Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Wingstop Inc. Fiscal First Quarter 2021 Earnings Conference Call. Please note this conference is being recorded today, Wednesday, April 28th, 2021. On the call, we have Charlie Morrison, Chairman and Chief Executive Officer, and Michael Skipworth, Executive Vice President and Chief Financial Officer. I would now like to turn the conference over to Michael. Please go ahead, sir. Thank you, and welcome. Everyone should have access to our fiscal first 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 forward-looking 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. Finally, we will discuss preliminary sales results for the first four weeks of the second fiscal quarter. We have not, of course, completed closing procedures for the second fiscal quarter, so preliminary sales results discussed today are subject to change, pending finalization, and actual results could differ materially. 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, Michael. We had a fantastic first quarter for Wingstop and a carryover of the incredible momentum we experienced during 2020. While the COVID-19 pandemic is far from over, we are glad to see that an economic recovery appears to be well underway and our long-term growth strategies continue to fuel strong results for the brand. During the first quarter, we opened 41 net new Wingstop restaurants, an all-time record first quarter that translated to year-over-year unit growth of 11.7%. This growth is representative of our strongest new restaurant development pipeline in the history of our brand, with over 700 commitments at the beginning of 2021. This compares to 610 development commitments a year ago. We anticipate our new unit growth to achieve record levels this year, and as such, we are providing guidance of 11% plus unit growth for 2021, highlighting our confidence in this acceleration. Same-store sales grew by 20.7% in Q1, which represents a 30.6% two-year comp, an acceleration from Q4 2020. Our AUV of $1.5 million, combined with an average initial investment of under $400,000, can generally yield cash-on-cash returns in excess of 50% for our brand partners, fueling the acceleration in restaurant development. The growth in our AUV has created efficiencies in our restaurant P&L that have resulted in growth in four-wall profits for our franchisees, despite record-high bone-in chicken wing prices. We value the strong relationships we have with our supplier partners, which have allowed us to successfully mitigate this inflationary period with landed prices for our wings that are well below the spot market prices. We believe that these prices are likely to continue to be elevated in 2021 as suppliers are struggling, just as many in our industry are, to hire people to process chicken, thus placing unexpected pressure on the amount of birds that can be processed and negatively affecting supply of all parts of the chicken in the U.S., not just wings. However, at these current higher wing prices, we believe our brand partners have seen an increase in profit dollars, thanks to our strong two-year same-store sales growth of more than 30%. While there is a significant amount of government stimulus in the economy right now, driving people to avoid accepting open positions for employment and fueling a near-term sales tailwind for almost all restaurant brands, we remain focused on our long-term strategy as we continue to pull a number of levers we have to drive sustainable growth and deliver on our 3 to 5-year target of mid-single-digit domestic same-store sales growth. Our digital mix of over 60% has fueled the growth of a database of unique users to Wingstop totaling over 20 million, which enables us to leverage our robust CRM architecture to increase customer retention levels to a 12-month high in the first quarter. We also put our multimillion-dollar surplus of advertising dollars from 2020 to work at the end of the first quarter to deliver more TRPs and premium national advertising placements, focusing those ads on moments we all know that drive the crave for Wingstop and pointing guests to delivery as a convenient channel to get their wings. We know these drivers are working. Coupled with the significant amount of government stimulus support, our domestic same-store sales have remained positive during the first four weeks of our second quarter, which represents an acceleration in the two-year comp. We are also pleased with the performance and continued recovery of our strategic international markets, which like other global brands, have been more impacted by the pandemic over the past year. Our timely investments in 2020 have helped position these markets to emerge in a position of strength. The events in 2020 validated our growth strategy, which will be focused in markets where we can have a premium brand positioning and can operate a high off-premise business. We will continue to be very strategic in which markets we focus our resources and efforts. An example of this is the exciting announcement yesterday of our plans to take Wingstop to Canada. This new development agreement is intended to yield 100 new restaurants over the next 10 years. Canada is a market very similar to the U.S. that has seen high growth in off-premise and supports our premium brand positioning. Canada will be the first market to take our domestic digital platform global, something we expect to pay significant dividends in the future. The validation of our international strategy and success in our strategic markets like Mexico and the U.K. has translated into encouraging progress in our business development pipeline in other parts of the world. A significant contributor to our results has been our leading restaurant technology platform. Over the past few