Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Wingstop Inc. fiscal third quarter 2021 earnings conference call. Please note that this conference is being recorded today, Wednesday, 3rd, 2021. On the call, we have Charlie Morrison, Chairman and Chief Executive Officer, Michael Skipworth, President and Chief Operating Officer, and Alex Kaleida, Senior Vice President and Chief Financial Officer. I would now like to turn the call over to Alex. Alex, please go ahead. Apologies, ladies and gentlemen, for the interruption. Please hold the line while I connect.
Thank you and welcome. Everyone should have access to our Fiscal Third Quarter 2021 Earnings Release. A copy is posted under the Investor Relations tab on our 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 condition. 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 GAAP measures are contained in our earnings release.
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, I would like to turn the call over to Charlie.
Thank you and good morning. We continue to be extremely pleased with our strategies fueling exceptional results for Wingstop. The third quarter continued our streak for record-breaking restaurant development, which is a great demonstration of the resiliency for our model. The results we have shared today underscore the sustaining power of our growth strategies and the interest of our brand partners in continuing growing with Wingstop. Thanks to our proactive investments in technology and delivery platforms, Wingstop was well-positioned to navigate this pandemic. I'm pleased to say that just as we did last quarter, we continue to lap the remarkable growth from last year. In the third quarter of 2021, we recorded domestic same-store sales growth of 3.9%, which on a two-year basis represents growth of 29.3%, what we believe to be best in class.
This outsized comp growth has raised the average unit volumes for our domestic restaurants to approximately $1.6 million, and these volumes are generated from an average initial investment of only $400,000. The third quarter was another record quarter for development for this time of year. We opened 49 net new restaurants, resulting in 13.1% total unit growth, despite experiencing unprecedented inflation in the cost of bone-in wings. Our restaurant development is a testament to the continued focus of our brand partners on the long term and strength of our unit economics to navigate these challenging times. We are seeing extraordinary results not only in the U.S., but also in key international markets.
In the U.K., we have opened 10 restaurants in the last 18 months alone, and the market is generating average unit volumes exceeding $2 million, well above the average we see in the U.S. This market has been only open since 2018, which underscores the tremendous long-term potential. As we communicated earlier this year, we made a minority investment in our U.K. operations. We believe this strategic use of our capital will continue to strengthen the development pipeline as we look to double the U.K. footprint in 2022. We are excited to support our brand partner in achieving the potential for the Wingstop brand in the U.K., a market we believe will serve as a model for our Western European expansion and other parts of the world. Earlier this year, we announced our expansion into Canada with a 100 restaurant development agreement.
Our first location in Toronto is on track to open early next year. We recently served our flavors to Canada with a visit from the Wingstop food truck, and we couldn't be more excited by the consumer response to our products. Canada is a market well poised to replicate the success we have had in markets like the U.K. and the United States. We are also very encouraged to see our international markets continue to recover from the impact of the pandemic, with most of our existing markets already generating sales volumes above their pre-pandemic levels. Our largest market, Mexico, which was one of the hardest markets impacted by the pandemic, is on track to open nine restaurants this year. Again, a testament to the resiliency of our model and the portability of our brand.
While we are facing near-term inflationary pressures, our growth fundamentals and long-term potential of operating over 6,000 restaurants worldwide remains unchanged, and our brand partners share that vision. We are very pleased with this record pace of restaurant development and the top line growth our brand has seen, which certainly provided relief from the inflationary environment we operate in today. The strength of our model is a differentiating factor for Wingstop and positioned us well to navigate this unprecedented environment. Since the end of the third quarter, leading indicators such as cold storage inventory levels for wings are beginning to approach 2019 levels for the first time of the year. We have seen sequential improvement in the spot price for bone-in wings, and it now stands at $2.87 per pound.
This $0.35 Drop versus the third quarter equates to approximately $75 million of cash flowing back into the system, enough annually to build 185 new restaurants. While the price of wings is trending in the right direction, we remain laser-focused on executing against our previously communicated goal of managing cost volatility with greater utilization of the whole bird and controlling more of the chicken pricing and supply process. We believe that the key to unlocking a less volatile food cost for the brand is predicated on the utilization of more parts of the chicken. At the end of the second quarter this year, we launched a virtual brand called Thighstop, initially available only on thighstop.com and in DoorDash's marketplace. In addition to what we're calling bone-in thighs, we're also offering Thigh Bites, which are a juicier, flavorful complement to our traditional boneless wings.
Just as we pioneered wings as the center of the plate, we also believe we can make thighs a center of the plate item and make them a fan favorite for a long time to come. In September, we integrated thighs into our regular Wingstop menu, doubling our thigh sales and allowing us to further progress on our strategy of buying more parts of the bird. Staying true to our entrepreneurial spirit, we are evaluating every phase of the chicken supply chain and looking at others, even outside our industry, to take a page from successful playbooks like those of the retail industry to be disruptive and gain greater control over our destiny. We are following a similar proactive approach to remain competitive in this tight labor market and leading the way in company-owned restaurants.
Unlike other restaurant concepts, we have a very streamlined kitchen operation with small roster sizes, which have enabled our system to better weather the severe labor challenges some of our peers are facing. With a long-term view in mind, we have increased the hourly wages and salaries of our company-owned restaurant team members, as we believe investing now will help us retain and attract talent to continue offering a great customer experience and maintain our top line momentum. With the top line momentum and the effectiveness of our strategy, we were able to leverage the surplus in our ad fund and rebate a portion back to brand partners in the third quarter in order to continue to fuel development. This ad fund rebate did not impact our overall media plans and provided immediate relief in this time of unprecedented inflation.
It's a proactive example of keeping our brand partners focused on development and the long-term growth ahead of us. We also anticipate brand partners will take an additional 4%-5% menu pricing, thanks to the disciplined approach in our past by the brand partners and pricing power we believe Wingstop has with consumers. With the ongoing momentum in top line growth, 2021 has seen greater levels of premium media placements, and we continue to invest heavily in our one-to-many and one-to-one communications. We recently decided to take a page from the org structure of many leading tech companies, which often house marketing and digital IT functions together to create a MarTech structure. This structure allows Wingstop to further its transition from the traditional promotion-based marketing approach that is typically seen in the restaurant industry to a digital platform-based strategy.
