Wingstop Inc.(WING)Q2 2026 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Wingstop Inc.'s Fiscal Second Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Please signal a conference specialist by pressing the star key followed by 0. Please note that this conference is being recorded today. Wednesday, July 29, 2026. On the call today are Michael J. Skipworth, President and Chief Executive Officer; Alex Kaleida, Senior Vice President and Chief Financial Officer; and Sarah Niehaus, Senior Director of Investor Relations. I would now like to turn the conference over to Sarah. Please go ahead. Thank you.

Thank you, and welcome to the fiscal second quarter 2026 earnings conference call for Wingstop. Our results were published earlier this morning and are available on our investor relations 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 each of you please 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 Michael.

Thank you, Sarah. Good morning, everyone, and thank you for joining us. I would like to start the call by taking a moment to recognize our brand partners, restaurant teams and global support center team members. I have previously described 2026 as a transformational year for Wingstop. From operationalizing Wingstop's Smart Kitchen, a new kitchen operating platform that completely changed our back-of-house operations, to the national launch of Club Wingstop, our first loyalty program. The commitment from our brand partners and team members has been impressive. All of this while operating in this evolving consumer environment. This is a direct reflection of the resilience and incredible commitment of team members across the system and demonstrates the shared excitement around the future for Wingstop. While we have continued to strengthen the business for the long term, our financial performance this quarter fell short of our expectations, with second quarter same-store sales declining 7.5%. The pressure on our core guests remained more pronounced than we anticipated. At the same time, the quarter gave us greater clarity about what is driving our results. It is increasingly clear that the challenge we are facing today is not structural and not a reflection of our brand relevance or product quality. That being said, we have an opportunity to showcase value more overtly to help preserve Wingstop occasions with our core guests as price-pointed messaging broadly across the industry has continued to intensify. Independent brand tracking continues to rank Wingstop among the strongest restaurant brands for quality. Brand awareness is growing and over the past year aided brand awareness has increased more than 5 percentage points. Perhaps one of the strongest proof points of brand health and relevance came during the World Cup. On key match days, we saw same-store sales swing into double-digit growth as guests came together to celebrate with family and friends. We saw similar response during the NBA Finals in markets with hometown teams competing. Those moments are a great reminder of what we have known as a brand for a long time: when our guests have special moments and occasions to celebrate together, Wingstop's flavor and quality is one of their top choices. Many of those guests who engage with Wingstop on those days are the very same consumers experiencing the greatest financial pressure today. Whether it was key World Cup matches or the NBA Finals, our core guests ordered for groups, driving double-digit increases in average ticket and frequently choosing one of our bundled offerings. To us, that is a really important insight. When our guests choose to treat themselves and come together for a group occasion, the Wingstop brand was top of mind. Consumers are still willing to spend on meaningful occasions. They simply want confidence they are receiving compelling value for the group. Our opportunity, particularly in this current environment, is to make that per-person value even more obvious so that our guests consider Wingstop for more occasions while we continue to expand the brand to new consumers. We find our business more exposed than other restaurant concepts to consumers who have been disproportionately impacted by persistent inflation and ongoing economic uncertainty. To better appreciate our results, let me share a little bit about the makeup of our restaurant footprint. Today, more than 55% of our domestic restaurants are located in urban trade areas where households are under more financial stress than higher-income households. Digital guest visits in those trade areas and corresponding frequency declined by approximately 9% while visits in higher-income trade areas actually grew in the second quarter. That divergence in trend reinforces our belief that the pressure we are seeing today in our core guests is macro-driven, not any change in the underlying strength of the Wingstop brand. While brand awareness remains an opportunity for us, we have made great progress over the last five years and our footprint has played a key role. As awareness has continued to grow, our focus is naturally evolving. Over the past several years, we focused on introducing more consumers to the Wingstop brand. Today, our opportunity is increasingly about converting that awareness into consideration, driving more occasions and increased frequency. That means giving guests more reasons to choose Wingstop through differentiated flavor innovation, compelling value and increasingly personalized engagement. What you will see from us in the second half of the year is our creative and message will evolve to this strategy. When we think about value, it is one simple question: was the experience worth what I paid? Price is certainly an input into that equation, but it is not the only one. Our quality, flavor, abundance and experience all contribute to the value guests receive. That said, in this current environment, price is clearly playing a greater role in consumers' perception of value. Guests can still feed a group at Wingstop for approximately $8 per person just as they could several years ago. What has changed is the environment our guests are operating in, and that means we have to communicate value in ways that resonate today. Our confidence in the strategies we have put in place has not changed. As we move into the balance of 2026, we are executing against our strategies with a sharper focus on protecting our core guests while continuing to strengthen the business for the long term. During the second quarter, we deployed a variety of offers to better understand how guests respond to different expressions of value. Our $1 wing promotion reinforced the demand compelling value can generate. The 30-for-30 bundle validated that the right offer can do more than drive transactions; it can grow the overall occasion, increasing average first-party ticket by nearly 17%. Flavors Under $10 demonstrated that we can better highlight the accessible price points already available on our menu, creating more entry points into the Wingstop brand while maintaining the quality, flavor and experience our guests expect. That approach resonated with guests. Overall satisfaction scores improved in 89% of the markets where the promotion ran. Importantly, we are executing our value strategy while