Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Wingstop Inc.'s fiscal second quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note that this conference is being recorded today, Wednesday, July 30th, 2025. On the call today are Michael Skipworth, President and Chief Executive Officer; Alex Kaleida, Senior Vice President and Chief Financial Officer; and Kristen Thomas, Senior Manager of Investor Relations. I would now like to turn the conference over to Kristen. Please go ahead. Thank you and welcome to the fiscal second quarter 2025 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 conditions. We use certain non-GAAP financial measures that we believe can be useful in evaluating our performance. Presentation of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are contained in our earnings release. Lastly, for the Q&A session, we ask that you please each keep to one question and a follow-up to allow as many participants as possible to ask a question. With that, I would like to turn the call over to Michael. Thank you, Kristen, and good morning, everyone. Before we jump into our second quarter results, I want to start today's call by acknowledging the horrific events that took place earlier this month in our home state of Texas with the devastating floods in the Texas Hill Country. None of us can imagine what those families and communities are going through after such a tragedy. However, we, along with our brand partners, are here to support our fellow Texans and are keeping all of those impacted in our thoughts and prayers. Now shifting to our second quarter results, I believe 2025 will be another differentiated year for Wingstop, showcasing the resiliency of our model and the opportunity we have to scale into a top 10 global restaurant brand. Our second quarter was a great example of this. System-wide sales increased 13.9% to $1.3 billion, while same-store sales declined 1.9% for the quarter. To put our Q2 comp in perspective, we lapped 28.7% same-store sales growth in 2024 and a 16.8% comp in 2023, both of which were primarily driven by transactions. I believe this highlights the effectiveness of our multi-year strategies, and our brand partners couldn't be more excited about the future with Wingstop. The demand for opening more Wingstops is the strongest it's ever been. We opened 129 net new restaurants globally in the second quarter, a nearly 20% growth rate. The 129 net new units was the highest number of restaurants opened in a single quarter in our history. I'm incredibly proud of how our team members and brand partners executed in the second quarter and the continued shared confidence they have in Wingstop and our long-term strategies. As we look ahead to the second half of the year, we have the utmost confidence in our proven long-term strategies, which consist of scaling brand awareness, driving menu innovation, expanding our delivery channels, leveraging data-driven marketing, and investing behind our digital transformation. I also want to acknowledge there remains a good deal of uncertainty with the consumer behaviors and implications to their spending habits. Through our regular consumer research, we hear concerns about elevated prices, future job prospects, and general anxiety about the future. We remain focused on what we can control in this environment and execute in our strategies. Fundamentals are strong across the board for Wingstop. We're seeing improvements in brand health metrics, restaurant operations, digital guest engagement, and unit economics. We continue to measure strength within our brand health metrics, including within quality and satisfaction scores. I also will share more about the tremendous progress we're making with speed and consistency from markets that have implemented our game-changing new kitchen operating platform that we are calling the Wingstop Smart Kitchen. While we've made considerable improvements in brand health metrics, there remains significant opportunity to narrow the gap to brand awareness when benchmarked to more established, larger restaurant brands. This past quarter, we took an opportunity to amplify our brand presence and connect us more deeply with current and future fans by leveraging our NBA partnership. With this partnership, we gained access to in-game brand placement throughout the NBA playoffs, as well as becoming the presenting sponsor during the second round of the playoffs. We're just scratching the surface on this partnership with the NBA and look forward to our activations for this upcoming season. Our new crispy chicken tenders are quickly becoming a fan favorite. Since their relaunch in the first quarter, we've seen strong guest engagement, particularly with new guests, and we're excited by the unique value they offer. In true Wingstop fashion, guests can order their tenders in any of our 12 bold, distinctive flavors, setting us apart in the category. We're seeing encouraging signs, including higher new guest retention, strong satisfaction scores compared to our previous tenders, and a healthy mix of day part occasions. Most notably, our tenders are driving reactivation of lapsed users at a level we haven't seen from any menu innovation in the past two years. In fact, the number of new and reactivated guests has tripled since launch compared to the run rate at the end of 2024. While frequency hasn't yet reached the level of our core guests, the early results are promising. We plan to continue leveraging tenders to unlock our fair share of this demand space and its 1.6 billion annual tender servings. This past quarter, we welcomed many of you to Dallas to showcase our new kitchen operating platform, the Wingstop Smart Kitchen. It didn't take long for those in attendance to see what a game changer it is for our guests and team members. I'm excited to say that today, the Wingstop Smart Kitchen is live in 1,000 restaurants across the U.S., and we are on track for a full system implementation by year-end. Although still early, the results from our initial markets are encouraging. Just four weeks into their implementation, we're measuring 40% reductions in average ticket times with restaurants ramping faster towards our steady-state operating model. Markets with the Wingstop Smart Kitchen are delivering faster speed, a more consistent guest experience, and sales outperformance. All of this is without additional advertising to the guest. Our restaurants are more consistent with ticket times in the range of 10 minutes, which compares to a prior quote time that was 18- 22 minutes