We are already seeing an impact with our first-party database of more than 25 million guests and continuing to grow. Thanks to our investments in CRM and our digital platforms, we continue to sustain digital sales above 60%. Due to the strong results in the third quarter and the results we have seen as we enter the fourth quarter, we are now expecting our same-store sales growth for the full year 2021 to be between 7% and 8%, up from our prior guidance of mid-single digits. With our robust development pipeline, we are reiterating our guidance for restaurant development growth of 12%+ in 2021. At Wingstop, people are the foundation of our strategy, and we serve our flavor in communities throughout the world.
Wingstop Charities is dedicated to enhancing and elevating the community work of our brand partners to make a difference in the lives of our youth. We recently completed our grant cycle and achieved a new milestone in the number of organizations we are supporting. Wingstop Charities has provided over $1 million in community grants and team member assistance. We are thrilled with this tremendous milestone for the organization. I'm excited by the momentum in the business, both on our top line and development growth, as well as our progress we are making against our whole bird strategy that will position us better to weather the next inflationary period in wings. More importantly, I'm encouraged by the strong foundational investments we are making for our long-term growth.
We remain confident in our strategies that will continue to reward our shareholders, brand partners, and team members as we continue on our way to become a top ten global restaurant brand. With that, I'll turn it over to Alex.
Thank you, Charlie. We are pleased to report strong third quarter results, especially when considering the extraordinary results we are lapping from the third quarter in 2020. Our top line momentum is continuing into the fourth quarter, with October comps at 7% despite lapping comps in the high teens last year. These results put us well on our way to achieving our 18th consecutive year of positive domestic same-store sales growth and underscore the sustaining power of our growth strategies. For the third quarter of 2021, we grew royalty revenue, franchise fees, and other revenue by $4 million, or 14% versus the prior year.
The increase was driven by domestic same-store sales growth of 3.9%, 193 global net franchise openings since the year-ago comparable period, and by the continued strength we are seeing in new restaurants, which are now producing AUVs of $1.2 million as they enter the comp base. As a reminder, just a couple years ago, our 2019 vintage generated $900,000 in sales during their first year of operations, a testament to the uniqueness of our model when you consider the average initial investment of approximately $400,000 that Charlie mentioned earlier. It's these unit economics that have fueled the 49 net new restaurants we opened in the third quarter, which is a continuation of our record restaurant development at Wingstop this year.
Company-owned restaurant sales increased $1.9 million, primarily due to the acquisition of three franchise restaurants in the third quarter of 2021 and the openings of three new restaurants since the prior year comparable period. In the third quarter, we recorded a gain on sale of $3.6 million as part of the refranchising of six company-owned restaurants in the Denver market. As part of this transaction, the brand partner signed a new 20-restaurant development agreement for the Denver market. This transaction is another example of a strategic use of our balance sheet to acquire restaurants, invest to showcase their potential, place them back in the hands of an existing brand partner, and position the market for accelerated development. As we have shared, we will continue to leverage this playbook and use our balance sheet to facilitate growth.
Food, beverage, and packaging costs as a percentage of company-owned restaurant sales increased by 11.7 percentage points compared to the third quarter last year. The average spot price in the third quarter for bone-in wings set a new record high at $3.22 per pound, an increase of 84% versus the prior year. Thanks to the price mitigation strategy in place with our largest poultry suppliers, our restaurants were able to partially offset this inflation and saw an effective year-over-year increase in the price of wings of 49%. We also are pleased to see sequential improvement in the spot price for bone-in wings, with the price now at $2.87 per pound, a $0.35 Reduction from the record highs we saw in the third quarter .
While below optimal levels, we are seeing frozen inventory stocks building and beginning to approach 2019 levels for this time of year, a leading indicator to deflation. With this trending in the right direction, we anticipate wing costs to continue declining in the fourth quarter. In the third quarter, labor costs as a percentage of company-owned restaurant sales were 24.6%, a decrease of 1.2 percentage points compared to the third quarter of last year. This decrease was primarily due to the lap of incentive pay provided to restaurant team members in response to the pandemic. This was partially offset by the investments Charlie mentioned we have made in wages, hiring bonuses, and training to continue attracting and retaining top talent. During the third quarter, we made additional investments in company-owned restaurant margins, which totaled approximately 3 percentage points.
These expenses were more elevated for the quarter in connection with training and repairs and maintenance related to three recently acquired restaurants as well as deferred maintenance for our restaurant portfolio following a year of lower spend due to the pandemic. We also made investments to prepare for our Manhattan launch. We are excited for our first restaurant in the heart of Manhattan to open in the next couple weeks near Times Square. We are encouraged by the potential of this market, where we have identified approximately 25 trade areas.
We anticipate restaurant margins for full year to be in the high teens to 20%, reflecting the improved outlook for the price of bone-in wings, additional menu pricing, and the continued investment in restaurant labor to remain competitive. Shifting to SG&A, we saw a decrease of $1.5 million over the prior year, mainly due to lower variable-based compensation expense and lapping COVID-19 related costs and support for our international brand partners. These decreases were partially offset by continued investments in people to support our growth and higher travel compared to 2020 when travel was limited as a result of the pandemic. For 2021, we had anticipated investing in strategic projects to support our international business. However, the ongoing pandemic has delayed the timing for these projects.
Additionally, we have experienced delays in hiring, and as such, we are lowering our full year guidance for SG&A from $64.8 million to $66.8 million to $62.2 million to $63.2 million, inclusive of stock compensation expense, which is estimated to be between $9.7 and $10.2 million in 2021. Adjusted EBITDA grew 16.2% to $21.4 million, and we recorded earnings per share of $0.38, an increase of 11.7% versus the prior year comparable period. We remain committed to driving shareholder value and returning capital to shareholders through our quarterly dividend, which is targeted at approximately 40% of free cash flow. Our board of directors has declared a dividend of $0.17 per share of common stock.
This dividend, totaling approximately $5.1 million, will be paid on December 10, 2021 to stockholders of record as of November 19, 2021. With the continued strength and resiliency of the Wingstop model in these unprecedented times, and as we look ahead to the balance of 2021 and beyond, we are well positioned to execute against our strategic long-term growth initiatives. With that, I'd like to turn the call over for Q&A.
If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, it is star followed by two, and please kindly limit yourself to one question per person. Our first question comes from Andrew Charles of Cowen. Your line is open. Please go ahead.
Great. Thanks. I'm just curious, just amid the sales and margin curation in 3Q, with sales that look like they're implied to further decelerate in 4Q, despite the fact that October up 7%, not as bad as deceleration for the full quarter that you're guiding to. The main question is, do you see risks that 2022 openings will fall below long-term kind of 10% plus guidance? Just kind of curious what you point to that suggests that 2022 should be a normalized year of store growth. Thanks.