preserving the strong unit economics that have always differentiated the Wingstop model. Competing more effectively for today's consumer requires us to win more occasions and strengthen the emotional connection with our guests over time. Perhaps the most significant milestone in advancing that strategy this quarter, and one we have been working toward for several years, was the national launch of Club Wingstop, our first loyalty program. From the beginning, our vision was not simply to launch another loyalty program; it was to build a more personalized relationship with our guests that allows us to engage with them in more meaningful ways, such as through exclusive access to Wingstop or special experiences and events. The early response has exceeded our expectations. In just a matter of weeks, Club Wingstop enrollments are tracking ahead of expectations by 22%, and loyalty sales represent nearly half of our first-party digital sales, significantly outperforming the pilot market results. While our near-term focus is centered on enrollment, early engagement trends reinforce our confidence in the platform. Club Wingstop has given us something we have never had before: a scalable personalization platform with millions of active guests that allows us to introduce exclusive experiences, tailor hyper-personalized communications, deliver relevant value through targeted offers and ultimately build greater guest frequency over time. As we have discussed, value is not a one-size-fits-all, and Club Wingstop gives us the ability to deliver the right message and the right offer to the right guests at the right time, ultimately strengthening the emotional connection with our guests. That is a much more effective way to communicate the compelling value already inherent in our menu than broad-based discounting, and one that supports both guest engagement and healthy brand partner economics. It is still early, and we have a great deal to learn as the platform continues to mature, but the pace of adoption and early engagement reinforce our confidence in Club Wingstop and its potential to become an important long-term growth platform for the brand. Awareness has grown, our focus is increasingly on converting that awareness into consideration, and one of the greatest reasons guests engage with Wingstop continues to be our unmatched flavor. Our bold and distinctive flavors have always been one of our strongest competitive advantages, and we have recently become much more intentional about maintaining a consistent cadence of innovation. Citrus Mojo and Sweet & Heat Chamoy generated great guest engagement during the quarter and we are excited about our innovation pipeline in the second half of the year. Innovation remains one of the best ways we can drive consideration, create new occasions, encourage repeat visits and reinforce what makes Wingstop unique. Operations is equally as critical to ensure we consistently deliver on the promise we are creating for our guests. That is exactly why we have remained focused on executing our Wingstop Smart Kitchen strategy. While we have more work to do operationally, we are seeing the improvements we expected in guest satisfaction, speed, consistency and restaurant execution. While the current environment is masking the near-term same-store sales lift, it does not change the long-term opportunity. Smart Kitchen is designed to improve the guest experience over time, and those benefits compound as guests repeatedly experience faster and more consistent service. Our field team is supporting through training and monitoring operating standards to ensure every restaurant consistently delivers the Wingstop experience our guests expect. Our historically lower-performing restaurants have improved digital guest satisfaction by more than 11 percentage points while reducing the performance gap across the system by more than 40%. To us, those are the right leading indicators and they reinforce our confidence that Wingstop's marketing will continue strengthening the business over the long term. Perhaps the strongest validation of our confidence in the long-term opportunity is the confidence our brand partners continue to demonstrate through their investment in Wingstop. New restaurant development remains healthy across both our domestic and international business, reinforcing our belief that our long-term unit economics and growth opportunity remain firmly intact. Our brand partners continue investing because they see the same long-term opportunity we do: a highly differentiated brand, compelling restaurant economics and a significant white space remaining both in the U.S. and internationally. Our brand partners in the U.S. opened more than 300 restaurants across 46 states in the last twelve months, a more than 13% growth rate. Outside of the U.S., we are continuing to make meaningful progress as we surpassed 100 restaurants in the United Kingdom, opened our flagship restaurant in Singapore, and remain on track to enter India later this year, which represents our largest international growth opportunity to date. 2026 is on pace for another record year of openings for our international markets. We are also excited to announce that we have signed a development agreement to expand into Poland, a market with an opportunity of more than 100 restaurants, reflecting continued confidence in the long-term international opportunity and adding another attractive growth market to our development pipeline. Finally, we are continuing to invest in one of our most important competitive advantages, our people. We have recently strengthened our leadership team with the addition of our first Chief AI Officer, further building the capabilities we believe are necessary to support Wingstop's next chapter of growth. Just as we have invested in our restaurants, technology and digital capabilities, we are equally committed to investing in the talent that will help us execute our strategy and deliver on the long term in front of us. With today's consumer backdrop, we are focused on what we can control. First, we are refining how we bring Wingstop to market. Our creative and messaging will increasingly connect our leadership in quality, bold flavor and compelling price-per-person value, helping us win more occasions more consistently throughout the year. Second, we are building deeper relationships with our guests through Club Wingstop. While still early in the launch and initial results are encouraging, Club Wingstop gives us the ability to communicate more effectively, deliver value and exclusive experiences, and build greater guest frequency over time. We are also focused on driving Smart Kitchen execution. As we continue improving operational consistency across the system, we are creating a more consistent and better guest experience that reinforces everything our marketing promises and strengthens the business for the long term. Taken together, these priorities position us to better serve our guests today while building an even stronger Wingstop for years ahead. We believe they are the right actions to strengthen the brand, create long-term shareholder value and continue advancing towards our goal of becoming a top-10 global restaurant brand. With that, I will turn the call over to Alex.

