your expectations? And, you know, where we might expect to see the brand lean into some of that brand awareness activity that you mentioned being a key driver of Salesforce sales going forward? And then I'll have a follow up. Hey, Josh, good morning.

Joshua C. Long: Great. Thank you for taking my question I was curious if you could talk a little bit about the AD fund and when we think about this always on premium approach to advertising. It clearly seems to be working but then also as I look at the dollars compared to last several years those have grown meaningfully can you talk a little bit about how this is performing versus your expectations and where you could where we might.

Speaker Change: Expect to see the brand lean into.

Speaker Change: Some of that brand awareness activities, you mentioned being a key driver of same store sales going forward, but then also had a follow up.

Speaker Change: Hey, Josh Good morning. Thank you for the question I think you said it well we really believe our our strategy is working this is a strategy. We deployed a couple of years ago, when we really leaned into live sports and our hypothesis at the time is that's where the eyeballs would be in and we think that's really.

Michael J. Skipworth: Thank you for the question. I think you said it well. We really believe our strategy is working. This is a strategy we deployed a couple years ago where we really leaned into live sports. And our hypothesis at the time was that's where the eyeballs would be.

Michael J. Skipworth: And, we think that's really shown up and demonstrated itself. And obviously, when you combine that with, as you pointed out, a meaningful increase in our ad dollars that we're able to deploy. If you look at just 2023 alone, system-wide sales growth of almost 30% translates to an equal increase in the amount of ad dollars we have to invest. And we think that, combined with the new creative that we deployed back in late Q3, is something we're pretty excited about and the results that we're seeing there.

Speaker Change: Sean up and demonstrated itself and obviously when you combine that with as you pointed out meaningful increase in our AD dollars that we're able to deploy if you look at just 2023 alone system wide sales growth of almost 30% translates to an equal increase in the amount of AD dollars. We have to go invest in we think.

Speaker Change: That combined with the new creative that we deployed back in late Q3 is a is something where we're pretty excited about and the results that we're seeing there. So I think as far as what to expect from US I think you can expect us to lean into our strategy that we believe is working and why.

Michael J. Skipworth: So, I think as far as what to expect from us, I think you can expect us to lean into a strategy that we believe is working. And while we're seeing incredible results, obviously showing up in same store sales growth, in Q4 in particular, over 21% same store sales growth, and the majority of that being transaction-driven, we think it's, it's, it's working. And even with those results, Josh, you know, we're on only one or two spots again, as an example.

Speaker Change: We're seeing incredible results, obviously showing up in same store sales growth in Q4 in particular over 21% same store sales growth in the majority of that being transaction driven we think it's it's it's working and <unk>.

Speaker Change: Even with those results Josh you know, where we're on are only one or two spots again as an example, and so there's still a lot of opportunity for us to to continue to chip away at what we've described as a meaningful opportunity to close the gap to other national brands from a brand.

Michael J. Skipworth: And so there's still a lot of opportunity for us to continue to chip away at what we've described as a meaningful opportunity to close the gap with other national brands from a brand awareness perspective. And so the additional firepower in our ad fund with the effectiveness of our strategy is something we're going to continue to lean into and chip away at that. Thank you for that. That's very helpful.

Speaker Change: Awareness perspective, and so the additional firepower into our AD fund with the effectiveness of our strategy is something we're going to continue to lean into and chip away at that.

Speaker Change: Think of it that was very helpful. And then when we think about just the underlying driver or at least the key underlying driver of the strong results is getting to be the the folks the brand's focus on people and culture that something that you mentioned in your prepared comments could you talk a little bit about some of the investments that are happening in and around the organization to support that but then also I imagine Oh.

Michael J. Skipworth: And then when we think about just the underlying driver, or at least a key underlying driver of the strong results, it's going to be the focus, the brand's focus on people and culture. That's something that you mentioned in your prepared comments. Could you talk a little bit about some of the investments that are happening in and around the organization to support that, but then also, I imagine, also support the brand partners' continued appetite for unit growth? Thank you. Yeah, you said it well, the foundation of our strategy is our people, our culture, and that's something that we take very seriously. It starts with how we hire and onboard, and we really lean into and invest in organizational health, making sure that we're driving clarity throughout the entire organization.