Good morning. I wanna first comment on the top line performance. Same store sales at 3.9% and a 29% two-year comp is something we're very proud of and won't apologize for as it relates to the sequential change or the absolute. I know the market is trying to absorb whether two-year or one-year are the right metrics, but in our opinion both are great demonstrations of the health of our business. I would also point to a couple factors about our overall model that we believe have caused the continued strong development from our brand partners, which is our average unit volume now is approaching $1.6 million per restaurant. That's up from just a few years ago at $1 million to $1.1 million.
The strong performance we've seen over the two-year trend, again above or close to 30% on a two-year same store sales basis is fueling great results. While we are dealing with the near term situation on wing costs, we are seeing those prices start to come down. As we commented, we are starting to take a much more proactive approach to how we can mitigate some of this volatility by not just purely relying on the spot market or some of the strategies we've actually put in place to mitigate that this year. All that said, our development pipeline as it stands today is above where it was when we look at a year ago and above where it was around the beginning of the year. Our brand partners are still actively engaged in development.
We have a strong pipeline and anticipate that the near term headwinds are not an indicator of what the long-term opportunity is for the brand.
Thanks, Charlie. That's helpful.
Our next question comes from David Tarantino of Baird. Your line is open. Please go ahead.
Hi, good morning. Charlie, I wanna come back to the sales trends, and I don't think anyone would debate that two-year comps of +29 are really, really good. But I wanted to get your thoughts on why you think that number has trended down from Q2 to Q3 and now what you're guiding to for Q4. You know, what in your view has caused that settling versus where you were last quarter? I have a quick follow-up to that.
Sure. Good morning, David. Thank you. Yeah, I don't think we would have expected based on our performance last year to have seen something meaningfully different in terms of the performance. Keep in mind that Wingstop was very well positioned to navigate through the challenges of the pandemic, and in that timeframe, saw extraordinary growth for the brand because we had made the right investments and were very well positioned. That's different than perhaps the rest of the market. I think on a sequential basis.
Our focus is on the health of the business. While it does show that the sequential two-year and in some cases, the one year have gone down, we did comment on the fact that in the fourth quarter, during the month of October, we've seen comps accelerate from our one-year rate to 7% and anticipate we'll have a good strong quarter like we always do. I think the key for us is anchoring on the long-term outlook. Our midterm outlook is for mid-single-digit comps. We're delivering against that, if not expected to exceed that. Also keep in mind, this is our 18th now consecutive year as we close this year out of positive same-store sales growth. The last comment I will make and continue to reiterate is the strength of our model.
Our sales to investment ratio for our restaurants has grown to 4-to-1, so a $1.6 million average unit volume against a $400,000 investment. Even with the challenging margin structure driven by things that are essentially out of our control, the macro situation anyway, we feel very confident in what our future looks like. We're not focused on the near term. We're focused on the long term as an organization. We're adjusting to the inflationary headwinds that are in place. Notably, you know, we've seen wage creep like everybody else. We are paying our people, making sure that we're retaining great talent, and I think those are the right adjustments to make that really focus your business for the long term against some of the near-term backdrop.
Great. Thank you for that. Just my follow-up is on the pricing. You mentioned 4%-5% for the system is what's planned or an incremental 4%-5%. When did that go into place, or when will that go into place?
Yeah. Over the course of the year, we've been taking price. We have another opportunity in front of us where we are actively working with our franchisees, and they are going to put in somewhere between 4-5 points of additional price, hopefully during this quarter, certainly over the next few months. That will culminate in a total of a targeted 10% overall increase, which we believe is in line with where inflation is and aligned with consumer demand as well. Like other brands, we're making sure that we're taking our price in this environment to offset some of the near-term headwinds.
Great. Thank you.
The next question comes from Jeffrey Bernstein of Barclays. Your line is open. Please go ahead.
Great. Thank you very much. Also had one question and then one follow-up. The broader question is just on franchise sentiment. It would seem like the record unit growth demonstrates their long-term bullish outlook, which you've reiterated. Just wondering, with that said, what are the conversations like in terms of the near-term unit development challenges, whether there's anything specific in terms of ongoing delays or labor challenges in terms of staffing or other maybe inflationary pressures they're expecting, just in terms of the conversations you're having with franchisees that give you confidence in the in the 10%+ over the next few years beyond just the pipeline, and then one follow-up.
Yeah. Jeff, thanks for the question and understand the context. The sentiment of course is challenged, like it would be in any system given the macro headwinds that we're facing. It is hard to hire people. We are adjusting our compensation strategies or have adjusted them so that we can make sure to get the right people in our restaurants, that will help us sustain a great customer experience, but also continued growth. I think the outlook is one of, you know, a challenge right now in that we've got high wing prices, we've got labor inflation, so what are we doing to control it? I think the sentiment we've had a conversation about is about taking more control. We have been reliant upon, for the most part, spot prices in our commodity.
We believe there's an opportunity for us to exercise more control over that, and so we're working together with our franchisees on strategies to mitigate the volatility in the future by taking more control of the supply chain. We're still trying to figure out exactly how that manifests itself, but I think it's incumbent upon us to not allow such volatility to continue for the long haul, which we believe we can address. As it relates to wage inflation, we see that as temporary in that we are gonna have to pay up, if you will, to make sure that we're paying our people at the levels that are expected and the market is dictating. There are a lot of people leaving the restaurant category to find jobs elsewhere, and so we're making sure that we're competitive in that respect.
I think Alex called that out very carefully, that we are making the investments in our company-owned restaurants, which are the leading indicator of overall margins in the brand to demonstrate that we're making those investments because we believe in it for the long haul. Even with those investments and even at our current EBITDA margin levels that we identified or discussed here, our restaurants are still generating great cash flow. The average unit volume for our company stores exceeds $2 million. Even at this margin structure, they're generating over $200,000 in cash per restaurant on a $400,000 investment. That leads to a little, you know, a sense of confidence not only amongst us but our franchisees as well that we'll weather this storm.
There's probably no brand better positioned to weather the challenges. That from a long-term perspective, we need not just look at the short term as to whether we develop restaurants, but really look towards the long term and what the upside potential is for this brand once we get through this transitional period.