years, we've been making investments in our digital platform to sustain a best-in-class infrastructure, which have paid off well. Digital sales mix has sustained above 60% over the past year, demonstrating a high level of stickiness with our guests and the high-quality experience they have with our digital platform. We won't stop at 60%-plus. We have a stated goal of digitizing every Wingstop transaction and believe it is important to protect our investment and digital foundation to operate a global restaurant brand. We believe having a global mindset and approaching these solutions from a global standpoint will give us a competitive advantage. As a result, we are doubling down on our technology efforts and will be investing to elevate our capabilities in this area. We are embarking on a multi-year project that will take our digital capabilities to the next level. During the next five years, we plan to invest significantly to execute initiatives that center around, first, globalizing our best-in-class domestic digital platform to ensure a blueprint for success for our international business. Second, modernizing and building a leading business intelligence platform. third, elevating and advancing the end-to-end customer experience. In 2021 alone, we expect to invest over $10 million in capital to establish the foundation for this transformational approach. Now is not a time to rest on our laurels, but instead, we must invest. We believe that brands that have gone before us regret not making such an investment and realize how hard it is to unwind multiple platforms all over the world after the fact. We're at another inflection point in our business and believe this critical investment will protect and grow our leading digital position well into the future. I'm really excited about the future of our brand and our continued efforts to position our business for long-term growth. Our two-year same-store sales growth of more than 30%, strong AUVs of $1.5 million, and opening 100 net new units in just the last two quarters gives us confidence in the road ahead. We remain confident that our long-term strategic focus will continue to reward our shareholders, brand partners, and team members as we continue on our journey of becoming a top 10 global restaurant brand. With that, I'd like to turn the call over to Michael. Thank you, Charlie. As you saw in our press release and from Charlie's remarks, we had an outstanding first quarter. We grew royalties, franchise fees, and other revenue by $7.4 million. Not only was this due to domestic same-store sales growth of 20.7% and 165 net franchise openings since the year-ago comparable period, but also due to the strength we are seeing in non-comp restaurants, which are well above $1.2 million in average unit volumes as they enter the comp base. To put this into perspective, the 2019 vintage generated year-one average volumes of just over $900,000, all while the investment has remained relatively the same. Company-owned restaurant sales increased $2.3 million due primarily to same-store sales growth of 13.4%, driven by a healthy mix of both transactions and ticket growth. Cost of sales as a percentage of company-owned restaurant sales increased by 220 basis points compared to the first quarter last year. Bone-in wings on the spot market increased more than 50% year-over-year. The combination of our data-driven approach to menu pricing and the wing price mitigation strategy in place with our largest poultry suppliers helped to effectively lower the cost of wings relative to the implied market value. The effective year-over-year increase in the price we paid for wings was 25.8%. Importantly, we were very pleased to see leverage on both labor and other operating expense lines, helping offset some of the inflation in food costs, a demonstration of the strength and efficiency of our model. Until we see a marked change in the availability of labor for poultry producers, a labor shortage that we believe is largely fueled by the amount of government stimulus, we anticipate that wing prices could remain elevated for the balance of 2021. For modeling purposes, we expect food costs for our company-owned restaurants to be approximately 42% for fiscal year 2021. As you likely saw in our release, we have made a change in our reported SG&A numbers to provide more clarity into our core SG&A. We have reclassified headcount-related expenses associated with our national advertising fund into the advertising expense line on the P&L, both for the current period as well as prior periods to provide apples-to-apples comparison. Moving forward, the revenue and expenses for our annual brand partner convention will no longer be presented gross on the P&L with an equal and offsetting amount in both revenue and SG&A, again, in an effort to provide a clear picture of core SG&A. As for the first quarter, SG&A came in a little lighter than we had anticipated as we see a competitive environment out there for top talent, particularly in the area of technology, an area where we are investing. However, we expect SG&A for the year to fall within our prior guidance when adjusted for the national advertising related headcount reclass to advertising expense previously mentioned. We do not provide quarterly guidance, but as for the cadence throughout the year, we expect SG&A to be relatively consistent for each quarter for the balance of the year. Please refer to the investor toolkit under Investor Resources in our IR website for additional information and a reconciliation of prior periods to conform to this presentation. These recast amounts had no impact on consolidated operating income, balance sheets, or statement of cash flows. Our ability to build cash on the balance sheet as a result of our asset-light model, combined with