on our best days. Restaurants with the new Wingstop Smart Kitchen are outperforming. In our 160+ restaurants in the Dallas-Fort Worth market, we are seeing meaningfully higher same-store sales growth relative to controlled restaurants. The Wingstop Smart Kitchen is clearly delivering the game-changing expectations that we establish, enabling operational excellence, elevating the guest experience, and fueling growth. The guests are experiencing improved speed of service, consistency, and accuracy, which is reflected in our guest satisfaction scores. The Wingstop Smart Kitchen restaurants are about eight points higher than restaurants that do not have our new kitchen operating platform. We are also seeing improvements in all day parts, including our lunch and late-night day parts, which we believe is an untapped opportunity for us. Without the benefit from the Wingstop Smart Kitchen, our delivery times can be in excess of 40 minutes, resulting in us not being in the consideration set for many delivery consumers. With Wingstop Smart Kitchen, we are unlocking delivery times under 30 minutes on the third-party delivery marketplaces, and we are now in the consideration set for those guests. For our restaurants in the Dallas-Fort Worth market, year-over-year sales growth in the delivery channel is outpacing the U.S. average growth rate by mid-single digits. What's more, our brand partners see the impact of the kitchen operating platform in their team member experience and training, guest feedback, as well as insight from the new reporting capabilities, all contributing to enhanced profitability. I can't tell you how many brand partners have told me how much they love the new system and how much of a game changer it is for their restaurant operations. Most importantly, the results we are seeing from the Wingstop Smart Kitchen are exactly what we had anticipated and are validating the opportunities we have within our strategy, supporting our long-term target of scaling AUVs to $3 million. Our commitment to innovation is proven, and we have focused investments aimed at driving long-term sustainable value. One of those investments was in our proprietary tech stack, MyWingstop, which recently marked its first full year in operation. In that time, we have harnessed the data gathered to provide our guests with relevant, personalized, and optimized content. We have been continuously fine-tuning our robust guest segments, leveraging our segmentation to reach guests and give them a more meaningful experience while mining for additional insights to inform future strategies. Since the launch, our digital database has grown by 30%, now approaching 60 million. We will continue to invest as we advance towards our aspirational goal of digitizing every transaction. With the launch of MyWingstop, coupled with our rich database of digital guest insights, we are uniquely positioned to build and subsequently launch a differentiated loyalty program designed to strengthen guest engagement by encouraging repeat visits and deepening the emotional connection guests have with our brand. It's a clear example of how we're leveraging technology to create lasting value for our guests. We're excited about this next phase in our digital journey and remain on track to pilot our new loyalty program in the fourth quarter with a full system-wide launch planned for 2026. Our ongoing investments in technology continue to advance us on our path to $3 million AUVs and further strengthen unit economics for our brand partners, which are translating to industry-leading unlevered cash-on-cash returns of 70%. Brand partners' confidence in our model is showing up in our 2025 pace of new restaurant development. We have opened 255 net new units through the first half of 2025, which is equivalent to the number of units opened during the entire year in 2023 just two years ago. Over 95% of those openings are from existing brand partners reinvesting, furthering their commitment to Wingstop. The level of reinvestment by our brand partners truly speaks to the strength of our unit economics. After delivering a record 129 net new restaurants in Q2, we updated our guidance again to 17%- 18% unit growth for 2025. This implies net new units of between 435- 460 globally. Demand for additional growth with our brand partners remains strong as we replenish our development agreement pipeline, which now has grown to the highest level of sold restaurant commitments on record. In addition to the strength in our domestic business, a key contributor to our growth is the exciting progress we continue to make within our international business. Demand is strong, and our first half results were impressive. Last month, we hosted our international summit in Toronto, where Wingstop brand partners and team members from around the world came together to connect, share ideas, and spotlight their early successes. It was especially rewarding to see our more seasoned brand partners share insights and advice with those newer to the brand, delivering confidence into the playbook we are executing. What stood out most? The passion for the brand is real, and it's growing fast. In the second quarter, we opened our first restaurant in Sydney, Australia, where new Wingstop fans lined up around the block in the pouring rain just to get a taste of that bold, distinctive Wingstop flavor. Another example is in Paris, where more Wingstop fans lined up for our first flagship restaurant in the city, building on the momentum we established from last year's House of Flavor event at the Olympics. Our new international markets are opening at levels surpassing domestic average unit volumes. In more established markets like the U.K., we continue to see strength, where our newest restaurant shattered Kuwait's recent record for highest global weekly sales. That's brand love in action, and we are just getting started. We've officially signed two additional markets, and we are set to open the first Wingstop this year in Italy and the Netherlands with several more markets in the pipeline. The world is craving our flavor, and Wingstop is delivering. While we recognize the challenging macro environment we're navigating, the resiliency of our model and disciplined focus we have on executing our strategies, as well as the game-changing initiatives such as the Wingstop Smart Kitchen and loyalty, give us the confidence in our path to $3 million AUVs. I want to thank our team members in the restaurants and at the global support center, brand partners, and supplier partners for their