Wingstop Inc. (WING) Earnings Call Transcript & Summary

Good morning. Welcome to Wingstop's first ever Investor Day. Thank you so much for being here today. Before we kick off our presentation today, I have a couple of items I would like to cover. But before I cover those, for those of you who do not know me, my name is Michael Skipworth. I'm the Chief Financial Officer here at Wingstop. So the first item that I would like to cover is, obviously, the legal disclaimer that we need to cover before this presentation. And then we've included a copy of that disclaimer within your presentation, which you can find at your table for those who are here or also find on our website at ir.wingstop.com. And obviously, today, we'll include some forward-looking statements as well as some non-GAAP disclosures and all the appropriate legal disclaimers are included here. This morning, we issued a prerelease on our fourth quarter results. And just to highlight a few of those if you haven't had a chance to see the release, we did post a unit growth number for 2019 of 10.6%, that reflects 45 net restaurants openings in the fourth quarter, and we ended the year with 1,385 global restaurants. We also posted a 12.2% same-store sales growth for the quarter. That's on top of a 6% same-store sales growth in Q4 of last year. So an 18.2% on a 2-year basis, a very strong Q4 same-store sales number, and that marked our 16th consecutive year of same-store sales for the brand with an 11.1% comp for the year. And those 2 top line drivers, unit growth and same-store sales come together to drive 21.2% growth in system-wide sales and for the year, we culminated system-wide sales of $1.5 billion for the brand. In the release, we also highlighted a couple of items that we wanted to make sure they were captured for modeling purposes. One of those was a $1.6 million investment that we made with a management consulting firm that we'll talk a little bit later today in the presentation. That $1.6 million investment is something that we're going to treat as an add-back for adjusted EBITDA. We also incurred about $1.1 million of organizational-related charges that are nonrecurring in nature, but not necessarily something that we're going to add back for an adjusted EBITDA perspective. And so before we kick off our presentation today, we did celebrate our 25th anniversary as a brand in 2019 and so I thought a good way to kick off the presentation today would be to start with a video that we shared at our convention this year with our brand partners, where it gives you a nice overview of the history of Wingstop for the last 25 years. And then from the presentation, there forward really going to be focused on the future and where we're going from there. [Presentation]

All right. Good afternoon, everyone. Welcome to Wingstop's First Investor Day. My name is Charlie Morrison. I am the Chairman and CEO of Wingstop, and I'm so excited to have all of you here today. We've got a lot to share today. And as Michael said, we're going to talk a little bit about the past. But as you saw in that video, we've done some amazing things. We're just getting started. Today, I'm going to kick it off, but then it's going to be all about the team, and you're going to get to meet them today. And our objectives are pretty darn clear. First and foremost, we want to make sure that we anchor everyone in this room on our strategic path forward. Here pretty quick, we're going to have roughly 22 to 23 different analysts covering our stock. That's a big number, and that's a lot of people to make sure that we give ample time to, to talk about our great story. Today, you're going to get a chance to actually hear that, ground yourself in it and look at how we're going to move the business forward. Second, I know we've had a lot of change. You're going to get to meet the entire management team of Wingstop. They're going to tell you all about what they're doing to really make it happen. You get a healthy dose of me and Michael, all the time, but this is a group that's really making it happen. And I'm very excited, very proud of this team, and I want you to really get to know them, not only now when they present but afterwards, when we're done. You're going to experience some innovative new ideas. Some of those are here with us today in the back of the room, some new technology. After the session, we're going to have some fun things to consume. So we hope you get a chance to actually see, feel, and maybe eat Wingstop by the time we're all done. And as Michael mentioned, we made an investment during the fourth quarter, and it really formed our international strategy going forward. Many of you have asked, we are going to deliver a lot more depth and insight on our international path forward. So I'm excited to share that with you as well today. As we get started, I want to ground us all in really what makes Wingstop who we are, and it starts with our mission statement, "to serve the world flavor." That's a very simple statement, but it has a deep meaning to all of us at Wingstop, not only just within the corporate office, but our fans and our brand partners as well, our franchisees. Serving the world flavor means it's not just about the bold distinctive 11 craveable flavors that we have on our menu that have stood the test of time but it also has a figurative component to it. It's the flavor of this brand. It's the culture. It's the excitement. It's that, I got to have it feeling that our customers are always talking about, and we're going to unpack that a lot more today. That mission leads to our vision, and you've heard me say it many times over to become a top 10 global restaurant brand, and we believe we're well on our way to get there. What grounds us is what we call the Wingstop way. It's our values. And in the middle of