Speaker Change: Support the brand partners continued appetite for unit growth. Thank you.

Speaker Change: Yeah, you said it well the foundation of our strategy is as our people our culture and that's something that we take very seriously it starts with with how we hire with how we onboard.

Speaker Change: And we really lean into and invest in organizational health.

Speaker Change: Sure that we're driving clarity throughout the throughout the organization and I think the results. We delivered in 2023 are the best Testament of the clarity that we're driving in the organization. We were able to open 115, net new restaurants in the fourth quarter, which represents over one restaurant a day.

Michael J. Skipworth: And I think the results we delivered in 2023 are the best testament to the clarity that we're driving in the organization. We were able to open 115 net new restaurants in the fourth quarter, which represents over one restaurant a day. And obviously, that's supported by the top line growth that we were able to deliver. And I think the success we're seeing in the business is really a demonstration of the healthyness of the culture and the team that we have here at Wingstop. Thank you. The next question is from Sara Senatore with Bank of America. Please go ahead.

Speaker Change: Obviously that supported with topline growth that we were able to deliver and I think the success. We're seeing in the business is really a demonstration of the healthiness of the culture and the team that we have here at Wingstop.

Speaker Change: Thank you.

Speaker Change: The next question is from Sara Senatore with Bank of America. Please go ahead.

Michael J. Skipworth: Great, thank you very much. I just wanted to ask about the food cost, please. So you talked about how you have restaurants where the boneless mix is above 50%, and you're seeing low-30s food costs. But I think you said your system is at 47%, so really close to that. And you're guiding to kind of the mid-30s. So I'm just trying to understand, is this sort of a step change or a continuous kind of function?

Sara Harkavy Senatore: Great. Thank you very much I just wanted to ask about the food costs clean. So he talked about how you have restaurants, where the boneless snacks and about 50% and you're seeing lower 30 cost that English and you said your system is that 47%, so really close to that and you're guiding to kind of mid thirties.

Sara Harkavy Senatore: Just trying to understand is that sort of that.

Sara Harkavy Senatore: That change or continuous kind of function and you know if any of this.

Michael J. Skipworth: And, you know, is any of this, the fact that you're guiding to the mid-30s, any of it have to do with sort of the value proposition you're trying to communicate? Just as I think about, you know, where commodity costs are going and the absence of a real significant price. Yeah, no, I'll jump in, and Alex can add to this.

Sara Harkavy Senatore: Fact that you're guiding to that mid thirties, and even have to do with sort of the value proposition you're trying to communicate just as I think about you know where commodity costs are going and the the asking price.

Sara Harkavy Senatore: Looking at the corn price.

Speaker Change: Yeah, No I'll I'll I'll jump in and then Alex can add to this but our our outlook for 2024 on food cost in the mid Thirty's is really specific to our company owned restaurants, which are actually below the system average from a boneless perspective, and so I think you could interpret that.

Michael J. Skipworth: But our outlook for 2024 on food costs in the mid-30s is really specific to our company-owned restaurants, which are actually below the system average from a boneless perspective. And so I think you could interpret that to mean the system would be a little bit lower than those mid-30s on average. That said, I think it's demonstrating a very strong return for brand partners in that mid-30 target range. And, as we mentioned in our prepared remarks, an unlevered cash on cash return in excess of 70% is pretty incredible and something we're pretty proud of. But we are continuing to be very focused on what we believe is a proven strategy around how to think about value perceptions, particularly as it relates to pricing.

Speaker Change: That to me in the system would be at a little bit lower than those mid thirty's on average.

Alex Collider: That said I think it's it's demonstrating a very strong return for brand partners in that mid 30 target range and as we mentioned in our prepared remarks, an unlevered cash on cash return in excess of 70% is pretty incredible and something we're pretty proud of but we are continuing to be very.

Alex Collider: <unk> focused on what we believe is a proven strategy around how to think about value.

Alex Collider: Value perceptions, particularly as it relates to pricing and that we've demonstrated a very prudent and disciplined approach to pricing and that's something we're going to stay committed to and and and we acknowledged it in our prepared remarks, but we've measuring continued improvements in quality and value.