ongoing commitment and collaboration in advancing our vision to become a top 10 global restaurant brand. With that, I'd like to turn the call over to Alex. Thank you, Michael. Our second quarter performance highlights the momentum in our global development and showcases the strength of our asset-light model. Through consistent execution of our strategies, we've continued to enhance brand partner returns. In just three years, AUVs have surged to over $2 million, an increase of more than $500,000. At today's AUVs of $2.1 million and on a low $500,000 investment to build a Wingstop, brand partners are seeing unlevered cash-on-cash returns of over 70%. This is driving yet another record-breaking quarter for development and, as Michael mentioned, fueling a record pipeline of sold restaurant commitments. We opened 129 net new restaurants in this second quarter, marking our fourth straight quarter with 100 or more net new openings. System-wide sales grew 13.9% to $1.3 billion for the quarter, pushing us past $5 billion in system-wide sales over the last 12 months. Total revenue increased 12% to $174.3 million versus the prior year. Royalty revenues, franchise fees, and other revenue increased by $8.7 million in Q2, driven primarily by 464 net franchise openings since the prior year comparable period and partially offset by a 1.9% decline in domestic same-store sales. Company-owned restaurant sales increased $2.6 million due to same-store sales growth of 3.6%, primarily driven by transaction growth and two net new restaurants versus the prior year period. Our company-owned restaurants have fully implemented the Wingstop Smart Kitchen and are delivering a consistent 10-minute average ticket time. These results are a good indication of the early success we're seeing with our new kitchen operating platform. Cost of sales as a percentage of company-owned sales were 75.2% for the second quarter, a decline of 70 basis points. The decrease was primarily driven by sales leverage on labor and operating expenses. Our supply chain strategy to mitigate volatility in food costs continues to pay dividends and is creating predictability for our brand partners. System average food costs have sustained at approximately 34%, which is well within our targeted range of mid-30%. In the second quarter, SG&A increased $4.8 million versus the prior year comparable period to a total of $32.9 million. This increase was driven by headcount-related investments to support the long-term growth of the business, plus $1.5 million of non-recurring system implementation expenses associated with our new ERP and HRIS platform. Adjusted EBITDA, a non-GAAP measure, was $59.2 million during the quarter, an increase of 14.3% versus the prior year. Adjusted EPS, a non-GAAP measure, for the second quarter was $1 per diluted share, a 1.6% increase versus the prior year. This includes an $0.18 EPS impact from the additional interest associated with our $500 million securitization transaction completed in December of 2024. Proceeds from this transaction were used to enhance shareholder returns and subsequently funded $370 million in share repurchases through the first quarter of 2025. We remain focused on creating long-term value to our shareholders through a balanced approach that includes our regular quarterly dividend and the remaining $191 million authorized under our current share repurchase program. Acknowledging the strong cash flow generation from our asset-light model, on July 29th, our Board of Directors approved an increase to our regular quarterly dividend from $0.27 per share to $0.30 per share of common stock, a demonstration of the strength of our model. This dividend, totaling approximately $8.4 million, will be paid on September 5th, 2025, to stockholders of record as of August 15, 2025. Shifting to our outlook for 2025, based on the visibility we have into our development pipeline at this point of the year, we are increasing our global unit growth rate to a range of 17%- 18%, previously 16%- 17%. Our new outlook implies a 30-unit increase to our prior outlook and a range of 435- 460 global net new units for the year. For domestic same-store sales growth, we are reiterating our guidance for fiscal year 2025 of approximately 1%. Our outlook remains dependent on macroeconomic conditions and is based on the most recent information available to us. For modeling purposes, our current outlook anticipates sales growth will return as the third quarter progresses and as the impact of tougher prior year comparisons begins to moderate in the back half of the third quarter and into the fourth quarter. We are also reiterating our guidance for SG&A to be approximately $140 million, which includes non-recurring system implementation costs of $4.5 million that will be an add-back to adjusted EBITDA and approximately $26 million of stock-based compensation expense. With these inputs and for modeling purposes, these assumptions translate to an estimated adjusted EBITDA growth rate that exceeds 15% versus 2024. Our second quarter results underscore the strength and resilience of our model in this uncertain environment. The strengthening industry-leading returns our brand partners are experiencing is fueling global demand for development, reflected in our robust pipeline and record pace of growth. We remain steadfast and execute our long-term strategies to realize our vision of becoming a top 10 global restaurant brand. I want to thank our global support team members, restaurant team members, brand partners, and supplier partners for their continued dedication and commitment to Wingstop. With that, I'd like to now turn to Q&A. Operator, please open the line for questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. As a reminder, please limit yourself to one question and one follow-up. If you have additional questions, you may re-enter the queue. 