this construct you see up here are our core values. And we spend a lot of time reflecting and cascading this message throughout our entire organization as well as with our brand partners to make sure that it becomes our filter for how we behave and how we run our business. We're always going to be mindful of taking care of our guests as well as all of the different constituents that we serve. We're going to remain authentic. We still make our product the way we did from the very beginning. We haven't changed that, and we're not going to be pushed into a position of having to do that. And I think it's shown itself in the great success we've had. We love to have fun. We're a fun brand. I could watch that first video all day long because it's so exciting to be part of something that's so great like Wingstop. And yet at the end of it all, we maintain our entrepreneurial roots. Even though we're growing towards becoming a top 10 worldwide brand, we know that we need to maintain our entrepreneurial spirit because that is what's going to keep us nimble and agile as we continue to grow. Now to be a part of this brand, you got to be able to meet the criteria of being part of who we are. We call them permission to play values, things like intellectual curiosity. We want you to come into this company, understanding who we are, what makes us tick and how we can continue to get better. We also have aspirational values, things like transparency, making sure that not only with all of you, but with our brand partners and anybody else, our supplier partners, that we are always trying to strive to be more transparent and more clear about what our direction is, so that we're all aligned together as we continue our mission forward. And last but not least, certainly, we got to watch out for those things that can hurt us. We call them accidental values. A lot of people don't talk about this. They talk about the positives, the things that move the brand forward, you got to watch out for things like complacency, creating silos in an organization, becoming entitled just because of your success and also being indecisive. That's not how we operate at Wingstop. And as soon as we see that happen, we attack it and we attack it quickly because we know it's going to hold us back from being the best that we can be. Michael talked about this. We're not going to share a whole lot of slides on trends and graphs, they are in your appendix. And if you feel the need to check them out, they're really great. They're all going this way. It's good numbers. I'm going to kind of sum them all up here, and we're -- then we're going to talk about the world going forward, okay? Now since our IPO in 2015, when we were here in New York, kicking it off, we have had best-in-class performance amongst any restaurant brand that's out there. We've delivered over 500 net new restaurants, with the unit growth rate on average of 13.1% and have now become a part of 10 different countries in which we operate. That track record has led to 31.3% stacked same-store sales growth during that time, a 16.5% average system-wide sales growth and strong EBITDA margins that freely convert into cash that we can return to our investors or put back into the business for investment. In fact, since our IPO, we have returned over 406% to our shareholders, including over $300 million in cash by the way of special dividends back to our -- and regular dividends to our shareholders. Truly remarkable performance, but as the video said, and we talk about it a lot, we're just getting started. And in fact, 2019 was a year that was just like the rest, great, strong momentum in the business, our 16th consecutive year of positive same-store sales growth, also our eighth consecutive year of international positive sales -- same-store sales growth and a very new business to us. As Michael said, 1,385 locations total, strong unit development, again, 10% plus is our long-term outlook, and we continue to hit that. Over 20% system-wide sales growth this year, 94% now of our business is covered by our partnership with DoorDash for delivery, that takes us into 2020, and you're going to hear a lot more about that later on today. We're just short the 40% of our system as they -- 40% of our sales coming in through digital channels. And ladies and gentlemen, that's only second to the big pizza players, and we're well on our way to continuing to digitize every transaction. This year, as Michael mentioned, 11.1% same-store sales growth, yet another double-digit year for Wingstop on top of a fantastic year in 2018, a total of 17.6% and a metric that I'm really proud of. Our average unit volumes are rising, $1.25 million, which generates fantastic unit economics, truly a remarkable year for Wingstop. Now some of you may say, well, how can this continue? How do we continue to lap this performance? What I'm going to share with you is our 12th flavor, our secret sauce. It happens to be in this chart right here. And I think this is really the key to our competitive advantage. Our restaurants opened strong, and they continue to get stronger. A lot of brands experienced what we call a honeymoon. They open, they get strong and then they weaken, taper off and then have to grow from there. Over the years, and you can see in this chart depicted, each line is a vintage of Wingstop restaurants from 2009 through 2016. And you can see that every single vintage starts strong, well within our unit economic expectations. And then continues to grow year in and year out as we continue up that curve. And that continues to repeat itself. And if you notice on the graph, the curve continues to shift up. It's truly what's unique about our business. And I would challenge, you don't see this very often in restaurants today. Just to add to that, in a year like we just had