industry-leading results, enables us to continue to make the necessary strategic investments in technology and people to grow the brand and maximize shareholder value. The investments in our technology stack have enabled a world-class digital platform, which now handles over $1 billion in annual digital sales. As you heard from Charlie, we have kicked off a multi-year project that will significantly boost our digital, tech, and business intelligence capabilities. In 2021, we expect this investment to be approximately $10 million, largely in the form of capital expenditures to support these initiatives. Our SG&A guidance has contemplated expenses associated with this technology project. As we have noted over the past year, it's not just the strategic tech investments we've made over the years, it's our people who are behind Wingstop's stellar performance. In 2019, we acquired a 78,000 sq ft state-of-the-art office building, and in 2021, we are investing approximately $10 million in capital to ensure this space is an environment that supports our next phase of growth, positions us to live our core values on a daily basis, and attracts top talent. We're excited to have a space that represents the growth and pride we have in the Wingstop brand. Now turning to guidance. As noted in the release this morning, we are reaffirming our targets of mid-single-digit domestic same-store sales growth for the three to five-year outlook, and we are adding unit growth guidance of 11%+ for fiscal year 2021. We estimate reported SG&A to be between $64.8 million and $66.8 million compared to $61.1 million for 2020. Note these estimates and prior year amounts now exclude brand partner convention and advertising expenses, but continue to include our stock compensation expense, which is estimated to be between $9.7 million and $10.2 million in 2021. 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 $0.14 per share of common stock. This dividend totaling approximately $4.2 million will be paid on June 4th to stockholders of record as of May 14th, 2021. We are extremely encouraged by the continued strength of the Wingstop business model. As we look ahead to the balance of 2021 and beyond, we believe we are well positioned for continued growth and achieving our vision of becoming a top 10 global restaurant brand. With that, I'd like to turn the call over for Q&A. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question will come from David Tarantino with Baird. Please go ahead. Hi, good morning, and congrats on a great start to the year. My question is about the dynamics around wing costs and your supply arrangement. I guess, Michael, I think you mentioned that you expected your food costs to be around 42% for the year, and that's close to what you did in the first quarter. Is that meant to imply that the supply arrangement you have In place is expected to continue for the balance of the year? If so, could you talk about when that contract might expire or that arrangement might change? Good morning, David. Thanks for the question. I think for us, obviously, we're going to do everything we can to mitigate the impact of inflation on food costs. Obviously, these are unprecedented times that we're in, and I think the real question for us is around whether or not there's going to be additional stimulus and the implications of that on the labor market, particularly the labor market for our poultry suppliers. We feel confident that we've got the right strategic partnerships with our suppliers and we have assured supply, and we're going to continue to lean into that. We feel comfortable as we sit here today with our ability to manage to the number we guided to of food costs of roughly 42%. Again, I think that the X factor, if you will, is whether or not there's any further stimulus. Fair enough. Charlie or Michael, the elevated wing costs, obviously some of that's being offset by leverage in the rest of the P&L for your franchisees. Can you just maybe talk about how wing cost inflation is affecting or not affecting the psyche of franchisees and their willingness to continue investing in new unit development? Good morning, David. I think there are a couple of things to keep in mind. If you reflect on Michael's comment about what we expect the balance of year to be as it relates to food cost, that level is not something we haven't seen before. We've seen that in prior years. In fact, we've seen more impact to the P&L in prior years associated with wing inflation. I think the work we've done to mitigate the Urner Barry cost of chicken wings with our strategic suppliers is important and recognized by our brand partners. I think second to that, the AUV growth in achieving our $1.5 million AUV generates a lot more cash dollars to the bottom line, which we believe is significantly different than what we saw in prior years when we had inflation like this and is continuing to fuel growth in the business. I think the combination of both of those is important. Yes, there is leverage, but I think the substantial growth in the AUV and the absolute dollars to the bottom line are what give us confidence in the continued growth algorithm that we're seeing. Makes sense. Thank you very much. The next question will come from Andy Barish with Jefferies. Please go ahead. Hey, guys. Congrats on the development pipeline building. Wondering if you can offer a little bit more color on the cadence of development this year. I know typically thinking about the domestic business, 4Q is the highest, but you're off to a good start, as you mentioned. Even if you straight line the first quarter, through every quarter, you're still well above the 11%-plus target. Just kind of wondering if there was some pull forward or pull back, I guess, from last year into the first quarter