Michael J. Skipworth: And that we've demonstrated a very prudent and disciplined approach to pricing, and that's something we're going to stay committed to. And we acknowledged it in our prepared remarks, but we've measured continued improvements in quality and value in an environment where I think a lot of other brands have taken a lot of price and are measuring declines in value scores. And so we're going to be very protective of that.

In an environment, where I think a lot of other brands have taken a lot of price and are measuring declines in value scores and so we're gonna be very protective of that.

Alex Kaleida: And it's something we'll focus on as we continue to drive the business forward in 2024. Okay, and then just to follow up, I know you don't give prices, but as we think about your approach to pricing, you know, in the year ahead, again, to your point, you know, I think the industry is still probably a little bit above historical run rates and that kind of low single-digit increase. Should we be thinking about you as more, you know, closer to that very low single-digit price increase, you know, in consistent with closer Yeah, hi Sara. This is Alex.

Alex Collider: And it's something we'll focus on as we continue to drive the business forward in 2024.

Speaker Change: Okay, and then just a follow up I know you don't start getting pricing, but as we think about your approach to pricing in the year ahead again to your point I think the industry is still probably a little bit about historical run rates in that kind of low single digit should we be thinking about here is more closer to that very low single digit.

Speaker Change: Price increase.

Speaker Change: Consistent with closer to historical averages.

Speaker Change: Yeah, Hi, Sarah This is Alex Yeah, I think I would anticipate that we're going to.

Alex Kaleida: Yeah, I think I would anticipate that we're going to go back to our historical cadence that you saw last year of about one to 2% menu pricing to be opportunistic in markets. I will say that excludes California, where we'll take a little more price, a modestly higher price increase in relation to the FAST Act effective in April. But one to 2% is probably a good proxy for us this year. Thank you. The next question is from Brian Harbour with Morgan Stanley. Please go ahead.

Alex Collider: Go back to our historical cadence that you saw last year of about 1% to 2% menu pricing to be opportunistic in market and markets I will say that excludes California, where it will take a little more price or modestly higher price increase in relation to the fast act effective in April.

Alex Collider: But 1% to 2% is probably a good proxy for us this year.

Speaker Change: Thank you.

Speaker Change: The next question is from Brian Harper with Morgan Stanley. Please go ahead.

Michael J. Skipworth: Yes, thank you. Good morning. Could you maybe just talk about delivery? As you're still seeing digital mix go higher, was delivery the driver of that, or was it mobile ordering? And just, you know, have you done more advertising lately in the delivery channel? What are you seeing there? Brian.

Brian Harper: Yes. Thank you good morning could you maybe just talk about.

Brian Harper: Delivering what it is you're still seeing digital Mac, Mexico higher where you know it was delivery are the driver of that or was it mobile ordering and just.

Brian Harper: Have you done more advertising still lately in the delivery channel what are you seeing there.

Speaker Change: Hey, Brian Good morning, I would say from a from a sales mix perspective, our delivery channel mix was pretty consistent Q4 to Q3 as an example, but I just think that demonstrates enel.

Michael J. Skipworth: I would say from a sales mix perspective, our delivery channel mix was pretty consistent from Q4 to Q3, as an example. But I just think that demonstrates another unique element to our story in that this growth that we're seeing, it's not just one channel, it's not just delivery, we're actually seeing growth across every single channel that includes dine-in, it includes digital carryout, and it includes non-digital carryout as well. And so it's a really healthy approach to growth that we're seeing. And so I would guess that that, or I would point to the increase in digital. While we're seeing growth in our delivery channel from a mixed perspective, it stayed pretty consistent from quarter three to quarter. Okay, sounds good. Just to follow up that last question about California, would you expect your franchisees to adjust the pricing sort of system with what? Some of your peers have been talking about it, or do you have a sense for the magnitude?

Brian Harper: Another unique element to our story and that this growth that we're seeing it's not just one channel. It's not just delivery, we're actually seeing growth across every single channel that includes dine in it includes digital Carryout that includes non digital carryout as well and so it's a really healthy.

Brian Harper:

Brian Harper: <unk> to growth that we're seeing and and so I would guess that there are I would point to the increase in digital while we're seeing growth in our delivery channel from a mixed perspective, it stayed pretty consistent from quarter three to quarter four.