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. First, a clarification question on your third quarter guidance. I think, Alex, you mentioned that you expect to return to positive comps as the quarter progresses. Are you expecting the full quarter to be positive in Q3? Maybe as a follow-up to that, I just wanted to ask about your general confidence in that trend playing out. Is it more of a matter of just running the current trends forward against these year comparisons, or are you expecting some sort of acceleration in the underlying trend? Thanks. Hey, David. Good morning, and thank you for the question. This is Michael. I'll jump in. I think you've heard a lot of others mention some weakening with the consumer demand to start third quarter. Some industry signals have signaled some softness to the start. I don't think that's any different for Wingstop. What we've referenced in our prior call about seeing some softness in a few pockets that over-index to lower-income or Hispanic consumers, I would say we really haven't seen those pockets improve. As we look at the business for the balance of the year and the behaviors that we observe within our guests within our business, Alex mentioned it, our compares ease as we start to exit the third quarter or the back half of the third quarter. As we run our current trends out, we would expect that to position us to return to growth when we compare that against the strategies that we're executing. Obviously, as you move further past the third quarter, the compares do ease. As it relates to our outlook for the full year of approximately 1%, our confidence in delivering on that number is really related to running out the trends we see in the business today, combined with the easing of the compares that we see. Great. Thank you for that. Just a follow-up. I don't think, at least that as of the last call, you were assuming much benefit from the Smart Kitchen in the numbers, but it does sound like you're seeing a benefit in the stores that have them. I guess, can you just explain what you're seeing in the stores or the restaurants that have had that the longest in terms of whether you want to quantify the lift or however you want to talk about it? Just to frame up what this might look like as you get it fully implemented. Yeah, David. We are extremely excited about Wingstop Smart Kitchen and really just what it means for what's in front of us here at Wingstop and the opportunity is. We've often referred to it as a game changer, and early results that we are seeing are validating that thesis, which is just really encouraging for us. As of today, we're in about 1,000 restaurants with Wingstop Smart Kitchen. What we're seeing is it really takes about four weeks for restaurants to acclimate to the new operating platform and really start to deliver on that targeted speed of service of approximately 10 minutes. You do see pretty quickly improvements in guest satisfaction scores, obviously, in speed and consistency. We called out some of the improvements we're seeing in accuracy, as well as overall guest satisfaction, which is super encouraging for us. I would say what we're really seeing, and I think the best example is the Dallas-Fort Worth market, is it feels like once we kind of hit that four-month mark, you're really starting to see it impact the overall trend and overall sales of the business. I think if you layer in what I talked about around just the amount of training and effort to get to acclimate to the system for our team, but then you overlay against that just our frequency, where we're still a relatively low-frequency brand. It takes a little bit of time for the guests to realize the benefits associated with Wingstop Smart Kitchen. It feels like about that four-month mark, which we hit towards the end of the second quarter in the Dallas-Fort Worth market. We called out how we are seeing sales outperformance in that market. I think a great indication or signal for that is our company-owned restaurants, where the majority of that portfolio is in DFW. Our focus, David, it's not about leaning in too early on how we drive sales. Our focus is really centered around a best-in-class implementation of this operating platform this year, making sure we're spending the time and investing in training, making sure that we're leaning in on just the operational capabilities and reporting that we need to ensure that we're delivering on these guest expectations and the benefits associated with Wingstop Smart Kitchen for the long term. Early results are very encouraging. Great, thank you. The next question is from Jeffrey Bernstein with Barclays. Please go ahead. Great. Thank you. My first question is just on the unit growth side of things. You know, your long-term guidance is for 10%+, and you've exceeded that pretty consistently in recent years. I know starting this year, you guided to 14%, 15%, but I guess 10%+ still seemed like a reasonable longer-term target. Now you've increased that twice in the first two quarters. Now we're talking about 17%- 18%. I'm just wondering if you could talk about the increased franchisee demand and maybe if there's anything unusual about the 2025 growth, or should we now think about future year unit growth more in the 15% type range rather than 10%, which you seem to be far surpassing? Any color you could share on that demand and maybe the balance of what you think of U.S. versus international as we think about this and forward years. I had one follow-up. Hey, Jeff. Good morning. Thank you for the question. We're really encouraged by the pace of development we're seeing in 2025. We said it in our prepared remarks that we think it's a pretty powerful statement toward the strength of the unit economics and the strength of the returns. As we went into this year, we obviously contemplated the fact that we were asking our brand partners, albeit not a meaningful capital investment, but yet, as you add up the number of restaurants based on brand partner, we wanted to make sure there was plenty of capital to deploy and implement the Wingstop Smart Kitchen. What we've seen this year is that capital investment, set up against the opportunity to expand their footprint with Wingstop, hasn't slowed down our brand partners at all. I think that's an encouraging sign and I think a strong statement, again, to the returns. The other half of the story is our international business, which is on pace for a record year there. You're really starting to see momentum pick up in that business, which is encouraging. We're really excited about the pace of development, the opportunity we have here today to increase our outlook yet again. We talked about it in our prepared remarks, but it's hard to believe just two years ago, we opened 255 net new restaurants for the full year, and we've already hit that number through the first half of 2025. We are encouraged by that. As we mentioned in our prepared remarks, even though we are opening a lot of restaurants, the demand continues to grow. Our pipeline of sold commitments sits at a record level today, and we're encouraged by that. I don't think we're here today to revisit our long-term or short-term targets for unit growth, but it does give