Michael Skipworth: No, Chris, I think we are definitely seeing examples where brand partners are developing ahead of their schedule. And I know your question was specific to the U.S. business. But what we are really excited about is we are actually seeing that manifest itself outside of the U.S. Some of these new markets, I highlighted Canada, as an example, and then even another market we opened in 2023 Puerto Rico. We have some of these international markets that are seeing these strong results, seeing the brand land really well, seeing our proven playbook show up, and they are actually developing ahead of their schedule as well. So, we are encouraged by the progress we are seeing outside of the U.S. as well.
Chris O’Cull: But just as a follow-up to that, I was wondering if you could tell us which countries are showing the best unit economics. And which ones are showing kind of the best improvement in returns? And then maybe how that’s playing out in terms of the pipeline and maybe the future pace of growth that we could expect in that International segment?
Michael Skipworth: Yes. I think you have heard us, Chris, over time, talk about the business in the UK and how the AUVs there are well above our system average here in the U.S., and they are seeing very similar unit economics there as we are here in the U.S. And so I would say that is in and of itself, our playbook, how we launched that market, how we started with the flagship and then built out from their additional points of access and expand the brand is our proven and demonstrated playbook. And so we are actually – those are the markets that I referenced, we are seeing very similar results. We are seeing them execute the same playbook and see very similar results. And so we are really encouraged by the progress we are seeing in our international business, and I have mentioned it before, I mentioned it in my prepared remarks. We think this business is building some momentum and is supercharge for growth, and we are really excited about it.
Chris O’Cull: Great. Thanks guys.
Operator: The next question is from Jeff Farmer with Gordon Haskett. Please go ahead.
Jeff Farmer: Thank you. A question and a follow-up as well. So, somewhat in line with your earlier 10-year comments, has there been a notable impact on traffic trends in recent quarters from improved staffing, reduced turnover levels, just better metrics as it relates to the labor force?
Michael Skipworth: Yes. I know Alex highlighted the efficiency of our model as it relates to the labor roster that were required and how efficient our box is. You can run a Wingstop with as few as four team members. And so we haven’t really seen a lot of issues around hiring, but what I would say is we have been really focused within the system, our brand partners, their team members in the restaurants on ensuring we operate with excellence. And we have been measuring some record levels for the brand as it relates to guest satisfaction scores. And I think that’s translating to some of those improvements we talked about around quality and value. And I think it all ladders up and support some of those results we are delivering on the top line.
Jeff Farmer: Okay. And then on the follow-up, record number of new guests, I believe in both Q3 and Q4. So, as we sit here looking out to the balance of 2024, what are your thoughts on sort of continuing net guest acquisition momentum?
Michael Skipworth: Yes. We think we are just scratching the surface. A lot of these new guests that are coming in are coming in through the chicken sandwich occasion initially. And we have referenced this number before. There is 2.4 billion chicken sandwich occasions in the U.S. annually. And so we think we are just scratching the surface there. But we are really excited about these new guests that are coming in that we talked about this last quarter, but they look a little bit different than our core or traditional guests. They are a little bit higher income, they are less likely to have children at home, they are demonstrating a higher frequency coming back a little bit quicker after that initial visit. They are learning to navigate the rest of the menu and actually are over-indexing to boneless, again, kind of helping 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 not only is there a lot of runway and additional opportunity for us to bring these new guests in and capture more occasions. But the broader impact they are having on our business around driving average check, driving boneless mix are a couple of elements we are really excited about.
Jeff Farmer: Okay. Thank you.
Operator: The next question is from Andy Barish with Jefferies. Please go ahead.
Andy Barish: Hey guys. Just circling back on some of the international stuff and then a quick follow-up. You still obviously don’t have all the arrows in the quiver that you have been implementing so successfully in the U.S. So, are some of these results, especially comps kind of tracking similar to the incredible numbers in the U.S. a little bit ahead of what you would have thought? Just give us a little bit more background there.
Alex Kaleida: Good morning Andy, this is Alex. Yes, they are tracking. They are executing our playbook in the international markets, and we are seeing the same-store sales that’s consistent with what we are reporting for domestic. And again, in the international markets as well, that is primarily driven by transaction growth.
Andy Barish: Okay. And then just quickly following up on the on the food cost guide and understanding that’s the company side. But are you guys kind of where you want to be for supply chain for the time being? I mean I recall a couple of years ago, there were some discussions about owning supply chain or stuff like that. But are you kind of at a size and scale now where you have locked and are kind of comfortable with where you are at least for the near-term?