Speaker Change: Okay sounds good.

Speaker Change: Just to follow up that last question two in California would you expect your franchisees to adjust pricing sort of consistent with what.

Speaker Change: Some of your peers have been talking about or do you have a sense for the magnitude.

Michael J. Skipworth: Yeah, I would say, Brian, the work we've done is we would, you know, Alex referenced our historical approach to pricing is about one to two points of price a year. And when we look at the impact of this minimum wage increase within California, we're looking at somewhere around four to five points of price, so not much above our prior or our kind of historical cadence, but yet, I think below what you're hearing a lot of others reference. Yeah, and Brian, one difference for us is the streamlined operating model that we deploy and that lean roster size that's in our restaurants. We can run a shift at that system average of 1.8 million with about 14, So I think that lessons, you know, from the, Okay, great. Thank you. The next question is from Danilo Gargiulo with Bernstein. Please go ahead. Thank you.

Speaker Change: Yeah, Yeah, I would say Brian we've the work. We've done is we would you know Alex referenced our historical approach to pricing is about one to two points of price a year and when we look at the impact of this minimum wage increase within California.

Speaker Change: On average we're looking at somewhere around four to five points of price so not much above our our prior or our kind of our historical cadence, but yet I think below what youre hearing a lot of others reference.

Speaker Change: Yeah, and Brian one difference for US is the dis streamline operating model that we deploy in that that lean roster size. That's in our restaurants. You know we can run a shift at the system average of 1.8 million with about 14 members.

Speaker Change: What lessons you know some of the impact.

Okay, great. Thank you.

Speaker Change: The next question is from Daniel Oh, God Julio with Bernstein. Please go ahead.

Daniel Oh: Thank you.

Michael J. Skipworth: Um, I wonder if you can expand a bit on your comment about operating in a category of one, especially as we are seeing some large national chains entering the category. So can you maybe share whether you're seeing any impact so far on the stores that are located closest to these national players who are now offering, Yeah, no, I appreciate the question. And there are there's a few components to unpack here.

Speaker Change: I Wonder if you can expand a bit on your comment.

Daniel Oh: Operating in a category of one, especially you know as we are seeing some larger national chains entering into the economy. So can you maybe share whether you've seen any impact so far on the stores that are located closer to these national players who are now offering wings.

Speaker Change: Yeah No I appreciate the question and there's there's a few components to unpack here, but I would say you know just to answer directly your your comment about some other national brands promoting.

Michael J. Skipworth: But I would say, you know, just to answer directly your comment about some other national brands promoting wings. At this time, what we've seen historically is when other brands promote wings, it's actually a benefit to our business. In fact, you know, if consumers are aware of Wingstop, and someone makes wings top of mind, there's really not a decision tree. They go to Wingstop versus that other brand.

Speaker Change: Wings at this time, what we've seen historically is when other brands promote wings.

Speaker Change: It's actually a benefit to our business.

Speaker Change: In fact, you.

Speaker Change: You know if if consumers are aware of Wingstop and someone makes wings top of mind Theres really not a decision tree. They they go to wingstop versus that other brand and so historically, we've seen that as a tailwind to our business and so as we think about us operating in the category.

Michael J. Skipworth: And so, historically, we've seen that as a tailwind to our business. And so, as we think about us operating in a category of one, that's part of it. I also think building on top of that is the strength of our unit economics, our simple operating model. As we mentioned in our prepared remarks, our AUV is now above $1.8 million. We believe we have these multi-year drivers of our business that we're executing against that give us a line of sight to increasing AUVs above $2 million. And that's on an initial investment that, even today, is, on average, less than $500,000.

Speaker Change: We have one that's part of it.

Speaker Change: I also think building on top of that is the strength of our unit economics are simple operating model. We mentioned in our prepared remarks R. E. V is now above $1.8 million. We believe we have these multi year drivers of our business that we're executing against that give.

Speaker Change: US line of sight.

Speaker Change: Two increasing au vs above $2 million and that's on an initial investment that even today as is on average less than $500000 and so it at those type of unit economics. The brand partners are enjoying some pretty incredible returns and I think it really shows up in the numbers and that of the 255.