us a lot of confidence in our ability to deliver on that long-term algorithm of 10%+. Understood. My follow-up was just on the, you sprinkled in some commentary about the loyalty program. I know in the past, you guys have been somewhat hesitant. When you're delivering the results you have been, no surprise there. I'm wondering what details you can share in terms of the structure of the program. I think you said you're going to pilot it in the fourth quarter and maybe roll it out across the entire system next year. Any thoughts in terms of the type of program or the potential impact on comp or frequency or check or the type of reward you're going to offer? Any kind of sneak peek into what a Wingstop rewards program would look like would be great. Good morning, Jeff. This is Alex. I can take this one. It's pretty exciting for us on the genesis of how we've thought about loyalty and rewards and watching the industry, studying that, and also amassing this database that's approaching 60 million guests that we've been able to unlock and mine insights around. You heard us talk a little bit about tenders and the reactivation of laps. That was a good example of how we've leveraged our hyper-personalization strategies to reactivate lapsed users that we can then inform approaches that we're going to have designed into our loyalty rewards program. We really draw aspirations for what we see as best in class, those that really tie an emotional connection to the rewards program, to where you're not transacting or you don't have this transactional relationship with a guest, but you're driving a connection into the brand that wants them to be engaged. You're rewarding them with surprises or unique things like even just Wingstop swag as a way for our guests to be rewarded that they're looking for and experiences that they could get access to through our partners that we have on the media side. There's a wealth of different approaches we're looking at to activate our rewards program. We think it's going to be something pretty unique in the industry. We're a bit advanced with what we have in our digital business, that's over 70% strong. Thank you very much. The next question is from Christine Cho with Goldman Sachs. Please go ahead. Great. Thank you. Congrats on the quarter. You've leaned into kind of the value messaging this year with very compelling deals such as 20 for $20 or $9.99 three-piece crispy chicken tender offers. Could you elaborate on how these value deals were received by customers and what impact they had on average ticket or traffic during the quarter? Also curious, what feedback you're receiving from your brand partners regarding these promos and how it has impacted their four-wall economics, if at all. It doesn't seem like it, but thank you. Hey, Christine. Good morning, and thank you for the question. I would say maybe I'll start with, for those who aren't as familiar with Wingstop, what we did with this 20 for $20 bundle as an example is a page out of our playbook that we've been executing for years. It's an opportunity for us to showcase abundance, value, and quality. I think you alluded to this in your question, but a lot of other brands, when they do promote value, that usually comes at the risk of lower margin. For us, we approach bundles and we approach value and quality a little bit different than other brands. I think 20 for $20 is a great example. This bundle performed really well for us, and the reality is it delivered on a food cost on the P&L that's right in line with our target. The guests clearly saw value and quality associated with this bundle. What we were really encouraged to see is when you look at the overall basket associated with 20 for $20, it actually carried a higher average check than our typical average check. We were encouraged by that. We saw this again as a way for us to lean into our proven playbook and showcase value and quality in a very differentiated way that Wingstop can do. I'm really encouraged by the results we saw associated with that. Great. Thank you so much for the color. I just want to follow up. With kind of that increased price sensitivity and consumer anxiety that you're seeing, are you seeing any meaningful shift in the percentage of the checks that are on deals or promo, or is there any specific consumer cohorts that are responding more actively to these promos? Thank you. Hi, Christine. This is Alex. Nothing I'd specifically point to. We've talked about, just generally speaking, the pockets where we've seen a consumer under a little more pressure, that low-income Hispanic consumer. You know, Michael mentioned earlier that that's been consistent with what we've seen from the start of the year. In that situation, there's been some ticket management, but they're still finding ways to engage with Wingstop. I think we're really encouraged by that. Great. Thank you so much. The next question is from Brian Harbour with Morgan Stanley. Please go ahead. Yeah, thanks. Morning, guys. With those stores that have a Smart Kitchen deployed, have you seen a pickup in delivery mix? I know you said that all dayparts were seeing the benefit, but are you seeing more of a benefit where you expected? I know that your digital mix has still kind of been ticking up here in the last couple of quarters. Is that part of what you're seeing as well? Hi, Brian. Thanks for the question. You know, there is a little bit of a difference we're seeing in performance on comp, for restaurants that have Smart Kitchen by day part. Lunch and late night is a hypothesis we've had. Without advertising, we're seeing a little bit of an uptick in performance at the day part level for lunch and late night. The other aspect, to what you mentioned is on delivery. When we measure results for Smart Kitchen restaurants on delivery sales, on what restaurants are performing at on an average weekly basis, restaurants with Smart Kitchen are seeing about a mid-single-digit growth rate differential versus restaurants that do not have Smart Kitchen. That ties to us being in that consideration set for fastest near you or guests that are filtering under 30 minutes. We haven't advertised in those platforms either. That's just the guests naturally engaging with us and finding us in those filters. Okay. Got it. Have you seen, as you've opened faster recently, have you seen any change in what you would typically observe as sales transfer from new store openings? No, Brian. I think we've got a pretty well-thought-out development strategy. We refer to them as playbooks built down