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Chain LeaderEditorial Archives2004 — April — Growth Strategy
Plane and Simple
Wingstop plans to excel on very few menu items and grow with existing franchisees.
Jim Flynn, CEO, Wingstop
Jim Flynn, Wingstop CEO, says his company is primarily looking to existing, multiunit franchisees for growth.

The concept is simple: have one or two specialties and do them right. That doesn’t mean things don’t get a little complicated once in a while.

Ninety percent of all food sales at Wingstop are chicken wings and fries. While that may sound easy to manage, orders are often high volume, and franchisees can cook up a lot of variations in a small space. There are eight different sauces for the wings: Original Hot, Cajun, Atomic, Teriyaki, Mild, Lemon Pepper, Hawaiian Barbeque and Garlic Parmesan. Take one order of 100 wings with five or six different sauces, for example, and there’s a bit of a challenge.

“We have a narrow product offering, so it’s imperative that the product and the service are flawless,” says Jim Flynn, chief executive officer of the privately owned Wingstop.

His Garland, Texas-based company’s plans for growth are similar in their laser-like focus. Wingstop is primarily looking to existing multiunit franchisees to explore new markets.

Garland, Texas
2003 Systemwide Sales
$55 million*
2004 Systemwide Sales
$85 million to $90 million*
6 company owned, 154 franchised
Average Unit Volume
Average Check
Expansion Plans
80 franchised and 10 company-owned units in 2004
*company estimate

There are currently 160 of the aviation-themed stores, six of which are company-owned in the Dallas-Fort Worth area. This year Wingstop will open 90 more.

Wingstop opened its first unit in 1994 and began offering franchises in 1998. It grew 67 percent in 2003 by opening 60 stores. That’s getting the chain noticed.

Entrepreneur magazine recently ranked Wingstop No. 1 in the chicken-wing category and No. 5 in its “Top 25 New Franchises” ranking in 2003. In July, Wingstop placed third in sales growth in Restaurants & Institutions’ “Top 400” ranking.

“We have rapid growth going on,” says Flynn. He notes that Wingstop’s same-store sales grew 24.8 percent in the last quarter of 2003. In the first quarter of this year, he says, comps are up about 20 percent.

Maria Anton, executive editor of Entrepreneur, says the chicken-wing category as a whole has grown steadily the past few years. Three of the top four chicken franchises are chicken-wing establishments.

“From 2002 to the summer of 2003 alone, Wingstop went from 65 to 113 units,” she says. “That’s a lot of growth. It used to be that the interesting chicken places were KFC, Popeyes and Church’s. It’s not like the old fried-chicken days.”

Friends Helping Friends
The strategy behind Wingstop’s growth is concentrating on multiunit contracts. The company does not necessarily want one store per market. “It’s just too difficult on the brand partners in terms of support,” says Flynn. “They only have a single voice in advertising and marketing, for example.”

To define the multiunit strategy even further, Wingstop is wooing its existing business partners because the company and its franchisees are already familiar with each other. Management today takes a much more active role in helping these tried-and-true partners.

“Our preference, all other things being equal, is to continue growing with our existing franchisees,” says Wes Jablonski, executive vice president of business development and franchising at Wingstop.

Eighty percent of aviation-themed Wingstop’s business is takeout. That allows the company to keep costs down by producing high volume in a small footprint.

Calvin Golden, a multiunit franchisee and president of Wingstop’s Franchise Advisory Council, says the multiunit strategy is sound. “Multiunit guys are generally well-capitalized and have a shorter learning curve. They are significantly less labor intense for corporate,” he says. “It’s a smart way to grow quickly.”

Golden has four units in Dallas and one in Louisiana, and plans to open three more units this year in Dallas.

Wingstop, Jablonski explains, encourages its existing franchisees to grow their markets by making the development process easier for them. Wingstop’s Franchise Advisory Council helps them identify new markets and attain financing.

The initial investment for a Wingstop franchise is between $181,500 to $250,000, including a one-time franchise fee of $20,000. Franchisees also pay an ongoing royalty fee of 5 percent of gross sales.