Thank you, Michael. Good morning, everyone. As Michael discussed, our second quarter results fell below our expectations and we are adapting our creative and messaging in the second half to apply what we learned in Q2. Even in this environment, our confidence in our long-term strategy has not changed. During the second quarter, we delivered system-wide sales growth, double-digit adjusted EBITDA growth, and strong free cash flow generation, giving us the flexibility to continue investing behind our strategic priorities. While we were disappointed in our same-store sales result, Q2 showcased the strength of our model and we believe we are executing strategies that will return same-store sales to growth. One of the clearest financial proof points of our model continues to be our unit development and the opportunity to scale Wingstop to more than 10,000 restaurants globally. System-wide sales grew 5.3% to approximately $1.4 billion supported by continued net new restaurant openings across the system. As a result, royalty revenue, franchise fees and other increased 8.7% to $86.8 million. Company-owned restaurant sales increased 5.3% to $34.2 million, which included the same-store sales decline of 2.5% during the second quarter and three additional corporate-owned restaurants added since the prior year. Company-owned restaurants' same-store sales outperformed the system average and benefited from a portfolio concentrated in the Dallas-Fort Worth market, our most mature market and one that has the highest level of brand awareness. Compared to our broader system, the Dallas-Fort Worth market also has a more diversified consumer base and less concentration with the lower-income consumer, a great representation of how we see our long-term opportunity to widen our consumer base. Turning to restaurant-level margins, company-owned cost of sales improved 190 basis points to 73.3% of company-owned restaurant sales. This improvement was primarily driven by lower bone-in wing costs. Our supply chain strategy continues to provide great visibility and predictability into food costs for our brand partners, allowing us to benefit when market conditions become more favorable as demonstrated in Q2. SG&A expense declined $2.7 million to $30.2 million versus the prior year for the second quarter, primarily related to the one-time stock forfeiture and stock-based compensation expense. We continue to take a disciplined approach to invest in talent and capabilities that we believe will support sustainable long-term growth. Q2 net income increased to $31.3 million, or $1.15 per diluted share, an increase of 16.9% versus the prior year. Adjusted EBITDA, a non-GAAP measure, increased 12.5% to $66.6 million. Our capital allocation priorities remain unchanged. Our first priority is investing behind our organic growth strategies, where we believe we can generate the highest long-term returns. That includes investments in technology and digital innovation, corporate restaurant operations, and the strategic initiatives Michael discussed earlier that we believe will strengthen Wingstop's long-term competitive position. In the third quarter, we expect to close on the acquisition of 13 restaurants in a market outside of the Dallas-Fort Worth area, representing an investment of approximately $32 million. With this acquisition, it will unlock a significant development opportunity for our company-owned portfolio that has the potential to support an additional 25 restaurants over time. When opportunities arise to deploy capital in ways that both strengthen the business and create attractive long-term returns, we continue to evaluate them through that disciplined framework. The acquired restaurants are anticipated to contribute approximately $7 million in revenue and $1 million of adjusted EBITDA for the balance of 2026, net of the royalty impact. These restaurants operate at volumes more representative of the broader system average than our existing company-owned portfolio and we expect to invest behind operations as we integrate them. We remain committed to returning excess capital to shareholders through a balanced approach that includes both our quarterly dividend and our share repurchase program. On July 28, our board of directors approved an increase to our quarterly cash dividend from $0.30 per share to $0.33 per share. In addition, through the first half of the year, we have repurchased 374,000 shares of common stock for $78.5 million. As of quarter end, approximately $313 million remained available under our share repurchase authorization. Turning to our outlook, we have updated elements of our full-year guidance to reflect both the current operating environment and the continued investments we are making across the business. First, we are updating our domestic same-store sales outlook to a decline of 4% to 6% for the year. We believe this change reflects the Q2 results in our business and the current macroeconomic environment, including recent inflation in fuel prices. Importantly, we are reiterating our global unit growth guidance of 15% to 16% for the year. We expect the pace of openings to accelerate through the balance of the year with the fourth quarter representing our largest quarter of net new restaurant openings. The health of our development pipeline continues to provide us with the visibility into the balance of the year, reinforcing our confidence and one of the key drivers of our long-term algorithm. We are also updating our SG&A outlook to a range of $140 million to $143 million and stock-based compensation expense to approximately $24 million. While we have updated our same-store sales outlook to address the current environment and pressure on our core consumer, we are focusing on what we can control and the opportunities in front of us with our long-term strategies. Our brand health metrics are strong. The Wingstop Smart Kitchen elevates our operating standards to a level unseen before for the brand. The Wingstop Smart Kitchen investment along with the launch of our first loyalty program positions us for another phase of growth. And importantly, in a franchise system such as ours, we believe our unit economics remain best-in-class, fueling this opportunity to bring more Wingstop to guests around the world. I want to thank our team members, supplier partners, and our brand partners for their continued commitment and dedication to Wingstop. With that, operator, please open the line for questions.