to the market level that really outline the sequencing and who we are growing with in each market that map us to the broader opportunity we believe we have here in the U.S. business. We always look at and measure if there's any impact to other restaurants. I think we got a similar question last quarter, and nothing's really changed materially from that. It's not a material number to the overall business. Brian, I would just add that when we set our new targets, we thought about the overall TAM for the U.S. at 6,000+ restaurants updated from 4,000+, as well as the AUV at the same time, moving from a $2 million target to now a $3 million target. Within these playbooks, we have a lot of data down to hands-on maps, trade areas identified, as well as predictions of sales for both restaurant level as well as what the market can see. I think that shows in how we set these new targets our confidence in scaling this beyond our existing range. Thanks. The next question is from Jim Salera with Stephens. Please go ahead. Hi, Alex. Good morning. Thanks for sending our question. I was hoping you guys might be able to provide a little bit more detail on the, you know, the record-breaking new unit openings. Are you able to offer any color on how many of those are in kind of existing established markets versus entrance into, you know, new or kind of expansion markets? Maybe as a part two to that, does the unlock from the Smart Kitchen, do you find that there's actually more consumers that are closer to each restaurant that you weren't reaching before? Perhaps the density in each market could be higher with the greater efficiency from the Smart Kitchen. Hey, Jim. Thanks for the question, or multiple questions. On the first one, what I would say is we opened restaurants in the second quarter in, as an example, in 46 different states, and so pretty diversified development for us. I wouldn't really say anything was concentrated by any means in any certain market or area. As it relates to your second question around Wingstop Smart Kitchen, I think, you know, really we take a step back and we've shared a little bit about this, but we understand our guests, we understand the core occasion that Wingstop is best positioned to win in. We've shared this number before, but we're winning of that core demand space, a little over 1%. When we benchmark other brands to their core demand space, most are winning about 20%. There's a pretty meaningful opportunity or meaningful number of occasions that are out there for us to win our fair share that we strongly believe Wingstop Smart Kitchen is going to unlock. When we did the work that Alex described earlier, which was not only putting pens on a map and building out the development strategy to our TAM of over 6,000, we also looked in each and every one of those trade areas and understood a lot about the consumer, the demand space. In conjunction with that work we did to arrive at over 6,000 units in the U.S., we also increased our AUV target to $3 million. It really ties back to winning our fair share of the demand space that we're best positioned to win in. This all ladders back to those strategies we've been talking about for years: expanding brand awareness, menu innovation, delivery channel expansion, digital transformation, and continuing to use data to drive our marketing that we have the insights around. All of that is bolstered by Wingstop Smart Kitchen. I wouldn't say this is necessarily a change or new unlock. It really just is enabling and strengthening the strategies that we're executing against today. Got it. You mentioned marketing there to tailor to your answer. Do you have any thoughts you can offer given, you know, we'll be entering football season with a lot more visibility on the third-party platforms? Anything you can tease on marketing or anything there that would drive greater visibility and maybe push some? I guess if you take a—I'm sorry. Go ahead, Jim. Oh, no, you're fine. I may have lost you there, but you know, I think if you take a step back and we just look at our media investment throughout the year, Q4 will be our highest investment out of all of 2025. We have that, but you know, we feel like we're executing a playbook that's working. We have great partnerships that we're leaning into. Obviously, we were an early partner of Amazon when they took over Thursday Night Football, and we were able to lean in and co-create a commercial with them and using some of their talent. Amazon is now taking on NBA, which gives us another opportunity to lean in early there as well. Obviously, we're leaning into culture where it makes sense. We will continue to execute against the playbook that we're executing against today that we feel like is working. We're excited about football season. I think the consumer is excited about football season, and we're encouraged about the back half of the year. Great. I appreciate all the color. I'll talk to you in a few. The next question is from Andrew Charles with TD Cowen. Please go ahead. Great. Thank you. Curious just in terms of reiterated guidance here. July seems weaker than you had anticipated along with the industry, so curious about the mechanics for the offset. Was it that 2Q outperformed expectations, or is there perhaps more consideration for Smart Kitchen? The supplier forecast didn't include any impact from Smart Kitchen in the back half of this year. Hi, Andrew. This is Alex. We haven't considered any benefit from Wingstop Smart Kitchen in our outlook, as well as any change in the consumer and any additional macro pressure that broadens more than what we're seeing today in these pockets. I think as it relates to how we thought about the quarter and the start, certainly, you're hearing more commentary around the start of July across various industries with the consumer pressure. I think us reiterating our guidance shows us the confidence in our strategies that we're executing. In the third quarter, we expect and anticipate that we would return to growth at the tail end of the quarter that positions us well in Q4 to hit our guidance of approximately 1%. Andrew, I'll just add that, you know, when we provided our prior outlook, we made the reference that it was based on recent trends in the business, and kind of modeling that out and looking at compares as they ease to the balance of the year, obviously, pretty materially in Q4. What we would say about Q3 is it kind of looks a little bit similar. There are similar trends that we're forecasting off of. I wouldn't say a material change. I