in 2019, our same-store sales growth averaged 11.1% for domestic restaurants. This chart shows each vintage from 1994 all the way through to 2017, that most mature class we have of new restaurants in our system. And you can see across the board, across every vintage, our same-store sales growth is very consistent. I'll even call attention to our original restaurant which is still open. It's not just a black and white picture up on the wall, it is a restaurant that we still operate today in Garland, Texas, averaging a little over $3.5 million a year and grew at 6% same-store sales growth. So a true testament to this long-term sustainable opportunity that we have in front of us. Let me show you one more way that you can dimensionalize this. I started with the company in 2012. Our average unit volume for the restaurants that were open at that time was $905,000. By 2015, those restaurants, that same set of restaurants, those 400-plus restaurants, averaged $1.2 million, which is pretty close to our average unit volume for the brand today. Today, in 2019, those same restaurants are now operating at over $1.5 million. And when you hit that level, our brand partners know the return economics are fantastic, and that's what fuels continued growth. And our brand partners are the reason for our success. We thank them for all their hard work, their commitment and their capital investment to continue to grow this brand. So I thought let me dimensionalize what it means to them to continue to grow and why we stick with our existing brand partners as our primary means for growth. The key is we want to create long-lasting value for our brand partners. This chart depicts 3 different examples of both mature and emerging brand partners in our system. As you see, each of the dots represents a year in the vintage as they continue to grow. As they move and get older then as you work your way up the chart, you'll see that their AUVs continue to strengthen. And then the size of the dot represents the number of restaurants that they operate. And typically, what we see is they ramp up quickly, and then they really start to create that curve that continues to create great value. Now if you dimensionalize the size of the dot for every restaurant they own, usually, it's about 1x their revenue is the value that they're creating for their businesses. So in cases, we have brand partners now that have $80 million to $100 million businesses that they're operating, and we're very proud of that. And we want to continue to see them leverage that and continue to grow with our brand. All of this gives us great confidence, confidence that we have a great long-term potential ahead of us, plenty of white space, not only in the U.S., where we believe we can deliver over 3,000 restaurants today at 1,231 in 44 states, plus an international footprint that we're going to talk about quite a bit today because we think that is the next great frontier for Wingstop. Again, over 3,000 restaurants, yielding a total of over 6,000 restaurants of global potential, which puts us in that position of being a top 10 global restaurant brand. Now all of this is anchored on a strategy that has been in place for a long time. Some companies come up and they revise their strategy. They go through that planning process each and every year. What we found at Wingstop is we don't have to continue to change it. In fact, no, what we're going to do is stick to it. And we believe this strategy and this construct will ladder us up to becoming a top 10 global brand. It starts with maintaining the performance that we've seen in same-store sales, by driving national advertising, continuing to create digital transactions that are more efficient for our guests and our brand partners. And then the advent of delivery, which we believe is incremental growth for our brand. We're going to protect our unit economics. We're going to try to do everything we can to mitigate the volatility we see in wing cost inflation, continue to look for ways to enhance our operation, make it more efficient and then take advantage of the scale that we're building, not only here in the U.S., but around the world. The combined effort of both of those yields great unit expansion opportunities. We're fortressing key markets, not to create cannibalization, but to create opportunity, and we're going to walk you through that with clarity today so that you clearly understand what fortressing means for Wingstop. We're going to start to dabble into nontraditional locations by looking at new cooking platforms that are -- that we're going to showcase to you today. And then the global expansion is about to take off, and we're very excited about what we have in store for you. But it all starts at that foundation of people. In fact, people are the most important asset we have. And in any growing organization, especially a brand like ours that's approaching $2 billion in system-wide revenue, you have to be cognizant of making sure that you've got the team in place that's going to take you clearly to the next level. That's why today we have our great team with us, and I'm very proud to say, I get to lead the best team in the restaurant industry. Why do I know that? Look at the results, but also you get to experience these people and understand why they're such a wonderful people to work with. Michael Skipworth, my right-hand, has been with us for about 5 years. Sitting with me, working through the IPO, helped us through the IPO, a strategic CFO. He's not going to talk about the trend charts, as I mentioned before, but he's going to talk about the strategy for where we're going to protect the economic model. A new appointment to a new role, but a guy that's been with us for 6 months, Mr. Mahesh Sadarangani has joined us. Mahesh and I have crossed paths in the past