Thank you. We will now begin the question-and-answer session. On your telephone keypad, if you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Again, please limit yourself to one question and a follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from David Tarantino with Baird. Please go ahead.

Hi, good morning. My question is on the value strategy that you mentioned related to the new approach on the marketing. I guess two parts to the question. One: could you just elaborate on how you are planning to approach this? Is this a discount versus what you already offer? Are you highlighting the value of what you offer today? And then secondly, I was hoping you could share maybe some anecdotes on whether you have some test results or proof points that might give us confidence that this strategy will indeed work to stabilize the sales trend. Thanks.

David, good morning, and thank you for the question. I think it is important to take a little bit of a step back and talk about what we saw in the second quarter. If you recall, we discussed the need to protect our core consumer. What you saw us do in the second quarter was bring forward value messaging, and we tested a handful of ways to present value. We also tested ways to deconstruct inherent value on our menu to create single-eater entry price points or even a price per person for group occasions. A great example from Q2 was when we put forward 30 wings for $30. What we saw with that promotion was guests building their own bundles with attachments and ultimately driving a higher average check well above that $30 price point. That told us it is not just price point; guests saw compelling value in building their own bundles while knowing the value they were getting on the wings. So quality, flavor, abundance and the value per person are key to winning more occasions for us. We also increased the frequency of flavor innovation and saw measurable increases in the rate of repeat visits within the first 90 days when we bring flavor innovation forward. That is another key indicator of how we can protect our core consumer. We have a strong pipeline of flavor innovation in the back half of the year that we are excited about. So when we think about both flavor and value, we know we can do a better job executing our creative and messaging to include a call to action that shows not only quality and flavor, but also breaks through with that value per person that exists on our menu today. Taking a step back and looking at the last five years and how we have scaled brand awareness, we see a real opportunity to evolve and focus on consideration and value-per-person messaging as well as flavor innovation. Both will help us drive consideration and purchases. You will see us evolve our marketing in the second half to more heavily focus on driving consideration and applying the learnings from Q2.