Understood. Just to follow up, I know you guys have kind of medium-term and then long-term guidance, and I know it's too early to be getting much specificity on 2022. You made a comment before that you anticipate that the near-term headwinds were not an indicator of the long-term opportunity, which I don't think people are questioning from a long-term perspective. Specific to 2022, is there any reason to believe that the mid-single digit comp or the 10% plus unit growth wouldn't be a realistic starting point? I know the AUV seem to have found a new home, so it's not like you can't build off of that. Just wondering if there's any early indicator that maybe either the comp or the unit growth might be more of a challenge in 2022 because of these short-term headwinds.
Yeah, I think if you look at the top drivers of the top line first, as a brand, you know, we rebated back $6.9 million during the quarter to our franchisees to put in their pockets to continue to fuel development, which we thought was a great decision, and we all aligned on that as a brand. What that didn't do was take any money out of the coffers to continue to execute our advertising strategy, as we've seen in the fourth quarter with a sequential increase in a comp so far. I think that gives us confidence that the right strategies are in place for us to continue to deliver against our both near-term and long-term outlook for the brand, especially on the top line.
Another great lever we have as an organization is the fact that we have a database of over 25 million users that we are actively investing in to deliver a one-to-one marketing platform with our customers that is usually reserved for tech companies and platform brands. Wingstop's in that position. I think that's gonna be another great driver. Then, as was mentioned before in the comments, we're getting very premium placements, leveraging properties like the NFL, the NBA and other, you know, really high profile properties to leverage our advertising dollars. Next year, we'll be somewhere in the range of $100 million to $125 million of total advertising spend. That's a big increase from where we were even a couple of years ago.
I think all of those are great indicators as to what the potential is for the brand to continue to grow comps at the rate that we've guided towards for the midterm and the long term. If you factor in the unit development, again, while the P&L is challenged right now because of some of these macro issues, the restaurants still deliver good cash flow characteristics. The investment economics are very efficient for Wingstop. A $400,000 average unit investment with a $1.6 million sustainable average unit volume, 4-to-1 is as good as it gets. I think our brand partners recognize, and they've been through this before, we'll navigate through the tough challenges to continue to see the brand grow.
Understood. Thank you.
The next question is from John Glass of Morgan Stanley. Your line is open. Please go ahead.
Thanks very much. Charlie, can you maybe just expand on the whole bird strategy and if you think that's something that you can start to see benefits from next year? Or is this something kind of a multiyear project? And can you also just comment on the mix of the thighs? You know, that was something you said had doubled. I'm not sure if it's material. Is that something that might also, you know, benefit cost as we think about 2022?
We definitely think that the introduction of thighs through Thighstop was the right strategy and yields the desired outcome we have, which is not only to just create an opportunity for an item to mix at a lower cost level than what the bone-in wings are, which it has done. But we also know that it has a meaningful effect on our ability to secure entire birds instead of just buying the wings and some of the breast meat off of the product from the spot markets. As we look forward, as I mentioned earlier, we are exploring strategies where we can take more control of the supply chain.
While it's preliminary, I think there are opportunities for us to follow the lead of some of the other large-scale, both franchisee and company-owned brands like Dunkin', Starbucks and others who, and the pizza chains, who start to take more control of their supply chain for the benefit of, eliminating volatility and/or market exposure. That's. I think Wingstop's a brand that's finding its way into that scale level. On a go-forward basis, the near term, yes, we're pleased with the mix of thighs. We're pleased with how it's performing. We mentioned it doubled in volume when we took it off just the platform that we established at the beginning with DoorDash and our own into the whole Wingstop format.
Our guests were coming into the restaurant saying, "We're ready to order thighs from you directly," and that's working out well for us. It's gonna build over time, and it's following a trajectory that we saw many years ago when we introduced boneless wings. Overall, we're pleased with where that's going, a long way to go, and it is making an impact, ultimately to the business by way of giving us a lot of confidence in ways we can secure whole birds and take more control of the supply chain.
If I could follow up, sounds like that's maybe it's a buying co-op, maybe is what you're thinking about. I don't wanna put words in your mouth, but if you could just sort of answer that part. On the return of the ad fund money to the franchisees, do you anticipate that was a one-time event, or do you think that continues in the fourth quarter?
Yeah. I think the question of the buying co-op is you are putting words in my mouth, but I think at the end of the day, there are a lot of options in front of us. I think if we lean into again what scaled brands have done over time as they've grown to the size that Wingstop is, I think they've made some very thoughtful decisions on how they can put together structures that support a less volatile commodity impact, and I think that's the right approach in some cases. If I go back then to your other question, yes, I think
No, I think.
Michael, you wanna jump in?
Yeah. I think, John, the ad fund rebate we gave was really around a surplus that we had, and it didn't impact any of our planned advertising strategy.
Yeah.
I would kind of think of that as more of a one-time thing than as something that would impact the
I think the best way to think about that, John, is that it is a great lever we have with the strength of our advertising, the strength of our top line. In this case, definitely a known surplus that we felt like was in the best interest of the entire system to put that in place this quarter.
Okay, thank you.
The next question is from Andy Barish of Jefferies. Your line is open. Please go ahead.
Hey, guys. Wondering if you can share, I guess, the thigh contribution or incrementality, whatever you're willing to share. Has it hit that threshold, I think it was the first $100 million was royalty-free? Just a little bit more color kind of on how, you know, thighs are helping the sales numbers in addition to obviously the cost side of the equation.
Yeah, Andy, we're not sharing any specific mix or sales data on the thighs other than it is making a meaningful contribution to the brand by way of the utilization of more parts of the bird. Quite frankly, it does not require a high mix in order for us to have a big impact on the number of birds that we can commit to, and that's really how we positioned this from the get-go. We put some advertising behind this, but primarily this was supported by public relations work and things we did in the marketplace to launch it and then a digital strategy behind it. What we haven't really done a lot of until just recently is put it on TV or do anything like that to truly grow it.
What we wanna know is, you know, number one, how well does it execute? How well do people engage with the product? I think we're happy with that. That was why we made the decision to go ahead and fold it so quickly into the total Wingstop platform. As we mentioned, it doubled our results. We still have a ways to go. We're on our way towards, you know, getting to that $100 million level. We didn't expect to be there by this point anyway, so we've still got some time ahead of us. Overall it's moving along at about the pace we expected it.
Great. Appreciate that color. The quick follow-up, just on the 300 basis points you called out on company-owned margins, was that pretty much idiosyncratic to the 3Q? As we think about the margin improvement at the company-owned site in the 4Q, is that something that sequentially you know helps to that extent?