Michael J. Skipworth: And so at these types of unit economics, the brand partners are enjoying some pretty incredible returns. And I think it really shows up in the numbers, because of the 255 net new restaurants that we opened, over 95% of those were existing brand partners who reinvested because they see and they understand the return that they get. They see and understand that we are in a category of one.

Speaker Change: Net new restaurants that we opened over 95% of those were existing brand partners reinvesting.

Speaker Change: Because they see and they understand the return that they get they see and understand that we're in are in a category of one and so I think that speaks a lot to the results into to the to our positioning. So I think you know and there's other elements of our brand we talked about our oldest restaurant in the system that.

Michael J. Skipworth: And so I think that speaks a lot to the results and to our positioning. So I think, you know, and there's other elements of our brand. We talked about our oldest restaurant in the system, which is a company-owned restaurant, and it is comping positive after all these years, and it's increasing transactions. And if you stack up our vintages by year, it's a pretty linear chart.

Speaker Change: That is a company owned restaurant and it is comping positive after all these years and its increasing transactions in and if you stack up our vintages by year, It's a pretty linear chart. Our restaurants start strong we talked about our average unit volume.

Michael J. Skipworth: Our restaurants start strong. We talked about how our average unit volume for our 2022 vintage was $1.3 million. Restaurants come out of the gate strong, and then they comp from there. That 2022 vintage is comping very similarly to the rest of the system, growing transaction growth. And so that is all centered upon a very efficient model. Alex mentioned our labor profile, our footprint, on average, 1,700 square feet in line. We're not competing for the end cap.

Speaker Change: For our 2022 vintage was $1.3 million restaurants come out of the gate strong and then they comp from there that 2022 vintage is comping very similar to the rest of the system growing transaction growth and so that is all centered upon a very efficient model Alex mentioned, our labor profile.

Speaker Change: Our footprint on average 1700 square feet in line, we're not competing for in cap, 94% of our business is off premise, allowing us to operate a very efficient box and so I think the and then we mentioned the 67% digital mix and an industry, leading number for us and something that.

Michael J. Skipworth: 94% of our business is off-premise, allowing us to operate a very efficient box. And so I think that, and then we mentioned the 67% digital mix, an industry-leading number for us and something we believe we will continue to expand. So I think it's because of all those things that we believe that we are in a category of one.

Speaker Change: We believe we can continue to expand so I think it's because of all those things. We believe that we are in a category of one.

Michael J. Skipworth: Excellent. Thank you, Michael. And if I can follow up, please, on the very strong unit economics and the 1.8 million AUV. Can you help us understand the distribution of the AUV across your stores? In other words, if you see a difference in performance between, say, the top quintile of your stores and the bottom quintile of your stores, what's causing the delta? So how much more opportunity do you have to kind of uplift the kind of weaker stores into your system to enable the $2 million AUV? Yeah, there's really only one common denominator in that difference, and that is tenure.

Speaker Change: Excellent. Thank you Michael and if I can follow up please on the very strong unit economics, and the one 8 million on a UV can.

Speaker Change: You help us understand the distribution arm.

Speaker Change: V across your stores in other words, if you see a difference in performance between say the top quintile of your stores in the bottom pick title I'll give store, what's causing that they ask us so how much more opportunity do you have to kind of uplift.

Speaker Change: Kind of the point.

Speaker Change: Quote unquote weaker stores seem to your system to enable the 2 million dollar hazy.

Speaker Change: Yeah, there's there's really one common denominator in that difference and that is tenure the difference between the higher volume restaurants versus those that are maybe below that $2 million threshold is really just how many years of these 20 years.

Michael J. Skipworth: The difference between higher volume restaurants versus those that are maybe below that $2 million threshold is really just how many years of these 20 years of consecutive same-source sales growth those restaurants have participated in. I think a great market for me to highlight just to kind of showcase that is the Dallas-Fort Worth market, which is sitting at an AUV for the entire market that is above $2 million. And we have over 135 restaurants in that market today, and that market is growing double digits as well. And so I think it really speaks to the fact that the difference is really tenure, and the beautiful thing here is we haven't even found a ceiling. I referenced that first original Wingstop that is still comping, and so we haven't quite found that ceiling or maturity within our box either, but something we're pretty excited about.