and then things moderate. Just a little bit more color on the cadence of openings this year domestically, please. Good morning, Andy. Yeah, the cadence obviously is a little different at the start this year. There was some expected pull forward in Q1 associated with the complete shutdown in Q2 of last year, and we saw some of that. We also would reinforce the fact that our pipeline for development at the beginning of the year was extremely strong, a record high over 700 restaurants in the pipeline. That is fueling our strong development and our guide towards the 11%-plus number. We won't see an even balance throughout the year. We never do. We usually see a little softening in that around the third quarter, but a strong fourth quarter is typical for us. I do think the cadence is a little different than last year, and hence why our guide is on the plus side of 11%. Okay. Just a quick follow-up on the international side of things, which was off to a little bit of a slower start. Do you still expect gross openings to exceed last year's levels or kind of get back to that 30 mark you were running at prior to the pandemic? Yeah. It's an excellent question. We do expect the gross openings to be consistent with what we've seen in prior years. The pipeline is still strong, and as these markets are emerging now and starting to pick up their pace, we're seeing development activity follow suit with that. We did note some closures in the first quarter. We would expect more of those to get the net number down a little bit from what we've done in the past. Some of those are specifically associated with the impact of the pandemic and the prolonged closure of the restaurants. On a gross basis, which I think is the most important metric, we expect it to be consistent with prior years. Okay. Thanks, guys. The next question will come from Andrew Charles with Cowen. Please go ahead. Great. Thank you. Charlie, last quarter you spoke about your aspirations for mid-single-digit comps in 2021, curious how you rate your confidence in this aspiration now versus 90 days ago, recognizing, as you said, that there's been a temporary jolt from stimulus impacting the industry over the last month. Well, yeah, I'm still confident in our near-term guide of mid-single-digit comps for the year. I think we made note in the commentary that we've seen positive results to date this quarter, and an acceleration in the two-year quarter to date as well, which are indicative of what we believe is, one, pulling all the levers that we knew we could. Just to reinforce, we had a surplus of advertising dollars coming into the year. We strategically placed those during this timeframe to make sure that we really pushed hard during this really tough lap that we had from last year's performance, especially in Q2. Of course, we couldn't predict exactly what or when the stimulus would occur, but obviously, as you're seeing with so many other brands, it's fueling strong performance. I think, our only caution there is to make sure that everybody knows that some of that stimulus is fueling not only the top line, but it impacts so many other parts of the industry right now. So we feel very confident in our long-term outlook, especially even related to this year. Note that not knowing when we're going to stop providing stimulus into the market will have an impact on how the top line will look for the balance of the year. Okay. That's helpful. Then just one follow-up on that long-term outlook. I apologize if I missed this, but what was the mix of delivery sales in 1Q? We saw better than expected other operating expenses 1Q. Was curious if that meant that the mix decelerated from 25% you saw in the back half of 2020. Just longer term, how do you foresee the mix of delivery sales settling out relative to the 15% or so that was running immediately before the pandemic? We've been running in the mid-20s ever since the beginning of the pandemic, and that was also our launch of delivery nationally. Prior to Q2 of last year, we were still ramping up delivery. We did not see any sort of shift in the delivery mix during the quarter that would have an impact on the P&L. The P&L results are strictly because of our strong top-line performance and the mitigation strategies we put in place to affect food costs. Long term, we noted the investments in technology that we are going to make to continue to drive a digital transaction, of which we believe delivery will be a sizable portion of those digital transactions as it already has been, and expect it to grow over time. We don't expect it to subside back to where we were pre-pandemic for any reason. Thank you. The next question will come from Michael Tamas with Oppenheimer & Co. Please go ahead. Hi. Thanks. Good morning. You mentioned that the first quarter saw your highest customer retention through your digital platform. Is there any way to put that into context? Has it been building over the last couple of quarters, or was this really a big change in that trend? Part of that, can you talk about maybe what you changed to allow you to achieve that, and what does it tell you about how you can sort of manage your business going forward? Thanks. Morning, Michael. Thank you. Yeah, the retention levels, we are seeing higher retention levels now. The way we measure that is how often they come back within 90 days if they're a new customer to the business. I think we mentioned over the last few quarters that we've had a substantial number of new customers coming into our business that are fueling this database that's growing so fast. Our efforts have been placed on making sure that we know a little bit about who they are. In many cases, we will append information to them so that we can understand their preferences better. We'll invite them back more