Good morning, Andy. This is Alex. Yes, you have that characterized correctly. It was specific to the third quarter . It related to some preventive maintenance work and catch-up that we were doing on the repairs and maintenance side, as well as connected to our three restaurant acquisitions' training and catch-up maintenance work as well that was unique to the quarter.
Thanks, guys.
The next question is from Jeff Farmer of Gordon Haskett. Your line is open. Please go ahead.
Thank you. A quick follow-up and then a question, as well. On the follow-up, is the 4%-5% incremental menu pricing, is that fully contemplated in the same store sales guidance for 2021?
Yes, that is.
Okay. On the question, shifting to G&A.
Can I clarify? Let me clarify that for you, Jeff. I mean, that comes in over time. So you don't have a full quarter effect of that. I just wanted to make sure that, you know, you didn't expect that to be a full quarter effect. Over the course of the quarter, we'll put that 4%-5% in.
Okay, that's helpful. Shifting to G&A. The prior G&A guidance, prior to the G&A guidance update provided today, at least over the last two years, you've seen your absolute G&A dollars grow by roughly $8 million to $9 million annually. You've told us several times that that's in support of digital and some international development investments and some other things. The question I have is looking forward to 2022 and 2023, is that still sort of a workable or a good run rate to think about in terms of how G&A dollars will grow moving forward?
Hi, good morning. Yes, you know, I think over time, as we've called out before, that we anticipate we'll grow into a rate of somewhere between 2%-3% of system sales for SG&A. You know, we'll have more details as we move into 2022, but I think about it more as a % of system sales, and that's based on where top ten brands have matured to over time.
Okay, thank you.
The next question comes from Michael Tamas of Oppenheimer. Your line is open. Please go ahead.
Thanks. Good morning, everyone. You know, I think you mentioned that you returned some of the ad fund to help with unit development, in the near term here. I'm just wondering, can you just talk about some of the constraints, following up on an earlier question, you know, how much are you sort of constrained either by the near term cost rises or supply chain, that's sort of like impacting franchisees ability to get open-
Yeah, you know, there's no constraint to get the restaurants open. I think when we made that decision, again, we recognized there was a surplus anticipated in the quarter of dollars based on our strong growth rate that we were able to put back in the pockets of our franchisees to shore up the P&L and deal with some of these macro headwinds while developing new restaurants. I think our performance demonstrates that they weren't pulling back at all. In fact, another record quarter for Wingstop. I see that as purely a great opportunity for us to pull a lever that was beneficial to our franchisees, and they appreciated that very much without impacting the top line by way of our current year cadence and performance with same store sales.
All in all, it was the right decision. There are some supply chain challenges associated with equipment that we are seeing, but those are not meaningfully impacting development. If anything, it might cause a week or two delay to get refrigeration into restaurants and things like that. That's pretty normal in the industry right now, and I'm sure others are talking about that. If not, they're dealing with it, I can assure you. That's the natural reality of what's going on with some of the log jams that we're seeing in the supply chain across multiple industries, not just ours.
Yeah, absolutely. Thanks for clarifying that. Then, you know, not to harp on the near term at all, but, you know, I think that the October two-year trend is a little bit above where you're guiding to for the fourth quarter. I'm just curious if there's anything over the next two months that you guys are thinking about that we should be aware of, or if that's just sort of some conservatism on your part, if my math is right. Thanks.
Well, I think you've called that out properly. Again, 7% in October is an exceptional performance given the two-year rollover. There's nothing other than the price that we expect to come in throughout the quarter associated with franchisees' decisions to raise their prices. You know, we do have a strong media plan in place for this quarter focused on driving the top line. You know, as I mentioned before, premiumly placed media, even compared to where we were a year ago or even early in the year. All of those are strong indicators towards our confidence in the top line in the first quarter.
Thanks so much.
The next question is from Chris Carril of RBCCM. Your line is open. Please go ahead.
Hi, good morning. Thanks for the question. You noted some encouraging sequential trends in Wingstop prices recently. I'm curious as to what you're hearing from your suppliers as to what's driving that easing in pricing. Is it improving labor trends on the supplier side, or is there seasonality or some other dynamic on the demand side that's impacting spot prices?
Yeah, this is the fun part of describing what goes on in the chicken industry that I love to talk about. They are seeing people coming back to work and improving, but the bigger problem that was out there had to do with the breeder stock of chickens that had to be replaced. They have made great progress in what they call pullet placements, which are the chickens that create the eggs that ultimately become chickens that go to work for Wingstop. That's how we like to put it. That was up about 18%, just in June alone, which is a good indicator and a leading indicator of more volume of chickens that are gonna be coming through the system. There's about a six-month lag to that.
One interesting statistic I'd call out to, which I think is very important, is breast meat. Frozen inventory stock are at five-year lows right now, and that product is the highest demand, and why they grow chickens is for the breast meat, primarily. With frozen stocks so low, those inventories need to be rebuilt, and we anticipate that those will start to grow once these pullets yield more birds that'll flow into the system. We expect that to be somewhere around the turn of the year, so December into January into the first quarter. If those inventories start to rise, that's good for wings, because on the wings side, our frozen inventories are approaching 2019 levels now, which is really good news for us.
As those frozen stocks continue to rise, which we would expect that they will as more birds come online, that's going to help support lower prices. We expect that that'll be the case going into 2022. We've expected that all along. We're starting to see the market dynamics finally play out to our benefit. You know, as we mentioned, prices are now down around $2.85 a pound as of yesterday, so a couple pennies below even what we said this morning. They're already coming down, so we're excited about what that potential is for Wingstop. Again, we need this number to be well below the $2 a pound level for us to be comfortable. I'll add one little data point for you for benefit.
We've done a lot of research and understanding into what it costs to actually produce a chicken. We think it's somewhere in the $1.30 plus or minus a pound range. It's hard to imagine that it costs an additional $2 to just trim the wings off. We do see that there's real opportunity in the market for the prices to come down to where the feed costs inputs and everything else associated with it would be in balance.
Great. Thanks for all that detail, Charlie. For my follow-up, I did wanna ask about labor at Wingstop. Obviously, one of the big advantages of the brand is your lean labor model. Curious as to how you and your franchisees are balancing that goal of maintaining that lean labor model while ensuring that restaurants remain fully staffed amid the broader industry labor challenges. Thanks.