Speaker Change: Consecutive same store sales growth those restaurants have participated in I think a great market for for me to highlight just to kind of showcase that is is the Dallas Fort worth market, which.

Speaker Change: As sitting that N V for the entire market that is above $2 million and we have over 135 restaurants in that market today and that market is comping double digits as well and so I think it really speaks to the fact that.

Speaker Change: The difference is really tenure and the and the beautiful thing here is we haven't even found a ceiling I referenced that at first original wingstop that it's still comping.

Speaker Change: And so we haven't quite found that silly, nor maturity within our within our box either and something we're pretty excited about and so we we have a lot of confidence in these these multi year strategies that we're executing against and our ability to continue to increase the system average from $1 8 million today to two above 2 million.

Michael J. Skipworth: And so we have a lot of confidence in these multi-year strategies that we're executing against and our ability to continue to increase the system average from $1.8 million today to above $2 million over time. Thank you. The next question is from Chris O'Call with Stiefel. Please go ahead. Yeah, thanks. Good morning, guys. You know, I realize the domestic development pipeline is quite strong, but with the continued improvements in unit economics, have you guys seen franchisees look to build ahead of their development commitments, or are there still obstacles to development that make it difficult to kind of pull forward that development? And then I had a follow-up. No, Chris, I think I think we're definitely seeing examples where brand partners are developing ahead of their schedule. And I know your question was was specific to to the US business. But what we're really excited

Speaker Change: Overtime.

Speaker Change: Thank you.

Speaker Change: The next question is from Chris O'connell with Stifel. Please go ahead.

Chris O'connell: Yeah. Thanks, good morning, guys.

I realize the domestic development pipeline pipeline is quite strong, but with the continued improvements in unit economics have you guys seen franchisees look to build ahead of their development commitments or are there still obstacles to development that make it difficult to kind of pull forward that development and then I had a follow up.

Speaker Change: No Chris I think I think we're definitely seeing examples where brand partners are developing ahead of their schedule and I know your question was specific to to the U S business, but what we're really excited about is we're actually seeing that.

Speaker Change: Manifests itself outside of the U S. Some of these new markets I highlighted Canada as an example, and then even.

Speaker Change: Another market, we opened in 2023, Puerto Rico, we have some of these international markets that are seen. These these strong results in the brand land really well seen our proven playbook show up and they're actually developing ahead of their schedule as well. So we're encouraged by the progress we're seeing outside of the U S as well.

Speaker Change: <unk>.

Speaker Change: But just as a follow up to that I was wondering if you could tell us which countries are showing the best unit economics in and which ones are showing kind of the best improvement in returns in and then you know maybe how that's playing out in terms of the.

Speaker Change: The pipeline and maybe the future pace of growth that we could expect in that international segment.

Speaker Change: Yeah, I think you've heard us Chris over time talk about the business in the U K and how the a visa there are well above.

Speaker Change: Our system average here in the U S and they're seeing very similar unit economics there.

Speaker Change: We are here in the U S and so I would say that is in it of itself our playbook, how that how we launched that market. How we started with a flagship and then built out from there additional points of access and expand the brand.

Speaker Change: Is is is our proven and demonstrated playbook and so we're actually those other markets that I referenced we're seeing very similar.

Speaker Change: <unk>, we're seeing them execute the same playbook and see very similar results and so we're really encouraged by the progress we're seeing in our international business and I've mentioned it before I mentioned it in my prepared remarks, we think this business is building some momentum and has supercharged for growth and we're really excited about it.

Speaker Change: Great. Thanks, guys.

Speaker Change: Your next question is from Jeff Farmer with Gordon Haskett. Please go ahead.

Jeff Farmer: Thank you question and a follow up as well so somewhat in line with your earlier 10 year comments.

Jeff Farmer: Has there been a notable impact on traffic trends in recent quarters from improved.

Jeff Farmer: Improved staffing reduce turnover levels, just better metrics as it relates to the labor force.

Jeff Farmer: Yeah, I mean, I know Alex highlighted the the efficiency of our model as it relates to the labor roster that were required and how efficient our boxes. You can you can run a wingstop with as few as for team members and so we haven't really seen a lot of issues around hiring but what I would.