as he has with Michael, and we believe Mahesh is well positioned to help lead our domestic efforts to take our domestic business to a completely different level. Christina Clarke has been the brains behind this fabulous marketing initiative that we've had, leading our national advertising efforts, wisely spending that extra 1% that we put in play and delivering fantastic results. You're going to get to meet her today as well. Nicolas Boudet, I knew Nicolas when he was in FOCUS Brands, a sister company at the Roark Capital Group before we were public. And we spend time together. And when we were looking for the right head of international operations, we went out and grabbed Nicolas and brought him into the company. He's going to walk you through what our new strategy looks like. Madison Jobe and I have been working together for many, many years, 2 different companies here together. And every time we come together, it's a great opportunity to continue to grow our business and develop new restaurants. He's really shifting the curve on the domestic business. I'm excited for him to tell you all about that today. Donnie Upshaw, we were looking for people. I mentioned people is important to us and so we went out looking for a head of people. And when I met this man, I realized very quickly, he exemplifies the culture of Wingstop in a great way, who we are, the fund we have, the authenticity, every bit about it. He's going to share with you his people strategy. And where we're going into the future. Not with us today, she recused herself, but Ms. Rebecca Minor has joined us as our General Counsel. Again, Rebecca and I have worked with each other in the past as well. A strong quality franchise lawyer who really understands what it takes to really navigate through some of the choppy waters of franchising as well as supporting our legal function. We're thrilled to have her on board. And then last but certainly not least, Marisa Carona, our Vice President of Strategy and Chief of Staff, who helps us really chart the course for strategically where we're going, keeps us on the leading edge of innovations, understands where the market is going. We're excited to have her here. And she's also going to talk to you about a very important aspect of our business, our taking care of the customer through our sustainability initiatives. So she's going to talk about that in a little bit. All right. So that's enough from me. I'll come back at the end to close it up and then we can have some wings after we're done. With that, ladies and gentlemen, I want to introduce Mr. Donnie Upshaw, our Senior Vice President of People. Donnie?

Thanks, Charlie. Good afternoon, and thank you, guys, for giving me an opportunity to talk to you about our people strategy. My name is Donnie Upshaw, and I get to lead all things people here at Wingstop. Charlie shared with you the phenomenal success of financial success the branch has had, but what truly attracted me to the brand is the opportunity that I saw to impact our culture, our great culture that we have at Wingstop. You see the accolades on the screen above. But the 2 that I'm most proud of, the 2 that inspire me the most is being a certified Great Place to Work and being selected as DFW's Best and Brightest Companies in the Dallas-Fort Worth market, which we all know is a truly competitive talent landscape. Also, these accolades, these awards really exemplify who we are as a brand, and we've worked really hard on our people strategy, and that's why we -- we're able to achieve such success. People are our competitive advantage. That's not just lip service at Wingstop. We attract the best and brightest talent, we bring them into our culture and align them with our culture, which means they understand our strategy. They understand how their role impacts that strategy. They are inspired. They understand they're part of something so much bigger here at Wingstop. We engage and retain our talent, engage them in our culture. We engage them to -- so they see that they have -- what their role does, how -- and how it impacts Wingstop. We develop our team. It's so important as we grow, that we have the right team members in place to take on larger responsibility, larger scope roles and larger teams. And last but not least, we advance and grow our talent internally. We want to promote from within. We want to make sure that we equip our team members with the right tools to be successful. We invested heavily in organizational health. We partnered with The Table Group, whose philosophies are on -- are leaned on Patrick Lencioni, who is a world-renowned author and a pioneer in the space. We started at the very top of the organization, the senior-most leadership team. And what did we want to do? We wanted to build a cohesive team that was based on trust, that's based on holding each other accountable and eliminating politics. We created clarity. Identifying what's important right now, what is the most important thing right now? Overcommunicated that clarity and reinforce that clarity. We also have what we call the ideal team player. What we consider as table stakes to work at Wingstop, humble, hungry and smart. Humble, you have to put the team before self. Hungry, we look for team members that are passionate about what they do, team members that are seeking out learning. And then last but not least, smart, people smart, we want those that have a level of empathy and also those that understand how to interact and communicate with team members with diverse backgrounds. Organizational health, as you know, when you're a healthy organization, you perform well, but what it also enabled us to identify is when our organization is not healthy, we can react quickly and make changes when we feel team members don't fit our culture. We made this investment