aggressively than we have before. I think we are starting to see, albeit very early, signs that we are seeing some momentum gaining, because we believe that if we can get those guests not to just be a once a quarter, but even more frequently than that, a guest of Wingstop, it can have a meaningful impact on our top-line performance. It is a big lever we're pulling. We're applying a lot of resources to it, and we have seen the effectiveness of that strategy start to take place during the first and early second quarter. Awesome. Thanks for that. You talked about using some of that advertising surplus leftover from last year in the early part of 2021 here. Is there any way you can frame up how much of that extra surplus you've used, whether either qualitatively or quantitatively? Thanks. Yeah. Qualitatively, a big portion of it, I'd say, if we carried roughly $11 million into the year from that surplus on the balance sheet, more than half was used in the first media window, which is what we are in right now. We do two large windows a year. One starts right around March Madness and carries through into June. The other one starts later in the year, around September, late August, September, and carries into late October, early November. We deliberately put more of those dollars in this quarter, but we have moved them throughout the year. Perfect. Thank you. The next question will come from Brian Harbour with Morgan Stanley. Please go ahead. Hey, good morning, guys. Maybe this first question on the Canada agreement. Will those stores kind of look similar to the U.S. and will the market entry approach be similar to the U.S.? Obviously, I know you approach certain international markets very differently and the stores look different, but just curious on how the approach there compares to some of the markets you're already in. Good morning. I think they'll be similar in terms of their look and feel to the U.S. I think there will be a blend of, for instance, what we've experienced in the U.K. in terms of the strategy for penetrating a market like Canada and the major metros first. You'll see perhaps a high street location like we did in the U.K., followed by a series of restaurants that surround that, and those could include alternative formats like ghost kitchens. We're adopting a strategy that not only is one we've always had in the U.S., but applying as well some of the strategic thinking that we've learned in Europe as well. Great. Maybe just a question on the technology investments you talked about. What will that cover in terms of what kind of software will you be buying versus perhaps what will you be building? Is it a pretty substantial headcount increase, and is that something you're going to do mostly this year, or will it be more spread out? Yeah, we know this to be a multi-year approach, and this is the first year. It will involve capital expenditures to develop software. We may acquire some component parts or develop APIs that connect with leading software providers for component parts of our tech stack as we move forward. It will involve additional headcount, which Michael called attention to, and is factored into our SG&A outlook for the year already. Yes, we expect that we will be, in a sense, rebuilding the stack to make sure that it is one that is scalable globally. Much of our component parts in the domestic platform do not scale internationally, and we want to develop a single global tech stack with this project, so it will take us a few years to get that done, and the investments in that will continue for the next couple of years as well. Incorporated into that will be some headcount necessary to support the component parts of that technology for our brand partners, both here in the U.S. as well as overseas. I'll say that some of this is the customer-facing applications and the infrastructure underneath that. Parts of this will incorporate a robust business intelligence platform that will make us a best-in-class brand as it relates to the information that we can gather from our systems as we continue on our journey towards digitizing all of our transactions. Thank you. The next question will come from Chris O'Cull with Stifel. Please go ahead. Thanks, guys. Good morning. This is Patrick on for Chris. I was curious if you could maybe give an update on how you're thinking about the reopening of dining rooms, and within that, Michael, if it's possible to quantify the rough sales and margin impact in the quarter from lower beverage attach. Yeah, sure. I think as it relates to dining rooms, I think the Q1 results and the comment we shared earlier about quarter to date being positive, I think really suggest and support the case that we're not really in a rush. We do have roughly 100 restaurants in the system where brand partners have requested, and we've approved them to open dining rooms. The results there on the overall business, that they're mixed. There's not a material impact that I would call out. To your second part of your question, I don't know that I would model or expect a material change to the results, and if anything, it's really supported the case for what we're seeing and hearing from brand partners about even a smaller box and leaning into off-premise as the future for our business. We're not in any immediate rush or hurry to reopen our dining rooms, and we're going to continue to monitor the situation and assess as we progress through the year. Great. Thanks. That's helpful. Just one follow-up pertaining to potentially delivery. We heard a lot about staffing issues, and just curious if you're seeing anything within DoorDash in terms of not having the delivery drivers available to meet demand or anything else that might be causing any issues there. Yeah, we are certainly aware that the market