think it's kind of interesting if you're debating a point here or a point there. If you look at just the contribution of the incremental net new restaurants that we're opening, it's pretty powerful to our asset-light model. We're pretty proud of our results for Q2, particularly when you look at the environment we're operating in, where the consumer sentiment is. You know, we take a look back, take a step back, and you kind of look at our business. On a three-year basis, to be driving sales over 40% is a pretty strong testament to the staying power of the multi-year horizons of our strategies. We're pretty encouraged by those results. Most importantly, we're really excited about what's in front of us as it relates to Wingstop Smart Kitchen, which is truly a game changer for our business. You know, getting to sit in, as Alex mentioned, in these design meetings around loyalty and understanding how that's going to continue to bolster the strategies we're executing to continue to scale AUVs towards that $3 million target. That's very well said. Thank you for all that. My follow-up question is just on the pockets of challenges that you're citing. What tools do you have in your toolkit to help address this more? Obviously, 20 for $20 was nationwide, but I would think value initiatives could be something. Is there an opportunity to step on the gas a bit more with advertising? You guys did a flavor innovation on Mexican street corn. Just kind of curious, what are the other items here to help accelerate performance in those pockets? Yeah, I think Andrew kind of answered the question. It's the components of our playbook that you're seeing us activate, showcasing abundance, quality, and value that really differentiates the Wingstop experience. Flavors are a fun way to engage our guests. We had a great flavor last quarter, Mexican street spice that we launched. You'll see additional flavor news coming out from us that really finds ways to engage the guests and remind the consumer of that high quality, high value occasion that Wingstop offers. We've said this before, Andrew, but we believe some of the softness in some of these pockets that we do see is temporary as well. We do expect to get on the other side of it over time. Very good. Thank you both. The next question is from Andy Barish with Jefferies. Please go ahead. Hey, guys. Can you just kind of give us a little sense of the huge, you know, unit growth year this year, just how we should be thinking about kind of some maybe normalization next year or, you know, maybe, you know, total unit counts on, you know, up or down a little bit? Just trying to kind of get our arms around how huge the development's been. Maybe this is the run rate for now. Hey, Andy. Good morning, and thanks for the question. We're obviously pretty excited about and encouraged about the pace of development. What's pretty wild is it wasn't that long ago we just celebrated hitting 2,000 restaurants as a system. Based on our outlook for this year, we're already going to hit the 3,000 unit milestone, which is pretty exciting for us. We mentioned that the pipeline of sold commitments is at a record level, and the demand is there. We're obviously not in a position to provide any sort of outlook or guidance related to 2026. What we're going to remain focused on is disciplined and sustainable growth and delivering on our long-term algorithm. I think really what you're seeing in 2025 is what we talked about over the past couple of years. We were making investments, and it was showing up in our G&A, but making investments in process, in systems, in people, in resources, in the team. Our brand partners have been making investments as well. I think you're seeing a lot of those investments that we often reference that we're making to position this thing for growth and scale really come into life in 2025, and we're encouraged by that. Gotcha. Just to follow up on the labor line, which saw some leverage, obviously in the company-owned stores that have Smart Kitchen. Can you just talk to, I know it's already a very efficient back of the house, but is there anything else there, or does this just kind of show that, hey, you can run higher volumes with the same team, and they're just getting more efficiency out of the technology? Hi, Andy. This is Alex. Yeah, that's right. You know, we talked about how this Smart Kitchen can improve the team member experience, simplify operations, and make that back of house, that kitchen operations much more efficient. I think you're seeing that play out in the corporate restaurants. We do have a little bit of a dynamic in both labor and operating expenses related to the exit of our or the refranchising of our New York market from last year. I'd say a combination of what you're seeing, and this is probably a good run rate for us, what you saw in Q2 as a way to think about the corporate restaurant labor line. We did, as we talked about as well, with frozen fries, we took out, with the launch of the frozen fries, we took out some of the prep labor that's associated with that, hand-cutting fries every day in the morning. I think we're getting a little bit of the benefit of that showing up as well. Okay, thank you. The next question is from Gregory Francfort with Guggenheim Securities. Please go ahead. Hey, thanks for the question. My question, maybe it's a little nuanced, but your customer is lower frequency than some of the other QSR categories. I think you have some customers that are probably coming 15, 20 times a year. Have you noticed with the Smart Kitchen, or are you able to detect at what kind of point that customer notices that you've gotten faster and that the operations are better and changes their visitation patterns? Is it on the first or second visit? Is it a couple in? Any thoughts on just color there? Thanks. Hey, good morning. Thanks for the question. Some of this is a little bit anecdotal, but we can clearly be in restaurants with Smart Kitchen and see and hear guests just react to the improvement in speed, the consistency in the experience. We talked about it in some of our earlier comments. When we do look at our frequency, it seems like we kind of hit a sweet spot in the DFW market at about four months in. There's no question for those higher frequency guests, you're seeing benefits sooner, as they realize the additional benefits associated with Wingstop Smart Kitchen. I I would say we talked about the improvement in comps versus control. We pointed to our corporate restaurants as a good proxy. I wouldn't say that