Could Wingstop Be the Next Victim of Fast-Casual's Fall?

Fast-casual dining is in trouble. Even after its 400% rally, here’s why WING could be an unexpected victim... [Derby City Daily logo]( [Derby City Daily logo]( May 28, 2024 [Could Wingstop Be the Next Victim of Fast-Casual's Fall?]( By Andy Swan Not many could’ve anticipated the meteoric rise of the fast-casual chicken wing restaurant, Wingstop (WING). This chain specializing in chicken wings (and otherworldly ranch dipping sauce) has seen its shares rocket nearly 400% over the last five years alone: What's this secret sauce Wingstop seems to have figured out? The recipe comes down to: ✓ A straightforward menu offering classic wings, boneless wings, or crispy tenders in a variety of craveable flavors ✓ More than 2,000 locations around the world ✓ Strong, easy-to-use digital ordering and sales channels ✓ Innovative store concepts like ghost kitchens and cashless, off-premises-only formats ✓ A laser focus on efficient operations ✓ And seriously, the ranch is that good (consumer applause is off the charts) But as you learned [earlier this month]( the fast-casual dining sector is in trouble. Persistent inflation is eroding purchasing power, particularly for lower-income consumers, and making dining out less affordable. SPONSORED AD [Keith Kaplan’s Most Controversial Event Yet?]( Tomorrow, May 29th at 8 PM ET, Keith Kaplan is holding an event that will surprise a lot of people. It’s controversial... we debated whether or not we should even do this. But the fact is, it wouldn’t be right to withhold this opportunity from everyone – just because it may not be suited for some... [Get the details here]( (By clicking the link, your email address will automatically be added to the Event RSVP list.) First Signs of a Slowdown Until now, inflation seems to have worked in Wingstop’s favor: It’s benefitted from a major consumer preference shift from beef to chicken, driven by both the perceived health benefits and affordability of poultry. (The average price of chuck roast has soared beyond $7 per pound.) It's also been among the restaurant chains effectively passing on commodities and wage inflation to consumers. Price increases and a favorable shift towards higher-priced menu items helped deliver 22% domestic same-store sales growth in the first quarter. The problem? At LikeFolio, we are seeing the first signs of a slowdown. Wingstop web visits are plateauing: While visits are up 3% year over year on a 90-day moving average, volume is flat on a tighter, 30-day moving average. This suggests the company may be facing a pullback in demand – something that will be critical to monitor moving forward, especially as its stock trades near all-time highs. SPONSORED AD [Is Artificial Intelligence the Biggest Bubble in History?]( (Millions of Retirements to be Cut in HALF?) Is it any surprise 31 billionaires (including: Warren Buffett, Elon Musk, Jeff Bezos, and more) are quietly unloading their OWN stocks at record pace? [They’re getting OUT of AI (and Tech Stocks) before it’s too late](. But why? And WHERE are they moving their cash for the biggest profits in 2024? [Click here to discover all the details]( In addition, consumer interest in chicken wings is unseasonably low, with searches dropping off significantly following an annual [Super Bowl]( spike. Google Trends We believe this could be the first sign of shifting consumer tastes in favor of healthier meal options, especially heading into summer. This, coupled with plateauing web metrics, give us room for pause regarding WING growth prospects near-term. Wingstop believes it can reach over 7,000 global restaurants long term, including 4,000 domestic locations. Management plans to open 270 net new restaurants in 2024, marking an acceleration from the 255 net new locations opened last year. However, if the company reports a slowdown in growth next quarter, it may be unable to clear a high bar. We'll be monitoring WING closely through its next earnings event, which is expected at the end of July. Now, before I go, I want to make sure you have a chance to sign up for an event happening tomorrow called The One Percent Event. Keith Kaplan, the CEO of TradeSmith, let me know that he plans to reveal a “payout code” during that event that allows folks with large accounts to potentially pocket six figures over the next six to 12 months. When I heard that, I knew you’d be interested: [Follow this link to be automatically registered for the event](. Until next time, [Andy Swan's signature] [Andy Swan's signature] Andy Swan Founder, LikeFolio Discover More Free Insights from Derby City Daily Here's what you may have missed from Derby City Daily this week... ✓ [These Are the Hidden Opportunities in AI, EVs, and Crypto]( ✓ [How Walmart Is Capitalizing on America’s Streaming Obsession]( ✓ [For Zoom, the Return to Office Trend Isn’t the Only Problem]( Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. 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