is difficult for staffing on all fronts, driven by the fact that we have this huge stimulus that's creating challenging wage rates comparisons, if you will, by way of it. With DoorDash in particular, we're not experiencing anything that's impacting the business. I know they've been challenged by it, but overall, our business performance, I think, demonstrates that they've been able to keep drivers staffed in supporting our business. The next question will come from Michael Rothstein with Goldman Sachs. Please go ahead. Hi. Thanks for taking the question. I want to learn a little bit more about the menu, and we saw that you guys had launched that $16.99 bundle of boneless wings, and I was wondering how has that affected your shift maybe in bone-in mix amongst consumers, and whether you guys are looking more to the menu, we know you guys have done the test on size, to continue to offset that bone-in pressure. Thanks. We've had that bundle and bundles like that in the mix over the years. It does have an impact on driving more of a mix of boneless wings over the bone-in wings, and that's been effective. It's been in place for a little over a year, if not two years, on and off in our system. It's a good driver of mix shift to help take some pressure off food cost. At the end of the day, our customers still see us as Wingstop, and they like the bone-in wings, and so it's embedded. The impact of that is embedded in our food cost numbers that we project going forward. Thanks. The next question will come from Joshua Long with Piper Sandler. Please go ahead. Great. Thank you for taking the question. Was curious if you could comment on your progress in attracting or getting access to some of those more heavy QSR customer or users of the QSR segment that might not have frequented Wingstop in the past? We talked about this at the Analyst Day, and there was a nice opportunity for that, and so curious if, leaning into the digital and then also with the increased TRPs and ad placements, if that's allowed you to get access to them at the same rate that you expected, if you've been able to accelerate that? Any sort of update there in terms of that customer segmentation would be very helpful. Yeah, definitely our growth over the last year or two has been driven primarily by acquisition of new guests, and our clear target for our advertising was that heavy QSR user that just either hasn't tried Wingstop or doesn't use us as frequently. Our frequency rates are pretty consistent quarter in and quarter out, but what we're seeing is all these new users coming in, and then our job now is to leverage that platform. We've talked about our CRM platform to engage those new users and bring them in and increase their frequency. It's not only a key part of our strategy, but it's also something that we believe is working really well. As demonstrated in the first quarter, our retention rates have improved to 12-month highs. That is clear. Our advertising is clearly pointed at those heavy QSR users and bringing them into Wingstop as an alternate occasion for their dining needs. Thank you for that. One follow-up, if I might, just to clarify the positive comps to date here in the second quarter, which is obviously very exciting. When we think about the prior year period, the 2Q of 2020, can you remind us the cadence of kind of progression of that near 25% comp that you posted for the quarter? Yeah. To give you perspective, last year, we did note in April, our same-store sales grew by 33.4%. During that timeframe, we experienced extraordinary comps and some of that carried through the rest of the second quarter, into Q3 and Q4, it started to taper off. That second quarter comp, being north of 30, was a big mountain to climb for us this year, I think we've been able to demonstrate that we had all the right levers in place so far to do that. Thank you. The next question will come from Jake Bartlett with Truist Securities. Please go ahead. Great. Thanks for taking the question. My question was about check in traffic and whether you're seeing any change there. Is the check starting to normalize a little bit, kind of being made up by traffic or any change in those dynamics? Yeah. As expected, Jake, we have seen when we started rolling over the impact of the pandemic and the shift away from dine-in occasions. We immediately saw a check lift last year that was associated with that because we had, for all intents and purposes, eliminated a bunch of smaller transactions that were dine-in, but replaced those with higher ticket average carryout and delivery transactions. As we're lapping that performance, we did expect to see the check growth slow down, but we are seeing good, strong transaction growth in the business as well today. And I'll note, without opening diners. Great. My follow-up is on anything you can say regionally, different markets obviously are at different points of the reopening of the economy. Any variances there? Maybe in the context of that, if you could comment on maybe why the company same-store sales is materially below where the franchisees are doing. Yeah. I would say very typical for Wingstop, over the years. We don't see much regional variation. The only one to call out in the first quarter would be the winter storm that impacted primarily Texas and the Southern Plains. Had a negative effect, but I think a lot of that was reversed by the stimulus, so we didn't see that the net of those two was meaningful to the performance of the company during that timeframe. Regionally, otherwise, everything's pretty consistent. I'll call attention to the company-owned restaurants. We consistently see positive growth across all vintages of our restaurants, and that has continued to play out through this time frame. However, these company-owned restaurants