those deltas were overnight. It obviously kind of gradually has continued to grow and improve there. Again, as we take a step back and look at what's in front of us and the opportunity we have here with Wingstop Smart Kitchen, we're pretty excited, and we feel like it really gives us a lot of confidence and line of sight into scaling AUVs to $3 million over time. The next question is from Sharon Zackfia with William Blair. Please go ahead. Hi, good morning. Thanks for taking the question. We've heard a lot of companies talk about kind of having to increase the pace of innovation or create more calls to action in this environment. I know you also have that with your value messaging. I'm curious on the pace of innovation, just given the success with the relaunch of tenders. How are you thinking about that for the balance of 2025, and is there an opportunity to accelerate that into 2026 as you've got the Smart Kitchen fully rolled out? Good morning, and thank you for the question. You know, you mentioned tenders and the relaunch of tenders, and the feedback from guests has been very strong. I believe hands down, we have the best tender on the market. Tenders in and of itself, I think, is a great example of menu innovation at Wingstop. Yet, really, we're just scratching the surface. There's 1.6 billion chicken tenders served annually, and we are a long way from winning our fair share. We compare against that chicken sandwich occasions annually of 2.8 billion. While we're encouraged by what we've seen with chicken sandwich, we still see a ton of upside there. For us, when we look at the upside in both of those occasions, and layer that against how Wingstop Smart Kitchen is going to position us to win our fair share, we think we have a lot of runway in front of us. As it relates to innovation, and Alex mentioned this earlier, I think you're going to see us continue to lean into flavor as a way to create new news, create engagement and excitement with our Wingstop fans. When we look at sandwich and tenders as two examples, we see a ton of runway in front of us. As a follow-up, I know you mentioned lunch and late night as particular opportunities. Are there any products that you have in the queue or any flavors that you think will really resonate with those day parts? Hi, Sharon. I think it's a bit of what we just talked about with sandwich and tenders. We've seen sandwich, you know, since the launch index a bit higher at the lunch occasion. Tenders was nominally higher, maybe not to the same extent as sandwich, but I think in both cases, you know, more broadly speaking across restaurants, you do tend to see those index higher and perhaps at lunch and late night. I think we could take advantage of that when we have something like Smart Kitchen and we're delivering on those speed expectations for our guests. Just to add on to Alex Kaleida's comment, I don't know that we necessarily need any new products, but as we think about those two dayparts, lunch or late night, there could just be things we do with combos and packaging that position existing products in a way that drive engagement with guests. Okay. Great. Thank you. The next question is from Chris O'Cull with Stifel. Please go ahead. Yeah, thanks. Michael, the marketing fund continues to increase substantially. I know you've moved the needle on the quality and quantity of placements over the past few years. I was hoping you could just discuss what doors continue to open as the fund grows. Are there any key inflections where you can invest at a level that might disproportionately bring more visibility to the brand? Hey, Chris. Good morning. Thanks for the question. No, you're right. Our ad fund has been growing at a pretty consistent pace of system sales, and we're encouraged by that. We feel like it's giving us continued ammo to chip away at this meaningful opportunity we have to close the gap to other more mature, scaled restaurant brands as it relates to brand awareness. We feel like a lot of the strategies we're executing are working, but we do see opportunities to lean in and some other areas to lean in. When you've heard us talk about WWE as an example, we did a test last year. We saw that as an opportunity this year to lean in. As we look at the fans of WWE, they look a lot like Wingstop fans, but the majority of them don't know us or don't engage with our brand. A ton of opportunity there for us to lean in. You can even go one step beyond that and look at the UFC, another area that we've seen an opportunity to lean in. We'll continue to lean into additional channels like that, or additional areas like that to continue to expand awareness. Even if you take an example like the NFL, we're showing up in a big way, but yet we still have a lot of opportunity to chip away at making a bigger impact with that partnership and in that presence and with that audience. I wouldn't say there's going to be a fundamental shift in our strategy, but us continuing to lean in into what's working. I had a follow-up on delivery. Given the improvement you're seeing in quote times and placements, does that increase the attractiveness of deploying some incremental marketing investment on these third-party platforms over the next few quarters? Hey, Chris. I would say, you know, first and foremost, it's pretty incredible how many consumers, when they engage with DoorDash or Uber Eats, they start their decision-making by opening one of the categories that Alex mentioned earlier of under 30 minutes or fastest near you. Historically, Wingstop wasn't even in that category, either of those categories, so we weren't in the consideration set. For us, and I think the early results that we're seeing are simply Wingstop getting into the consideration set for this large group of users of delivery that are looking for speed and looking for consistency. We're excited about that. As it relates to leaning in from an investment perspective, we continue to see opportunities within that platform, within that channel to invest. Most importantly, we continue to receive co-investment behind our brand because both DoorDash and Uber Eats like our business a lot and the size of the check that comes with it. We're continuing to lean in and push them and get as much as we can there. Early results from Wingstop Smart Kitchen are really, really encouraging, as it relates to their delivery channel. Thanks. This concludes our question and answer session, and the conference is also now concluded. Thank you for attending today's presentation. You may now disconnect.