Michael Skipworth: We are obviously, Andy, very excited about the position we are in today, something that is the first for us, being able to have confidence and visibility into what to expect from a food cost perspective for the next year. But we are definitely not finished. We remain committed to our supply chain strategy, which the progress and the results we are seeing today are one component of that, just simply how we structure our purchase agreements and moving more and more of that buy away from 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 taking control of an entire complex and vertically integrated.
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 are able to minimize the volatility that our brand partners see in food costs and focus on opening more restaurants.
Andy Barish: Thank you. Very helpful.
Operator: The next question is from Jon Tower with Citigroup. Please go ahead.
Jon Tower: Great. Thanks. Just a few for me, the – I am curious if you can give an update on the AI voice ordering test that you guys had in a few markets, especially in your efforts to kind of get the digital sales mix kind of up to 100% aspirational over time?
Alex Kaleida: Yes, Jon. We are happy with what we are seeing in the test. These large language models continue to progress, and we are enhancing that ordering experience. And I think it’s a good example of investments of opportunities in 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 another lever for us on our path to AUVs scaling beyond $2 million.
Jon Tower: Okay. How many stores is it in today?
Alex Kaleida: We have about a little over 150 restaurants.
Jon Tower: Okay. Great. And just in terms of the Wingstop rollout, can you – I believe it’s a domestic-only launch. Can you talk about maybe the hurdles or the reasons for not moving that into the international markets at this time?
Michael Skipworth: Yes. I think, Jon, there is a practical element in the investment that’s needed to support the investments to do something like we have done here in the U.S. I think our playbook in the U.S. that included a strategic partner like Olo that helped us scale our business to where it is today, a digital business that’s north of $2 million. I think 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 find – we can evaluate whether or not it makes sense to make this kind of investment to scale that this My Wingstop digital business or platform outside of the U.S. But I think the partnership we – I referenced with Olo is one we are replicating in a couple of markets outside of the U.S. using them.
And then we continue to see opportunities to leverage a partner like Olo and Alex referenced voice ordering. We are leaning into Olo as a partner there to help with the integration elements around that. And so we will continue to find ways to drive our digital business and as Alex mentioned, continue to expand it to our aspirational goal of over 100 – to 100% fully digitized business.
Jon Tower: Great. Thanks. And then just the last one, I know you have spoken in the past about your chicken tender business as being an opportunity to – as a platform where you feel like there is real opportunity. Can you discuss where you think that is in the pipeline, could we see something coming in ‘24?
Alex Kaleida: Yes, Jon, today, chicken tenders is a good example of something with very low awareness on our menu. Even our core guests aren’t even aware at times that chicken tenders is a mini option. It mixes in the low-single digit. And so I think that is a good example of an opportunity for us within our menu innovation to bring something new, leveraging our flavor profiles to the guests and a lot of – we believe a lot of chicken sandwich users are also high tender usage as well. So, it is an opportunity for us to consider as to continue to drive new guests into the brand.
Jon Tower: Okay. Thanks for taking the questions.
Operator: The next question is from Dennis Geiger with UBS. Please go ahead.
Dennis Geiger: Great. Thanks guys. You have got a bunch of initiatives that are clearly resonating, supporting traffic and you have got some newer initiatives coming this year. So, recognizing a lot of the sales momentum is about all these levers that you have 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 ‘24 or maybe the drivers that you are most excited about for this year, and if that’s at all different from 2023? Thank you.
Michael Skipworth: Yes. I mean I think for us, these drivers we are executing against, whether it’s expanding brand awareness, which we mentioned is still a meaningful opportunity even after the progress we have made in 2023, and the growth in our ad fund to be able to support us continuing to expand awareness delivery. We are at still that roughly 30% channel mix. We know much more mature heavy off-premise brands enjoyed a delivery mix, that’s north of 50%. So, we see meaningful growth in that channel, and we can kind of move along the chicken sandwich occasions through menu innovation. I mentioned that we are just scratching the surface there. We talked about digital marketing and the deleveraging our database that we have, the launch of My Wingstop, the investments we are 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 are kind of equally excited about all of them because each one of those have a multiyear impact and all support our overall target of exceeding AUVs of north of $2 million from that $1.8 million level today.
Dennis Geiger: Great. Thanks Michael and congrats.
Michael Skipworth: Thank you.
Operator: 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.