Great. And maybe just a follow-up on the second part of my question. I guess were you seeing signs that this strategy is working under the surface? I only ask because the result for Q2 came in a bit below your expectations, so I am trying to reconcile those two points. It seems like you have unlocked some concepts on value that could work; do you see it working under the surface and giving you confidence for the second half?

Yes, David. We did see certain elements that we put forward showed some really positive signs. At a higher level, we did see an improvement in trend as it relates to transactions. We gave a little bit of that back on ticket but did see some improvement in transactions and we also saw that drive engagement with our core guest in some of the trade areas that are under more pressure, which we referenced in our prepared remarks. As we leaned in and demonstrated some of these value offerings inherent in our menu today, we saw improvement in those trade areas. Thank you.

The next question comes from Sara Senatore with Bank of America. Please go ahead.

Thank you. A question and a follow-up. Could you talk about the marketing perhaps a little bit? You talked about call to action. One of the things we have seen is that social and digital marketing has been powerful for some brands around relevance to the cultural conversation. Have you done anything, stood up social listening or changed anything about your strategy? I know you have talked about shifting a little more from linear television toward digital, but the examples you cited of really strong performance were around live sports, which has historically been your strong suit. Any update on a pivot that makes you more visible on social and digital media? And a quick follow-up. Thank you.

Hey, Sara. Good morning. Reiterating some of our prepared remarks and my response to David earlier, you will see us get much tighter around execution—both creative and messaging—which does include that call to action but balanced with our historical emphasis on quality and flavor. It is about that value per person you can get in our menu today and finding ways to present it that include a clear call to action. We have acknowledged in the first half of the year that we need to drive execution as it relates to creative and messaging. You will see us continue to lean in and improve consistency and focus around that messaging in the back half of the year.

And Sara, to add to Michael's response, alongside our launch of Club Wingstop, we invested behind our personalization engine through CRM and Club Wingstop that allows us to hyper-personalize messages to guests. Some of our core consumers that are feeling more pressure could see a more value-centric message; others could see something centered around flavor to elevate and show the quality we can deliver. Club Wingstop is a platform to further strengthen our value proposition through challenges and rewarding members with more points and access. The combination of that plus Michael's comments is something we are now able to unlock.

The next question comes from Jon Tower with Citi. Please go ahead.

Hey, thanks for taking the question. Maybe just a couple quick ones. You obviously spoke quite a bit on innovation around flavor, which has been your play for a long while. Is there any other innovation we should be thinking of on your menu, taking into consideration your makeline with low SKU count, but also the idea new product news may drive customers to stores? The follow-up: around the store acquisition you made outside of Dallas—13 stores—and you alluded to another potential 25 in the pipeline. Is it your intention to build those out yourself in the company portfolio, or will you own this and potentially refranchise that chunk later?

Hey, Jon. Good morning. I will take the first question and let Alex take the second. I would point to the moments we referenced in the prepared remarks—the World Cup and certain key matchups. Those moments remind us how special this brand is. Our core guests engaged with the brand in a big way on certain matchup days, showing that the brand is still relevant and top of mind even though our core guest is under pressure. When we continue to bring flavor innovation that only Wingstop can bring forward, it drives engagement and repeat visits, and it also brings in new guests and drives trial. You will see us continue to lean into our proven playbook around flavor innovation. Alex will address the corporate acquisition question.

Hey, Jon. Regarding the corporate acquisition, to be clear, this is not a departure from our strategy to maintain an asset-light, highly franchised model. As we see deals come through the system, we evaluated this market and saw an opportunity to step into it in a way that enhances shareholder value. We do anticipate retaining this market. In addition to the 13 restaurants, we see another potential 25 restaurants for us to build over time.

The next question comes from Brian Harbour with Morgan Stanley. Please go ahead.

Yes, thanks. Good morning. When you spoke about the more challenged areas, I guess those are the lower-income markets. Do you think you are losing share there to some extent? Is messaging value meant to regain some of that, or do you think this is a problem across these markets generally?

