Wingstop
At a time when fast-food chains offer high-end entrée salads and casual-dining restaurants are pushing to-go orders, Wingstop is proof-positive that staying focused on one thing can still lead to success.
By Toby Weber, Contributing Editor -- Foodservice Equipment & Supplies, 12/15/2005
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The fast-casual chain headquartered in the Dallas suburb of Garland, Texas, Wingstop sells Buffalo chicken wings and, by management's own proud proclamation, not much else.
According to Wingstop Chief Executive Officer Jim Flynn, about 80% of the company's sales are for chicken wings prepared in one of nine ways: hickory-smoked barbecue, atomic, Cajun, original hot, mild, lemon pepper, garlic Parmesan, Hawaiian and teriyaki.
A look at the chain's menu shows that it sells little more than wings. Wingstop offers side dishes of fresh-cut seasoned fries, coleslaw, potato salad and baked beans. Beer and other beverages, carrot and celery sticks, dinner rolls, various dipping sauces and recently introduced boneless wings complete what is an unabashedly simple menu.
This laser-like focus has led to great success. At the 2005 National Buffalo Wing Festival in Buffalo, N.Y., the chain was named the "Festival Favorite," took first place in the Best Creative Spicy Sauce category for its Cajun wings and second in the Traditional Extra-Hot Sauce category for its atomic wings.
Wingstop has employed this narrow focus since its founding by Antonio Swad in Dallas in 1994. Swad recognized that Buffalo chicken wings are in a different category than the offerings of restaurants like KFC or Popeyes, which sell meals for the individual and for families. But Buffalo chicken wings, by their very nature, are well-suited for groups of people and are perfect for events such as Super Bowl parties and similar gatherings.
The concept was enough of a success that Swad began franchising Wingstop units in the late 1990s and in 2003 he sold Wingstop to Boston-based Gemini Investments.
At that time, Flynn, who previously worked as president of the Popeyes and Church's chicken chains, was serving as a Wingstop board member. Asked to step in to lead the company on an interim basis, Flynn says he "got excited about the concept and we all agreed I would stay on."
That decision has paid dividends for both Flynn and Wingstop, which has reported impressive growth under his leadership. The chain is on track to post sales of between $100 million and $120 million in 2005, up from $90 million in 2004, according to Restaurants & Institutions' annual list of the top 400 chains. In addition, Flynn says, same-store sales are up by 5% this year following a 14% jump in 2004.
Wingstop typically situates its stores in lifestyle centers, each occupying between 1,200- and 1,600-square-feet in a space approximately 20-feet wide by 60-feet deep. In this relatively small space, among aviation memorabilia reminiscent of the 1950s, restaurants have enough room to seat about 30 patrons.
So few seats are needed, Flynn says, because approximately 80% of the chain's sales are take-out orders, and 48% of its total sales are called in over the phone, in keeping with the communal and event-oriented nature of Buffalo wings.
These statistics indicate that Wingstop's biggest competitors are not traditional fried-chicken chains, but rather pizza restaurants, says Chief Operating Officer Bill Knight. Because of this, the company will likely "tinker" with delivery service in the coming years.
Wingstop's locations post average sales of $600,000 on about 150 transactions per day. The chain boasts a healthy average check of $11, which again reflects that Buffalo wings are usually ordered for group consumption.
Wingstop's unit growth is on the rise, as well. The company anticipates opening between 70 and 80 stores this year, giving it a total year-end unit count of 285 to 295, and another 100 units in 2006. A vast majority of these locations are franchised operations.
Despite this rapid growth, the company employs a strict standard to how it goes to market with franchisees. According to Flynn, when Wingstop enters a new market, the company requires that multiple units begin operation at or around the same time. This can occur through a single operator running many locations or several operators starting one or two stores at a time. This strategy is necessary to leverage the advantages inherent in a chain of restaurants, he asserts.
"How many people in the United States know about Wingstop? Not that many, so when you go into a new market, you've got to find your marketing voice very quickly with a lot of stores," Flynn says. "Distribution is also hard. We've got a lot of proprietary sauces and wings that have to get to our stores, so you have to have some concentration of stores in order to make it work. We also want our franchise field consultant to go to a market and be able to spend some time there to help people."
Even with this restriction, the chain's franchising program is still going strong. All told, Flynn estimates that the company has licensed the rights to about 500 franchise units and is signing development deals as the rate of 10 to 15 per month.
Many factors make Wingstop such an appealing prospect to franchisees, most of which revolve around the chain's simple menu. That simplicity, Flynn says, means the concept is easy to grasp and manage for those with no prior foodservice experience. Going further, as a fast-casual chain with a small menu, units typically have low labor costs, with the standard store employing only about 10 people, Knight adds.
In addition, Wingstop's limited menu translates to a small, affordable kitchen. According to Knight, at roughly $60,000 for equipment, smallwares and furnishings (but not signage), the relatively low cost of opening a unit "is part of the appeal of the concept, of course."
The centerpiece of Wingstop's kitchens is a fryer bank consisting of three to four fryers, depending on unit volume — two 18-inch-wide units and one to two 14-inch-wide units. In these fryers staff cook chicken wings, boneless wings and fries.
The company recently upgraded its fryers to units with integral filtration that cost about $4,000 more than the models Wingstop previously relied on, which required staff to filter the oil manually. The extra cost initially did concern some franchisees, Knight says, but with positive word of mouth among operators, he anticipates that 98% of new fryers ordered by franchisees have this feature.
The other key piece of cooking equipment Wingstop employs is a four-burner gas range with a conventional oven underneath. In the oven staff warm dinner rolls, while on top they heat baked beans and boil potatoes for freshly made potato salad, which is prepared on a nearby worktable.
Next to the bank of fryers is a reach-in refrigerator that holds thawed chicken wings for use during high-volume periods. The company also employs a walk-in cooler where chicken wings, received on average of once a week, are stored along with produce items on separate shelves.
The third piece of refrigeration Wingstop uses is a reach-in freezer where units store their boneless wings.
A recent addition for Wingstop, the boneless wings have helped the company expand its customer base in many ways. First, as a daytime product, the company now has a more appealing menu for lunch, which is offered at about 200 locations, Knight says. Second, the product helps eliminate the veto vote when groups go out to eat.
"Among ladies and children, I think there's a turn-off sometimes to getting their hands messy eating traditional wings," he says. "With boneless wings, you don't have that challenge."
In the past few years, Wingstop has grown from a small franchise operation to one of the fastest-growing chain restaurants in the country. As a pioneer of the chicken wing concept, the company can expect its growth to continue thanks to its decision to achieve excellence in one area and to how that choice impacts the entire operation.
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