Jeff Farmer: Say as we've been really focused on.

Jeff Farmer: Within the system or brand partners their team members in the restaurants on ensuring we operate with excellence and we've been measuring some record levels for the brand as it relates to guest satisfaction scores and I think that's translating into some of those improvements we talked about around quality and value and I think it all ladders up and support some of those <unk>.

Jeff Farmer: We're delivering on the top line.

Speaker Change: Okay, and then on a follow up record number of new guests I believe in both Q3 and Q4 so.

Speaker Change: As we sit here looking out to the the balance of 'twenty 'twenty four what are your thoughts on sort of continuing that guest acquisition momentum.

Speaker Change: Yeah. We think we think we're just scratching the surface a lot of these new guests that are coming in or are coming in through our through the chicken sandwich occasion, initially and we've we've referenced this number before there's $2 4 billion chicken sandwich occasions in the U S annually and so we think we're just scratching the surface there, but we're re.

Speaker Change: Really excited about that.

Speaker Change: These new guests that are coming in that we talked about this last quarter, but they look a little bit different than than are our core our traditional gas there a little bit higher income, they're less likely to have children at home, they're demonstrating a higher frequency coming back a little bit quicker after that initial visit.

Speaker Change: They're learning to navigate the rest of the menu and actually are over indexing to boneless again kind of helping to support and drive that boneless mix. They engage with us digitally and they are demonstrating a little bit higher average check and so we think you know not only is there a lot of runway in additional opportunity for us to bring these new guests.

Speaker Change: N and capture more occasions, but the broader impact they're having on our business around driving average check driving boneless mix or a couple of them and so we're really excited about.

Speaker Change: Okay. Thank you.

Speaker Change: The next question is from Andy Barish with Jefferies. Please go ahead.

Andy Barish: He goes.

Andy Barish: Circling back on some of the international stuff and then a quick follow up.

Andy Barish: You're still obviously don't have all the you know the arrows in the quiver that you've been implementing so successfully in the U S. So is some of these results you know, especially comps you know kind of tracking similar to the incredible numbers in the U S.

Andy Barish: A little bit ahead of what you would've thought you know just give us a little bit more background there.

Speaker Change: Good morning, Andy the South side, they are tracking their executing our playbook and the international markets and we're seeing the same source sales that's consistent with what we're reporting for domestic and again in the international markets as well that is primarily driven by transaction growth.

Speaker Change: Okay.

Speaker Change: Okay and then just.

Speaker Change: Just quickly following up on the.

Speaker Change: You know on the food cost guide in understanding the company side.

Speaker Change: You know.

Speaker Change: Are you guys kind of where you want to be you know for supply chain for the time being I mean, well.

Speaker Change: Recall, a couple of years ago. There were some discussions about you know quote owning supply chain or stuff like that.

Speaker Change: You kind of added size and scale now where you've locked in you know we're kind of comfortable.

Speaker Change: With where you are at least in the near term.

Speaker Change: We're obviously, Andy very excited about the position we're in today something that.

Speaker Change: That is as it is the first for us being able to to have confidence and visibility into what to expect from a food cost perspective for the next year.

Speaker Change: But we're we're definitely not finished we remain committed to our supply chain strategy, which the progress and the results. We're seeing today are one component of that just simply how we structure, our purchase agreements and moving more and more of that by away from the.

Speaker Change: The week to week fluctuations in the spot market, but yet we remain committed to additional components of that strategy, which could include some level of co investment could include a joint venture or could ultimately include some amount of of taking control of an entire complex and vertically.

Integrated in and so I think that all remains at play and I think it's all part of the longer term strategy, but yet what gives us confidence in that we're able to.

Speaker Change: Minimize the volatility that our brand partners seeing food costs and focus on opening more restaurants.

Speaker Change: Thank you very helpful.

Speaker Change: The next question is from Jon Tower with Citigroup. Please go ahead.

Jon Tower: Great. Thanks, just a few for me the I'm curious if you could give some update on the AI voice ordering test that you guys had a few markets, especially in your efforts to kind of get the digital sales mix kind of up to 100% aspirational over time.