Hey, Brian. Good morning. As we indicated in our prepared remarks, in markets where we have a heavier presence of lower-income consumers, we did see a pullback in frequency. When we look at the data, I would not necessarily say those guests are going somewhere else; it appears they are generally pulling back given the economic pressures they face. The World Cup behavior was a strong signal that our core guest is still there and that Wingstop remains top of mind. That supports the importance of our plan for the second half—presenting value with our quality and flavor in a way that positions us to win more occasions with that core guest.

And how did third-party delivery do in the second quarter? I might think that channel is holding up better based on the customer base. Also, as you have been working on service time in that channel, have you continued to see improvement there and is that resonating?

Brian, regarding third-party delivery, we did not see as much lift as we might have expected just from improvements in speed alone. In Q2 we tested and learned more about how those platforms' algorithms work and how important conversion is in fueling those algorithms. Based on what we learned in Q2 and our plan for the back half, we believe we have a strategy that will fuel those algorithms and put Wingstop into more of the consideration set so we can take advantage of the speed improvements we've made.

The next question comes from Jim Salera with Stephens. Please go ahead.

Yes, good morning. Thanks for taking our question. I wanted to ask about the new unit opening splits. Michael, you highlighted that 55% are in markets experiencing more pressure. Can you give us a sense, given the new unit openings have such a strong cadence, of the split of the new units and if you have a glide path for where you expect that mix to be longer term between higher-income areas that are doing better and the more legacy, lower-income units?

Jim, great question and good morning. Our existing restaurant openings and what's in the pipeline are generally a decent representation of our footprint today as we execute those development playbooks. One of the things we've discussed is our core demand space where we are only winning roughly 2% to 3% of that demand space today, while benchmarks suggest we could win close to 20%. As you deconstruct that demand space, the majority of the spend is represented by households with income above $100,000. As we map out continued growth in the U.S., you should expect our footprint to evolve a bit and position us to win more of those occasions over time.

If we think about demand drivers, you called out that engagement in lower-income areas is often around specific events, primarily sporting events. Is that different with higher-income groups? Do you see different drivers or is it primarily that higher-income households have more disposable income and frequency around events is higher?

This is Alex. The distinction is that our core consumers re-engaged in an outsized way during some of those key events, which was the notable factor. We also mentioned in our prepared remarks that higher-income areas outperformed those trade areas more concentrated with low-income households. An interesting element: within Club Wingstop, our early focus is enrollment. The typical guest enrolling in Club Wingstop so far is our core consumer—lower-income, younger demographics—and they are showing a strong propensity to return; about 70% of those loyalty members who signed up are already back for another visit. That encourages us and shows how Club Wingstop can strengthen our value proposition.

The next question comes from Zachary Fadem with Wells Fargo. Please go ahead.

Hi, good morning. I know you do not typically talk about cadence, but considering all the moving parts around oil prices, sporting events and the levers you have pulled around Club Wingstop and value, could you walk us through monthly comp performance in a little more detail and any changes you saw as these evolved and whether there is a specific message around early Q3 and your expectations for the shape of the back half of the year?

Hey, Zachary. Good morning. On our last call, we signaled a little about what we saw in the first month of the quarter. In May we saw gas prices hit a recent peak and that had a pronounced impact on our core guest; that is reflected in the quarter results. As we think about our guide and the balance of the year, our approach remains consistent: look at trends in the business and acknowledge recent fuel-price inflation. What I would point you to is the strategies we are executing—tightening creative and messaging to drive quality, flavor and value per person; Club Wingstop, which we see as an encouraging long-term driver; and Smart Kitchen execution. As we execute these, think about a ratable improvement in trend as we progress through the back half of the year.

You have a favorable environment for wing prices right now. To what extent do you think value efforts can be sustained considering the profit dynamic? And separately, on EBITDA for the year, to what extent do you think double-digit growth is still on the table?

Zachary, regarding the favorable market dynamics, you saw that play out in the second quarter with our food costs. We have been discussing with our brand partners the opportunity to invest behind our value strategies. We can take advantage of the current wing-price backdrop to help invest behind bundles and flavor strategies while maintaining quality. Regarding adjusted EBITDA growth for the balance of the year, based on the shape of our guidance, it still can imply a double-digit rate versus the prior year.

The next question comes from Danilo Gargiulo with Bernstein. Please go ahead.