tend to be older than most of our average restaurants, just because they're in mature markets like Dallas and Las Vegas. Their performance may be a little bit softer, but I don't think that's indicative of anything otherwise as compared to the rest of the business. Great. Thanks a lot. The next question will come from James Salera with Northc oast Research. Please go ahead. Hey, thank you for the question. I wanted to drill down a little bit more on the growing number of clients in your digital database. Wonder if you could give us a sense of who these clients are, whether they're heavy wing users, new users, and what strategies you're going to deploy to try to increase frequency or engagement, especially as we lap or get through some of this government stimulus. I do have a follow-up. Thank you, Jim. To reiterate what I mentioned earlier, and I think the question was asked about these heavy QSR users as a target for our business. We have definitely seen a lot of net new users that fit that profile. A heavy QSR user tends to be a little higher in income than our core user, and uses QSR platforms more so than even our core user does. Those were an attractive target for the brand, and we're bringing them in large numbers. We're growing just pure new customer counts. Our strategy to retain them, as mentioned before, is to incorporate our CRM platform, which provides one-to-one messaging to those guests to encourage them to repeat that first occassion and come back to Wingstop. Our goal is to get them in certainly within 90 days, but to convert them into a heavy user, which might use us as many as five times in a quarter. Our strategies are well in place. They are effective, and as we noted, a 12-month high on our overall retention rate. These new Wingstop users are coming into your system as relatively light Wingstop clients, and the idea would be to move them up to heavier engagement over time. Is that the right way to look at it? Yes. Okay. I just wanted to clarify the comp to date for company-operated stores in the current period. Is that also flattish compared to prior year? Hey, Jim, this is Michael. We didn't disclose the company quarter to date number. Obviously, it's not an area we want to highlight or focus, primarily because it's 30 restaurants out of the whole system, and they're doing $2.2 million in AUVs. Really what we're focused on is the broader system, the health of our franchisee base, our brand partners, which is really the long-term story here that's going to continue to help feed the unit development pipeline that we talked about earlier. Understood. If I can just add one more quick question regarding your Canadian development. Are the royalty rates on that relationship comparable to the rates we see to date? They are, yes. All right. Thank you. The next question will come from Todd Brooks with CL King & Associates. Please go ahead. Hey, thanks for taking my questions. First, this follows up on the Canadian deal that was announced this week. As you're looking for the other countries that were highlighted as kind of early access to drive the international expansion, are you looking to structure those with this type of larger master franchise type of structure after striking the deal in Canada? We are. We would call it a master development agreement. It's one single operator that opens and develops restaurants in the market. There are no sub-franchise specific considerations in these deals. Okay, great. Thank you. A second question, if I may. You talked about your success in mitigating wing cost inflation and just that raw 50% type of increase that you've seen in the Urner Barry wing, turning that discussion about new entrants that has been asked over the couple of quarters into a different type of discussion. The competitive advantage that the Wingstop brand has with the ability to mitigate those wing costs, how do you think new entrants are dealing with this? Do you expect to drive some people out of the wing category that kind of flooded into it with virtual brands, this persistent pressure on wing cost across fiscal 2021? Yeah, it's an excellent question. Again, I'd go back to the competitive dynamics, and if I were in the shoes of some of these other brands, I'd probably do something quite similar. We do expect that at these elevated prices, it will be very difficult for them to blend that into their desired margin structure. If that's the case, then should take some pressure off chicken wings for the balance of the year. I will say that one of the other material factors is not just the competitive nature, it has as much to do with the impact of the government stimulus and creating an artificially high wage rate that is competitive to the people that are necessary to actually process chicken. The absolute number of chickens that are being processed is down. That's why you see pressure even in the sandwich business and everywhere else on chicken right now. Labor shortages are the real challenge we're dealing with. Dealing with that in and of itself would alleviate some pressure on the market on its own. Because there's just not the volume of product out there before. I think our strategic positioning, our great partnerships that we have with some very large chicken suppliers, affords us the opportunity to make sure that we have adequate supply to drive our business at a reasonable price. When the market does subside and demand for those wings goes down as we reopen the economy and get restaurants back operating again, Wingstop will always be there with them to continue to not only grow but be buyers of chicken wings. Okay, very helpful. Thanks, Charlie. The next question will come from Peter Saleh with BTIG. Please go ahead. Great. Thanks for taking the question. I just wanted to come back