As president of the advisory council, Golden acts as a liaison between the 100-some franchisees and corporate headquarters. Five at-large representatives elected by the franchisees meet quarterly to discuss any issues that affect the franchise system.

Fifty-five to 60 percent of the chain’s expansion is with current franchisees. But there are some new markets, too, like a six-store package recently sold in San Diego and another package in Mississippi.

Single-unit operators are also welcome. “We do need a mix to keep a strong business plan. If you don’t mix things up, there are bound to be flat years because multi-unit plans are spread out,” says Jablonski.

Keeping Consistent
Wingstop has several operational plans in place to keep quality consistent during its rapid growth.

The company trains franchisees in an intense three-week program in the company units in Dallas. “These are high-volume stores, so managers can see for themselves how busy things get,” Flynn says.

The organization is building its operations staff well ahead of growth. With 25 years of experience in chicken franchises, Chief Operating Officer Bill Knight is assembling three separate staffs: a training crew, an opening crew and a team of field consultants. If an operator is new to the industry, the opening crew will spend a week prior to opening at the establishment. The field consultants visit and evaluate units about four times per year. Half of those visits are unannounced.

Wingstop also employs mystery shoppers. The chain awards an all-expense-paid Caribbean vacation to the manager with the best mystery-shopper results. The winner is announced in March at Wingstop’s annual convention.

“We take that mystery-shopper data very seriously,” says Golden. “I’ve changed personnel based on those report cards.”

Wingstop also controls franchisees’ marketing efforts. “All ads must be approved by the franchisor, which is good,” Golden says. “You don’t want 100 different people doing different things with your trademark.”

Wingstop's chicken wings
Wingstop's chicken wings are available in eight varieties including Original Hot and Garlic Parmesan.

Wingstop keeps tabs on product consistency by having two distributors, one east of the Mississippi and one west, that all franchisees use. They provide the proprietary sauces to the units. The company also controls the specifications of the wings. For instance, all units use fresh, cryovaced product, which has a 12- to 14-day shelf life.

Food and paper prices comprise 34 percent to 35 percent of operating costs. “Chicken-wing prices are going through the roof right now,” says Flynn. The high price of wings is out of the company’s control because wings are a market-driven commodity. “At Super Bowl time, the price usually peaks than begins falling off. This year it’s still holding at a high price, when in years past it usually drops by now,” he says.

Labor makes up about 25 percent of expenses. Wingstop does have some labor-intensive practices. For example, some of its side dishes like seasoned fries, vegetable sticks and pearl potato salad are hand-cut. “Potatoes come in as potatoes. Employees make the fries and potato salad. They cut celery and carrots,” says Flynn. “We can do these things because of our focus.”

Choice Made Simple
Flynn is much more apt to name Papa John’s as a competitor than a chicken chain because consumers either want wings or they don’t. “We don’t see bone-in chicken stores like Popeyes as competitors. Even the other wing stores offer burgers and salads. That’s not our competition,” says Flynn. “I think people ask their families, ‘Do you want pizza or wings for dinner?’”

Flynn says Wingstop will not make food ahead of time. The company quotes a 14-minute wait for wings during the lunch hour. “Our marketing materials encourage people to call ahead with orders,” he says.

The chain’s business hours of 11 a.m. to midnight on Fridays, Saturdays and Sundays, and 4 p.m. to midnight Monday through Thursday reflect peak dining times. Flynn notes that Wingstop has always been oriented toward dinner and late night. Lunch on weekends has proven to be successful as well, though Flynn will not quantify that success.

Eighty percent of Wingstop’s business is takeout. That allows the company to keep costs down by producing high volume in a small footprint.The average unit size is 1,200 square feet.

Testament to Wingstop’s uniqueness is that it turned a fan into a national spokes-man. But this is no ordinary fan—it’s retired Dallas football hero and FOX Sports personality Troy Aikman. He has been its spokesman since October.

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