Thank you. Michael, historically when same-store sales decline in the industry, operators typically respond by reducing labor in their stores. Have you seen that trend across franchisees and therefore would you expect their four-wall economics to be largely unaffected this year?

Hey, Danilo. Thanks for the question. Regarding labor, we run a highly efficient labor model in our restaurants, so there is not a lot of labor to begin with. Given recent sales, I would not point to a material margin benefit from labor reductions. What I would point to is the strength of our model: the AUV growth we've seen over the past four or five years, paired with our supply chain strategy, means Wingstop unit economics remain really strong. One of the most supportive signals is our reiterated unit guidance of 15% to 16% growth and a development pipeline at a record level, showing strong brand-partner commitment to continue investing in Wingstop.

Exactly to that point, franchisee economics dictate their willingness to open stores. Today you are sitting at about $1.9 million average unit volume, which is significantly above historical level. At what point of same-store sales growth do you expect franchisees to feel conviction on the long term and potentially reduce net unit growth from the 15%-plus that we are seeing today?

Danilo, as indicated by our guide for the balance of the year and the strategies we are executing, we expect a meaningful inflection in trend. We are focused on executing against that and working toward growth and expanding AUVs, which will continue to fuel one of the strongest development pipelines in the industry.

The next question comes from Gregory Francfort with Guggenheim Securities. Please go ahead.

Thanks, Michael. Just a follow-up on Danilo's question. You've suggested that cannibalization is not material to your system. Looking at the down high-single-digit comps, can you help us understand what you are seeing or give us data points that support there is no reason for franchisees or you to start pulling back unit growth?

Gregory, regarding cannibalization, we referenced in Q1 that we actually saw that impact retract to below historical levels and we measure it every quarter; in Q2 it got a bit lower still. What I would point to regarding the pipeline and unit growth is conversations with brand partners— their excitement around our strategies, what they are seeing from Smart Kitchen, early Club Wingstop performance, and the moments we saw in Q2 that remind them how special the brand is. Our brand partners are bought in, and that is driving the continued pace of growth.

Okay. Did you have a follow-up, sir?

No. Thank you.

The next question comes from Brian Vaccaro with Raymond James. Please go ahead.

Hi. Thank you. Back to the need for more value, I am curious what led you to conclude that beyond the softer comp trends and some macro things in the markets you highlighted. Specifically, did you look under the hood at product mix? Have sales for chicken sandwiches or boneless products been softer than bone-in wings, which might reflect more intense value competition from QSR competitors? Any dynamics there as you look at what this value opportunity might look like?

Hey, Brian. Good morning. When we saw the conflict in the Middle East and the impact on gas prices, that created incremental pressure on our core guest and was a catalyst for leaning in to protect them. We tested several tactics to deliver value and the messaging around it, and it laddered back to our core occasion—the group occasion—and making sure we message the value per person we can deliver. That value has been roughly $8 per person for several years, and it remains compelling when matched with Wingstop's quality and flavor and the improved guest experience supported by Smart Kitchen. Regarding menu mix, bone-in wings are our halo and hero product. When core guests re-engaged, they came back for what they love—bone-in wings. With promotions like 30-for-30, guests built up their tickets above the base price. That behavior is positive and something we can continue to lean on as we protect our core guests and win more occasions in the back half of the year.

That is helpful. As a follow-up, you referenced the 30-for-30 bundle and other bundles like Game Time at $35 and 20-for-20 last year. You also mentioned single-eater price points like $10 or lower. Can you talk about the performance of $1 wings, the 10-for-10 band, Flavors Under $10, or early learnings on the $5-and-under Tastings Menu you are testing? How important is that $10-and-under range versus the bundles that emphasize price per person for larger groups?

Brian, the simple way to think about it is we are deconstructing the inherent value in our menu to showcase a lower entry price point for consumers. There is still opportunity for us to educate guests on how to navigate our menu, which is a key learning from Q2. Flavors Under $10 is a good example: it is the same value as a larger group pack on our menu; we are just helping guests identify an easy entry point. The reality is they often build tickets much higher than the less-than-$10 price point they see. That dynamic is encouraging and supports our approach to highlight both single-eater entry points and group bundles.

This concludes our question-and-answer session and Wingstop Inc.'s Fiscal Second Quarter 2026 Earnings Conference Call. Thank you for attending today's presentation. You may now disconnect.