We always have and always will continue to have a very lean model. The actual roster size for our restaurants is quite a bit smaller than most brands out there. We usually like to have around 16 people plus or minus on a roster at the volumes that we execute, and our labor does become very fixed very quickly at the high volume of a very single commodity that we sell with simplified cooking platforms. All of that is still intact. That doesn't mean we're not looking for ways to improve that. You know, part of our strategy on looking at the supply chain could incorporate ways to simplify the prep side of our production and get smarter on that. We make everything in-house, and it's for good reason. It's our quality. Are there ways we can improve that?
We're looking at that. From a dining room perspective, we still only have about 200 restaurants plus or minus that have their dining rooms open today out of 1,500 in the U.S. That's a good indication to us that we can further simplify our model by reducing the size of the dining rooms and leveraging the strong delivery business that we're seeing. In fact, when others are seeing their delivery volumes drop, Wingstop is actually seeing delivery continue to increase. If you look at it year-over-year, we're now at 27.2% delivery. That's almost 3 points better than where we were a year ago, and we know it carries a higher average check. It's beneficial to our business.
I think our franchisees, as well as all of us, corporately, feel like the digital side of our business is really what the long term's all about. How can we create efficiencies inside the four walls of the restaurant to mitigate some of these challenges we're seeing in the near term on labor? All of that said, we are seeing wage inflation, and we should see wage inflation because the market is dictating that right now. Our approach is to make sure that we invest now for what's best for the long term.
Thank you.
The next question comes from Jared Garber of Goldman Sachs. Your line is open. Please go ahead.
Morning. Thanks for the question. Wanted to swing back to the unit growth outlook on the international side. Obviously, you noted that some of the SG&A projects were sort of pushed or delayed, and some of that related to some of the back-end work you were working on related to international growth. I just wanted to get a sense of if you could help frame what exactly that work that you're doing is, and maybe how we should think about that cost or that project flowing into 2022. Then further to that, how we should be thinking about maybe the acceleration or the level of unit opens across the international business as it relates to unit growth over the next couple of years. Thank you.
Yeah, thanks. Good question, and appreciate you bringing up the international performance. I think all in all, we're very excited about the international potential for this brand, always have been. As you know and we know, most of the markets outside the U.S. have not rebounded the way the U.S. has in terms of reopening and building their businesses back. Wingstop has seen that happen now over the course of the last couple of quarters, notably our performance in the U.K. Those restaurants are doing very well, average unit volumes exceeding $2 million, which is a great indicator of what we believe is right on strategy for the future of this brand. We're really making great progress.
The other markets, Mexico, for example, is a market that is now starting to approach their 2019 level volumes on the top line. They opened even 9 restaurants this year when they were probably one of the hardest hit with the pandemic. We were there to support them, and now we're seeing the benefits of that support paying off for Wingstop and expect growth to be strong into the coming year. Canada, we also mentioned our first restaurant will open in Toronto, hopefully in the first quarter. That's a 100-store development agreement. I think the key for the projects is one big area of focus is China.
We obviously were delayed because of the pandemic and getting back into China and just doing some of the groundwork necessary to build the organization, prepare ourselves for the likes of a joint venture deal. Those things typically take a lot of time. The pandemic probably pushed us back, you know, somewhere between 8-12 months in our progress. We're back working on that right now and would hope to be, you know, in China within, you know, a reasonable period of time, but we're gonna do it right and be very diligent as we go. Other markets are starting to reopen, and we're starting to see the development engine start to pick up.
We're excited about what the potential is for the long term overseas, but certainly the pandemic put a headwind in front of us that was very difficult to navigate. I think at the end of the day, we're coming out, perhaps even stronger than we were before.
Great. Thanks. Then just one quick follow-up, sort of, on a different topic, but just wanted to get a sense of how we should be thinking about shareholder returns going forward. Usually you're on a cadence of somewhat of a every other year, sort of a special dividend, and I think that largely relates to the leverage levels. It looks like we're sort of approaching those leverage levels in the next quarter or so, where we might be thinking about layering that in. Can you make any comments and just help frame that for us if that's still the right way to be thinking about it? Thanks.
Thanks, Jared. Appreciate the question. You're right. You know, with the cash generated from our business, we do quickly de-lever from our last event. You know, historically, you know, it's we've had a pattern of about 18 months of re-looking at our
Leverage on our balance sheet. It's a conversation that's ongoing with the board, and you know, we'll continue to have that dialogue on the best way to generate those shareholder returns.
Great. Thanks so much.
The next question comes from Dennis Geiger of UBS. Your line is open. Please go ahead.
Great. Thank you. First, just a quick follow-up on the labor staffing question. I was just wondering if you could speak a bit more to staffing levels and operations. You know, curious if you saw any impact on operations and sales in the quarter based on staffing levels across the system, and if you have a sense on sort of how close the system is or maybe the system is fully staffed right now.
Yeah, we definitely have seen the impact of really high turnover that all of us are experiencing in the industry right now. That puts some pressure on the training side of the business, so there's an investment necessary to train up new team members and bringing them on board, as well as compensation to make sure that we're attracting the right talent. The good news of our brand is the high off-premise mix, the efficiency inside the four walls tends to insulate us from having any sort of meaningful negative impact on the guest experience.
Since we're not serving in a dining room and we're not seeing long wait times like others have, I think that's a great strength of the Wingstop model as we're able to deal with some of these challenges and deal with them with very low rosters if we need to. We don't like to have our rosters challenged in terms of their size, but we know that we can operate at lower levels and still deliver a great guest experience. Our focus, not only in our company restaurants, as Alex mentioned earlier, but also in our franchise system, is to get staffed up and make sure we maintain that by way of adapting to the macro environment that we're seeing in front of us.
Great. Thanks. Charlie, just one more. I think you spoke some to this, but just wondering if you could talk a bit more about customer behaviors. Any kind of shifts that you've seen at all over the last couple of quarters, you know, really the last several months, be it across channel mix, which I think you spoke to some, menu use, anything more on check versus traffic, any kind of notable shifts there worth calling out. Thank you.
I wouldn't say there are any notable shifts that have changed, especially in the dynamic for Wingstop. I think one thing we've been very pleased with is we've maintained a solid digital mix and also growing our delivery mix. I think those are counter to what the trend has been in the marketplace as people go back out and dine in somewhere. We've seen our business continue to not only grow, but also to see the mix shift working to our advantage, and it's what we would have expected as a brand like ours. I think all that factors in. One could have said, "Well, gee, you know, Wingstop could have been a real you know really impacted by the shift of consumer behavior back to a dine-in format." That's just not the case.