Jon Tower: Yeah, John we're happy with what we're seeing in the tests you know these large language models continued to progress you know and we're enhancing that ordering experience and I think.

Jon Tower: It's a good example of investments of our opportunities and our best in class digital platform and something that can help us achieve our aspirational goal of digitizing every transaction. So we view it as a another lever for us on our path to a $2 million to avs scaling beyond $2 million.

Speaker Change: Okay. So how many stores is it in today.

Speaker Change: Oh, we haven't and about a little over 150 restaurants.

Speaker Change: Great and then just in terms of the Wingstop rollout can you I believe it's a domestic only launch can you talk about maybe the hurdles are or the reasons for not moving that into the international markets at this time.

Speaker Change: Yeah, I I think I think John there is there's a practical element and the investment that's needed to support the investments to do something like we've done here in the U S. You know I think our playbook in the U S that.

Speaker Change: Included a strategic partner like although that helped us scale, our business to to where it is today a digital business, that's north of $2 million.

Speaker Change: It is a good strategy and is the approach we are taking in these international markets initially and I think over time as they scale. We can we can find.

Speaker Change: We can evaluate whether or not it makes sense to make this kind of investment to scale that this this my wingstop digital digital business.

Speaker Change: That form outside of the U S, but I think you.

Speaker Change: You know the partnership we I referenced with although as one we are replicating in a couple of markets outside of the U S. Using them and then we continue to see opportunities to to leverage.

Speaker Change: Our partner like although and Alex referenced voice ordering we're leaning into although as a partner there to help with the integration elements around that and so we'll continue to find ways to.

Speaker Change: To drive our digital business and as Alex mentioned continued to expand it to our aspirational goal of over 100 to 100 per cent a fully digitized business.

Speaker Change: Great. Thanks, and then just the last one I know you've spoken in the past about your chicken tender business as being an opportunity to.

Speaker Change: As a platform or do you feel like there's real opportunity can you discuss where you think that is.

Speaker Change: The pipeline could we see something coming in 'twenty four.

Speaker Change: Yeah. John Today are you know chicken tenders is a good example of something that was very low awareness on our menu, but even our core core guests arent, even though we're at times that chicken tenders as our menu option. It mixes in the low single digit and so I think that is a good example of an opportunity for us within our our menu into.

Speaker Change: Nation to bring something new leveraging our flavor profiles to the guests and you know a lot of we believe a lot of chicken sandwich users are also our highest tender usage as well. So it is an opportunity for us to consider them as an up to continue to drive new guests into the brand.

Speaker Change: Thanks for taking my questions.

Speaker Change: Your next question is from Dennis Geiger with UBS. Please go ahead.

Dennis Geiger: Great. Thanks, guys.

Dennis Geiger: A bunch of initiatives that are clearly resonating reporting traffic and you've got some newer initiatives coming this year. So recognizing a lot of the sales momentum is about all of these levers that you've touched on working together, but just curious if you could kind of speak to how you think about some of the most impactful sales drivers for 'twenty four or maybe the drivers that you're most excited.

Dennis Geiger: About for this year and if that's at all different from from 'twenty to 'twenty three thank you.

Dennis Geiger: Yeah, I mean, I think for US. These these drivers were executing against whether it's expanding brand awareness, which we mentioned is still a meaningful opportunity even after the progress we've made in 2023.

Dennis Geiger: And the growth in our AD fund to be able to support us continuing to expand awareness delivery. We're at still that roughly 30% channel mix, we know much more mature.

Dennis Geiger: Heavy off premise brands enjoyed a delivery mix, that's north of 50%. So we've seen meaningful growth in that channel and we can kind of move along the chicken sandwich occasions through menu innovation I mentioned that we're just scratching the surface there.

Dennis Geiger: Talked about digital marketing and the deleveraging our database that we have the launch of my Wingstop. The investments, we're making in technology there to help US continue to drive our digital business. We think all of those have a lot of runway associated with them and we're kind of equally excited about all of them.

Dennis Geiger: Does each one of those have a multiyear impact and all support our overall target of exceeding au vs of north of $2 million from that $1.8 million level today.

Speaker Change: Great. Thanks, Michael one congrats.

Speaker Change: Thank you.

Speaker Change: This concludes our question and answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: Yeah.