because we know that culture trumps strategy every single day, and it's paying off for us in a big way. We have arguably the most engaged team members in the industry. We are outpacing the benchmark, we're outpacing our peers and our team members are saying, they feel that they're valued at Wingstop. They feel Wingstop gives them the tools and resources to be successful. And they also feel like, "Hey, I can recommend my friends and family to come work at Wingstop." You can also see, over the last 4 years we've invested in top talent. The average salary for those at VP and Director level has grown 34%, so not only are they engaged in our strategy, they're also engaged in our Pay for Performance model. We're proud of our results. We've been putting big numbers on the board, but we know that's because of a great culture and because of the investments in our team, is why we are here. Another big investment I'd like to talk about is what we'd like to call HQ2 at our new Wingstop home. We closed on the transaction in 2019. We'll spend this year modifying the building, focused on making it fit our culture, bring some swagger to the building and it will also enable our teams to work in ways that we aren't able to work today. I'll tell you a quick story about the building. So I'm going through my interview process, this is about 2 years ago, I'm going through my interview process, I come in, I meet with Charlie. I meet with the leadership team. I'm really excited, I get to the building, and I'm like, it's pretty beige. It can use a code of paint. But I leave -- I'm still charged up about the brand. I'm still excited about the brand. But I send Charlie my assessment of how my day went. And I said, "Charlie, whether or not you hire me, you need a new building." So it's been really cool to see that come to fruition. With hindsight, it was quite the sign-on bonus, but I'm thankful for it and our team members will benefit from it. So thank you for taking some time to listen and hear our secret sauce. And what I will call now our 13th flavor, our people. Next, I'd like to welcome Christina Clarke to the stage. What I admire most about Christina is she grew up through operations, just like I did, and I think that gives her a great perspective on the business overall. Please welcome Christina Clarke, our Chief Marketing Officer.

Donnie. Nice job. All right. That was a nice HR hug if there ever was one. My name is Christina Clarke, and as Donnie mentioned, I actually began my career in the restaurant business at age 16, starting in restaurant operations, prior to moving to marketing. And after I moved to marketing, I was able to spend about 10 years at Yum! and 12 years at PepsiCo before joining Wingstop in 2018, and this has been an incredible journey. But I have to tell you, as a brand, the Wingstop brand is a marketer's dream come true. It hits on so many brand strengths trifectas that it's impossible to measure. What I mean by that is that when you think of living within pop culture, being able to organically communicate and connect with consumers in a powerful way that's intrinsic to who they are; two is having an avid and loyal fan base that is incredibly passionate about the brand; and last but not least, it's about having a distinct and differentiated product that allows you to exist within that category of one. We are so excited to share with you not only this strategy from a marketing side, but also want to share with you the journey that we've been on over the past year. Let's roll. [Presentation]

In Q4 of 2018, I led Leo Burnett to create that flavor world, a world that celebrates uncompromising flavor, one that ignites all your senses, jumps off the page and makes you want to lick the screen. It is about crafting that elevated experience that means no shortcuts because Wingstop is where flavor gets its wings. And we took this flavor world all over in 2019 across our entire campaign. We even did the Grand Hyatt, right? We brought this flavor world everywhere and showed it to consumers in a big way and boy did it pay off. Let's look. [Presentation]

2019 was an impressive year. And I bet many of you are wondering, how are you going to [ lapse ] that 11.1% same-store sales growth. Well, I have great news. When we look at our history over the past 16 years, every time we've made a strategic shift in our marketing focus, we have driven considerable same-store sales growth, whether that be moving to a co-op centered focus for markets like L.A. and Dallas, where we can consolidate our media and our spend or whether that moving to a cohesive creative strategy, bringing the brand forward in a cohesive way and also taking our social voice out in a big way or whether that be investing in national advertising and our incremental investment into the ad fund to bring the brand forward to more consumers. Every time we've made those specific shifts, we have changed the growth trajectory for the brand. Which is why we believe that we are just getting started. This past year, I have -- I led the team to get deeper into the consumer and understand our consumer better than we ever have before, focusing on 2 key points. One is, how is their behavior within the QSR landscape; and two, how does it pertain to Wingstop. And what we began to understand and began to segment out was their behaviors. Understanding our core, which we call Box 3, 4, 7 and 8, which represents those who visit us a little bit about once a month. And also, represent about 60% of our visits. We also began to identify those who are light usage of our brand or have never tried us before, understanding their behaviors and seeing that they represent 67% of QSR visits, which also identifies a prime opportunity for us to go source new occasions. Taking this information, we were able to dimensionalize who