We're still growing. We're growing on a strong two-year basis, 29%+. I think that's indicative of the strength of this brand. From a check perspective, pretty consistent with where we've been. We still see at least a $5 higher average check for digital orders, strong delivery performance on the check average as well. All systems are right where we would expect them to be. The thing that is the challenge for us are the things we can't necessarily control right in front of us, the macro headwinds.
Great. Thank you.
Mm-hmm.
The next question comes from Chris O'Cull of Stifel. Your line is open. Please go ahead.
Thanks. Good morning, guys. Alex, the margin guidance implies a fairly wide range for the fourth quarter. Can you help us understand the assumptions that go into the high and low end of that range? I had a follow-up.
Yeah. Chris, great question. You know, part of what we wanted to indicate, you know, was we're still doing a lot of hiring and training investment, not only to ready for our New York market open, but also the amount of hirings. We've instituted some bonuses as well, you know, at the restaurant level to help, you know, attract that top talent for our restaurant. You know, as Charlie indicated, there's still some volatility. While we're encouraged by what we're seeing on the labor front, there's still some volatility in our wing prices. We just wanted to indicate a bit of what that might look like for the quarter.
Okay. Charlie, as chicken prices revert back toward historical average prices or at least the trend line, then how are you thinking about maintaining a strong value proposition with consumers given the amount of pricing taken this year to mitigate the pressure? I'm trying to understand if the system will leave higher prices unchanged and then just be more aggressive with maybe a promotional activity or if there's other alternatives that you're considering.
Well, I think there are a couple thoughts on that. Number 1, we've always believed we have sufficient pricing power in the brand and have historically been on a cadence of 1-2 points of price per year consistently baked into the P&L of the brand. This environment we're in, which we don't believe is transitory in any way, shape, or form, is driving the need to take price where consumers are willing to adopt that. I think we're seeing it across the board. This will be a level set for the future, perhaps, and we will revert back to our cadence. We've always believed that we do have pricing power in this brand. While, you know, it's challenging right now. I think that'll stabilize.
As we look to the wing market, will it stabilize and get back to historical levels? You know, we don't know, and we're not going to just bank on that. That's why we've commented several times that we're going to look at strategies where we can take more control of the situation.
Okay. Thanks, guys.
The next question comes from Jon Tower of Wells Fargo. Your line is open. Please go ahead.
Great. Thanks for taking the questions. Just mostly follow-ups here, as many of the questions were already asked. It doesn't seem to be the case, but on development, did franchisees or you deal with any supply chain issues with respect to equipment in the stores? Did that impact perhaps a few stores in the margin, in terms of opening during the period? My other question is, I know you had mentioned many times, Charlie, on this call, the idea of taking more control of your supply chain and that the plan is still evolving. Do you potentially see requiring any capital spend on your behalf to kinda get that going?
Hey, Jon, thanks for the questions. You know, first and foremost on equipment, I mentioned before, we're dealing with some of the challenges everybody is, but we generally, because we have such a simple model and very standardized footprint, we tend to forward buy a lot of our equipment, and so some of it is impacted. For instance, chip shortages, microchip shortages impact more pieces of equipment than you'd ever imagine in the restaurants. Notably, POS equipment can be impacted. Refrigeration has been a challenge for a lot of people. But ultimately, what that means is really just perhaps a near-term, short-term delay of a couple weeks on getting an opening in versus, you know, being a reason to not develop. That's what we're dealing with in the macro environment.
We're putting everything in place to make sure we mitigate that, including leveraging our balance sheet, if needed, to secure more equipment and have that available to us. On the supply chain side, hard to say. Our preference certainly would be to find ways that we can leverage more of the bird with our existing supply relationships. At this point, you know, we're going to evaluate all possible options in front of us and see what makes the most sense for the long-term success of the brand. I think I'd just play against, again, what others have done in front of us. They've been faced with those exact same questions and made some of those decisions as well.
Got it. Thank you.
The next question is from Nick Setyan of Wedbush Securities. Your line is open. Please go ahead.
Thank you. You know, the wing cost commentary goes in the face of traditional seasonality, you know, heading into Super Bowl and March Madness. Just to confirm, do you expect, you know, wing costs to, you know, go in the right direction here, as we head into, you know, February and March?
Yeah. I think this year is a little atypical, maybe a little. It's a lot atypical for what we've seen historically, which is a pattern of rising prices in anticipation of the big event. I think with the really high wing prices, many have started to opt out of the wing market, if you will, and modified their menus, which is helping improve the supply levels that we're seeing, especially in the frozen stocks. I will say that we've put away all the frozen inventory we need to be able to navigate through the Super Bowl timeframe. We expect that most also have done the same. The dynamic is actually appears to be playing towards a continued pattern of a lower price for the product going into the first quarter.
A little different than what we've seen historically. Again, you know, this is a one-time event really driven by the pandemic more and the ability to get people back to work than it is, you know, any sort of natural cadence of the market.
Thank you. You know, on the royalty, you know, just royalties in terms of the percentage of the franchise system sales, you know, sequentially that ticked down a little bit. Is that a function of just Thighstop and you're not collecting royalties there? Because, you know, with the improvement in international, I would have expected that to at least hold steady. If it is because of Thighstop, is that a phenomenon that should kind of last into the H1 of 2022?
I think there are two factors affecting this. Both, I'd say, are balanced in the impact on the effective royalty rate. One is Thighstop, and yes, I do believe that'll factor into the H1 of next year. Second is our international business. The royalty rates generally are lower overseas, and so the mix has modified because of the performance of the international markets. They're working their way back, as I mentioned, but it has had a drag, if you will, on the effective royalty rate by their lower performance. I just wanted to call those out.
Thank you very much.
The next question comes from Peter Saleh of BTIG. Your line is open. Please go ahead.
Great. Thanks. Charlie, you mentioned you guys have been taking price throughout the year and plan to take another, you know, 4%-5% over the course of the next couple months. Have you seen any sort of pushback on order counts from customers, either through delivery or pickup? Any sort of noticeable impact? And then I have a follow-up.
No, we have not. I think our performance is indicative of that on our two-year rates for sure, and definitely on our one-year rate. Then the performance in the fourth quarter, another good indicator that we're not seeing the drag that you would otherwise expect from taking a lot of price. I think a lot of that is because of the macro factors more so than anything. There's just a lot of demand out there right now.