to the conversation around delivery. Can you give us an update on how much of the delivery mix now is coming through your own website, your own app, versus your third-party partners? Yeah, it's been hovering around 70/30, the marketplace to Wingstop. That's been a consistent mix. Great. If I could just follow up on that, do you guys see any crossover in customers? I don't know if you get the data to see. Are there any crossover between those? Are the customers coming through DoorDash, are they unique, or do you see them come to the Wingstop website as well? I think our pure desire is that they come through the Wingstop website, but the way we've established this, we're a little bit agnostic as to which platform they come through. What I will say is that they enjoy a more competitive price if they come through wingstop.com than through the marketplace. Our price differential creates an incentive for them to use the Wingstop platform. I also would submit that through our CRM efforts, we will be pushing more and more of them into that Wingstop platform than through the marketplace. Excellent. Just last question. Will you be marketing that going forward to try and kind of shift that? Shift the mix a little bit more towards Wingstop? Is that how we should understand that? Yeah. We've always marketed, anything we market directly from Wingstop, is always pointing to wingstop.com. That would be in TV advertising as well as in our paid social and also our CRM platform. We always point them there first. Excellent. Thank you very much. The next question will come from Christopher Carril with RBC. Please go ahead. Hi. Good morning. Thanks for taking the questions. I wanted to ask about capacity and throughput, and any updated thoughts on those topics specifically. Clearly the gap between system AUV, company AUV implies significantly more capacity remains in the restaurants. Curious to hear any updated thoughts around throughput and any efforts to improve throughput now that system AUVs are above the $1.5 million level. Yeah, we've commented many times in the past that we believe our restaurants have the capacity to go well above even the $2.2 million mark where we see our existing corporate-owned restaurants. As our restaurants mature over time, they continue to grow. It's a very unique curve applicable to Wingstop in this industry. What I can tell you is, at our highest volume levels, we are operating right at or above $3.5 million out of the same platform annually. There are a handful of restaurants that can do that. We know that we don't have a capacity or throughput issue. As we get more volume, we can increase the number of deliveries each week to the restaurants and leverage that small space that we have very efficiently. We have a long way to go in that domestic AUV before we'll hit a capacity constraint. Got it. Thank you. Just on SG&A, can you help us frame up how you're thinking about this line item longer term, just relative maybe to total system sales, just in light of the reclassification of expense related to advertising noted this morning, and then just the commentary too around just investing in technology and growth? Yeah, Chris, this is Michael. We've historically shared the comment around anchoring expectations around core G&A, where we've historically had, as you pointed out, we've backed out any headcount related to national advertising, as well as any convention-related expenses. Now those have been removed from the number. We do also back out non-cash stock-based compensation as well. When you get to that core SG&A number, how we think about that longer term is really a number that we've benchmarked to more mature brands, but it's roughly around 2.5% of system sales is the target we kind of guide to. Got it. Thank you. The next question will come from Brian Vaccaro with Raymond James. Please go ahead. Hi, it's Dan Docherty on for Brian. Thanks for taking the question. I just wanted to circle back on international growth for a second. I think you mentioned the prolonged pandemic conditions as sort of the driver of the closures. Are you adapting your prioritization of certain geographies internationally as market dynamics kind of remain pretty fluid with the pandemic? Yeah, that's a fantastic question. The answer is yes. You may recall that one year ago, a little over one year ago, we did a big strategic study globally to identify a few things. Number one, which markets fit the right archetype for us to go aggressively develop in, and which ones should we shy away from. Our efforts in markets like Canada, the U.K., our work we're doing in China to continue to prepare for expansion there, all highlight what we talked about in Canada, which is the ability to have a premium positioning with a very high off-premise mix. That's our sweet spot, and we know just our early indications in the U.K. and the great success we're having there would lead to that. Some of these markets where we are experiencing closures were markets that didn't fit that mix perfectly, and so we've had some challenges. Larger restaurants that are sit-down oriented, or are in markets where we don't enjoy that premium price position have been the harder challenges for us, and that's where we are experiencing some closures. For the most part, markets like the U.K., Mexico, our entry into Canada, further expansion in Europe, and parts of Southeast Asia where we enjoy that price premium will be the markets that will stabilize and continue to grow for us long term. Great. Thanks so much on that. Then just one item, apologies if I missed this, but did you guys provide any color on the cadence for sales within the first quarter? We did not, no. Okay, great. Thank you guys. Thank you, Brian. This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.