Alex Kaleida: Hey. Good morning, Andrew. Yes, I think, we are sensitive a bit to the current backdrop we’re operating in. But as you may recall last year we were opportunistic in the last debt transaction that we had made to position our flexibility on our balance sheet to navigate uncertainty ahead. And that includes with the strength of our free cash flow generation this asset-light highly franchised model we delever fairly quickly. But we can put that free cash flow to work whether it’s to support our growth initiatives or return of capital strategies which also include beyond share repurchases a regular dividend that’s funded at about 40% of free cash flow. So we think we have ample flexibility and liquidity available to us to continue to support those growth strategies.
Andrew Charles: Excellent. Thank you, guys.
Operator: The next question is from Jon Tower with Citi. Please go ahead.
Karen Holthouse: Hi. It’s actually Karen Holthouse on for John today. Thinking about the new technology platform that you’re hoping to roll out to stores in the second quarter. It sounds like there’s customer facing and then also analytical or operational pieces to it. If you could maybe expand on kind of the new capabilities? And then also other companies have started to talk about recouping some of their investments in digital capabilities through per-order fees or other fees to franchisees. Philosophically, how do you think about that as a service to your franchisees that’s part of just already being Wingstop franchisee or something that’s replacing third parties that you should get paid for? Just, kind of, again philosophically how do you think about that?
Michael Skipworth: Hey, Karen, good morning. Yeah, we’re really excited about what we’re calling My Wingstop this tech platform that we’ve built. And we do believe it’s going to just continue to advance the ball forward and provide a best-in-class consumer experience, digital ordering experience that will allow us to continue to win more digital occasions. And we think it will ultimately improve conversion and as we mentioned also we believe ultimately impact frequency. And you’re right it is providing more insights and more visibility into the business within the four walls of the restaurants for our brand partners, which we think will just — that added visibility the additional analytics will just further help them improve profitability over time, which is pretty exciting.
And as we deploy this we will be deplacing certain costs that sit on their P&L today. And as we think about the ongoing operating expense associated with operating My Wingstop, we would expect to structure it in a way to where it’s cost neutral in our P&L and the ongoing cost is covered by the brand partners. And we think that’s the right approach to do it. And ultimately we think this is something that will just further enhance their unit economics over the long-term.
Karen Holthouse: Great. Thank you.
Operator: The next question is from Andrew Strelzik with BMO. Please go ahead.
Daniel Gold: This is Daniel Gold on for Andrew Strelzik. Thanks for taking my question. Regarding your supply chain initiatives, you’ve noted moving the buy off spot. Have you completely disconnected the model from spot-linked prices? Is there still some link, can you provide texture on how that link is structured if there is one?
Michael Skipworth: Yeah. Good morning. I think we’re pretty excited about the progress we’ve made in our supply chain strategy. And I think what’s important is this strategy is designed around minimizing the volatility that we see in food cost. And Alex referenced it in his prepared remarks where we’ve made some meaningful progress over the past year and it puts us in a position — and then quite frankly a position we really haven’t been in before as a brand to have visibility into what we expect food cost to be for 2024. And that’s something that’s really exciting for our brand partners. And we’re going to continue to work on advancing that strategy. Our supplier partners are right there with us and we think it’s a great strategy that works for both sides.
And so it’s something we think we can continue to advance forward. And we’ll move more and more of our buy away from the spot market ensuring that we minimize the volatility in food costs. And then as Alex mentioned, we see a line of sight to continuing to drive boneless mix to something north of 50% that could ultimately be a structural change to food costs in that low 30% range, which is in the mid-30s today. And that would just further bolster those unit economics that our brand partners enjoy today.
Daniel Gold: Right. Thank you. And can you give us an update on your delivery mix and how you’re looking to drive growth in that channel? I understand there’s some pressure on delivery in this environment. And are additional partners a factor there in driving growth?
Michael Skipworth: Yeah. I mean, we’re pretty encouraged by the growth that we’ve seen in delivery. We actually mentioned in our prepared remarks that we’ve seen growth both in DoorDash and Uber Eats and we’re continuing to believe there’s a meaningful amount of upside in that channel for us. From a mix perspective, it’s pretty consistent to what it was last quarter, maybe ticked up a little bit. But that’s a good thing because while we’re still seeing growth in those channels, we’re seeing growth in all other channels, whether it’s digital carryout, non-digital carryout. And so from a mix perspective, that number is not moving very much, but we think that’s a good thing because of the strength we’re seeing across all channels which we think is a really healthy sign for the brand.
Daniel Gold: Great. Congrats on the quarter.
Michael Skipworth: Thank you.
Operator: The next question is from Michael Tamas with Oppenheimer & Company. Please go ahead.
Michael Tamas: Thanks. Good morning. Michael, I wanted to follow-up on your comment about gaining more new customers this quarter than you did when you first launched chicken sandwich. It’s pretty impressive. So can you dig into that a little bit more, how are you reaching these new customers for the first time? How do you maintain that momentum? Is it just the national TV campaigns? Or what are some other levers you can pull in 2024 and beyond to continue gaining new customers? Thanks.