Great. All right, then just on the third quarter numbers and maybe the outlook for 4Q, do you feel like there was any impact, either in third quarter or your outlook for fourth quarter, from just having less stimulus, you know, fewer unemployment dollars out there, benefit dollars out there? Has that impacted you guys at all?
No, I don't think that's had any sort of impact on us in particular. If anything, if it were expected, I think our performance might be different, but I think our brand has demonstrated great resilience to even not having to rely on that stimulus, if you will, to grow. I don't see any impact associated with that.
Thank you very much.
The next question is from Joshua Long of Piper Sandler. Your line is open. Please go ahead.
Great. Thank you for squeezing me in. Charlie, I had a question on the, you know, your cultural aspect, which is a huge part of the story and the long-term investment thesis, and then a lot of the people pipeline or investments into your people pipeline that you've talked about in a couple different ways on the call. Curious if you're seeing that flow into more candidates, you know, at the store level or even at maybe corporate, depending on how you think about that. So are we thinking about these investments to kind of keep pace for? I know you talked about getting ahead of and investing ahead of what is going to be kind of an overarching dynamic here. But just curious if you're starting to see that, kind of those investments allow you to hold that pipeline steady.
Is it accelerating? Is it kind of what's the movement in real time in terms of being able to invest into that pipeline? I had a quick follow-up on labor as well.
Sure. I truly believe, and I appreciate the first part of the question on culture, that companies with strong cultures are best positioned to be able to navigate some of the most challenging environments. I know we've always said, even prior to the pandemic, that it'll be a great test for us and the quality of our culture if we can navigate through it with great results, which I think we've been able to prove. It's been tested, there's no doubt, and it's tested by way of a lot of the turnover that we've seen at the store level, even at the corporate level that a lot of companies are facing. I've talked to other CEOs who say the same thing.
You know, we're all in this together, but we're all dealing with a very difficult environment. We're going to have to adapt to the new way the world is moving, and we're demonstrating that. I do think that, look, we're seeing wage rates increase at the store level, both on the company and franchise side pretty consistently. We're paying what we believe is a fair amount and a proper amount to get the right talent in the organization to build for the long term. While that creates near-term pressure, I think the long-term outlook is very good. We are starting to see the pipeline of talent improve quite a bit.
The brand's still able to attract the best and brightest talent to come in and work with us to develop our long-term strategy and execute against it. All in all, I feel good about where we are right now. It was a little harder a couple months ago, but we are starting to see some improvement.
I appreciate that color. Alex, in your comments in line with some of the international investments that might have slipped, you mentioned some hiring delays, and it sounded like those might be at the corporate level, but just wanted to see if there's any additional context you could share there in terms of, you know, what hiring or kind of where in the organization those delays were being experienced.
Yeah, Josh, I think it really just points to what Charlie said a minute ago on, you know, just the challenges, you know, everyone's facing with, you know, attracting talent. You know, we are encouraged by what we're seeing by the end of the quarter and the pace of hiring picking up and entering into Q4, which is, you know, why kind of the guidance was positioned in the way it was on SG&A.
Got it. Thank you.
The next question comes from James Rutherford of Stephens Inc. Your line is open. Please go ahead.
Hey, thanks for slotting me in here. I just wanted to ask on the unit opening piece of this. The unit openings in the franchise business in the U.S. were consistent with prior quarters this quarter. I know that usually fourth quarter is a bit stronger for openings, and I was just curious if you maintain the same number of openings into the fourth quarter, that puts you at your 12% or better guided growth for the year. But if you do have that seasonal step up, you'd close in maybe on that 13%. I'm just curious for the very near term what your thoughts are on unit openings. Thank you.
Yeah, I think, as a brand, this year has demonstrated our ability and what we've desired to do, which is to, you know, if you will, smooth the cadence of openings over the year. We've always believed that should be the case. We've always had a strong fourth quarter, but I think, the demand for growth has shown that now we're starting to see this quarter-to-quarter cadence be fairly consistent. We're quite confident in our outlook for the balance of the year. You know, any adjustment to that would be centered on any supply chain challenges we mentioned before. Right now, we feel very good about where we are for the full year outlook.
Thanks for that. I know it's a smaller part of your business, but can you update us on where the dine-in is now as a percentage of sales? If that's another lever at the margin to add some incremental sales. Thanks very much.
Yeah. We actually saw even though we've only had about 200 restaurants open, we saw a pickup in their mix. These were restaurants that were historically higher dine-in mix, outpaced the system average. That wasn't too surprising to us as they've had their dining rooms open for a longer duration. I don't think, you know, I think the levers that Charlie mentioned in terms of same-store sales, our advertising strategy, our work against CRM, and continuing to build the delivery business are gonna be the long-term drivers of our growth.
The next question comes from Jim Sanderson of Northcoast Research. Your line is open. Please go ahead.
Hey, thanks for the question. Had a quick follow-up question on menu pricing going into the new year. Any feedback on how you expect consumers to react as far as transaction count, as we see the full impact of the 10% price increase heading into 2022?
Yeah. I think if you look at kind of what's going on on a macro basis, total savings rates are at all-time highs for consumers. They have a lot of money and a lot of cash out there. They're spending that money. They're dealing with the inflationary environment. It's not just in, you know, restaurants. It's across the board everywhere. I don't think we're seeing a slowdown in demand. I think that, you know, our assessment is that will be consistent with Wingstop. I think there's a window right here where we can deal with some of these price hikes to follow the real inflation that's out there. You know, I think that from our perspective, this is necessary, obviously to combat the inflation, especially on the wage side.
Like others have done, we're not the only ones in the market who have done that. I think it's a necessary adjustment. I don't anticipate seeing that affect transactions the way it would have in a more typical environment we've seen in the past.
As far as the delivery segment goes, you mentioned strength in digital. Is delivery mix growing? Is it relatively stable as far as the percentage of sales?
Yeah. I mentioned earlier we've grown delivery mix on a year-over-year basis by almost 3 percentage points. Twenty-seven percent plus is where we sit today.
That's still with a 15% premium above what you could buy in store?
Yeah, which is a good indicator of consumer tolerance for that pricing. To your last question, we tend on the marketplace side with DoorDash, we price up about 15% over our typical menu price, and we're seeing it grow. That's a great indicator of what you were talking about before.
All right. Thank you, Charlie.
There are no further questions in the queue, so I'll hand back. There are no further questions in the queue. Thank you for joining. You may now disconnect your lines.