they are. Looking at not only their usage of our brand, but also beginning to see their demographic diversity. Their incomes and their family structures, which is important as we begin to see millennials having families and their occasions and needs shifting. We were also able to translate this information over to understand how they are aware of the brand. And if they are aware, are we considered as a top of mind focus allowing us to understand what behaviors and/or problems we need to go solve for. This is important because each quarter, we measure key brand health metrics around attitudes, like, are you aware of the brand, to more of an active attitude, which is, if you are aware, do you consider Wingstop, all the way down to behaviors that are oriented around purchase and repeat. And while we have made -- sorry about that. While we have made considerable progress in moving these metrics forward in 2019, growing awareness, 0.3 and also growing consideration 3.8 points, which is 6x faster than the brands that we benchmark against. We also know that when we look at other QSR benchmarks, we have room for growth, which is why we feel we're still just getting started. When we take that performance that we've made across awareness and consideration, and we take it back to that marketing segment, the consumers, we've begun to see that we have moved consumers that were nevers or were light users, up the purchasing funnel, driving over a full point of new users into the brand and 3.5 points of visit increase, driving that frequency of our brand. And when we marry that to our internal data, we begin to see that we've generated almost 1,100 new users per restaurant through Q3. 2020 is going to be an exciting year as we continue to build upon everything that we've learned and applied in 2019, pulling those marketing levers strategically to continue to deliver that growth, starting with increased media investments as we continue to drive and increase our national reach. Delivering breakthrough creative, working with great agencies like Leo Burnett to continue to deliver that creative that pops and captures your attention. Tying into local media, ensuring that our national and our local media correlate and are nicely allowed, allowing us to deliver an always-on communication strategy. Continuing the strategic partnerships across college and football that connect fans of the brand with the fans of our flavor. And last but not least, is continuing to leverage our robust consumer data to drive a more personalized CRM experience aimed for our guests. I want to give you a little bit more information on our CRM because I feel like that's a really key opportunity for us as we continue to progress. And it's really about applying our intelligent personalization and recommendations through some very strategic partnerships. This allows us to architect communication that can prime and trigger consumer behavior and continuously learn and reiterate through the process. We did this during our 25 Days of Flavor campaign bringing to life personalized communication that was tied to your flavor profile and past behavior. And what we saw is we not only maintained top of mind consideration and conversion, but we also saw benchmarks exceeding by 3x our current CRM benchmark strategy. This allows us to not only drive that frequency, but also as a pivotal point as we look to digitize every Wingstop order. Building off the success in 2019, our 2020 marketing calendar is going to leverage more money and more weeks on air to continue to drive our messaging. Delivering that "always on" communication approach as we take national and local and work them hand-in-hand; owning key holidays where we have a right to win the occasion; and last but not least, is layering in that personalized CRM as we know our guests more and more and can deliver that message that helps drive their behavior. In closing, I mentioned that we've been on an incredible journey over the last year to tell the Wingstop story. And I want to first remind you of the story we told to consumers as we brought the flavor world to life for the first time, really capitalizing on that first bite experience and that transports you into this flavor world. [Presentation]

I wanted to remind you of where we've been, because I also want to show you a sneak peek of our new campaign. And I literally took this from Leo last night as this is a rough cut as we are wrapping up the production of our creative. But what you're going to see is we're going to take that story that we told the consumers in 2019, and we're going to take it into a second chapter. And that chapter is going to talk about boneless as a means to help drive variety and new occasions, and it's also going to bring delivery to the national stage for the first time. [Presentation]

Last but not least, I want to show you a different piece that we've been working on with Leo. As we continue to broaden our media platforms and our consumers, we know we have to be even more into content that is engaging and dynamic. Now before I show it to you, I'm curious, how many people have heard or played Fortnite? Okay. In Fortnite, there happens to be a dance called the boneless dance. Are you familiar with the dance? Anybody want to do it? Just checking. All right. I want to show you this spot that we created that taps into that and also the insights around parenting as a whole. [Presentation]

Now if you ask me at the happy hour, I'll tell you who on the executive team can do that dance the best. Yes. We have videos to prove it. And -- but we have, as I mentioned, we have a solid strategy in place, continuing to build on our learnings from 2019, pulling those marketing levers and taking them to the next level. And as I mentioned, we're just getting started. So I'd like to introduce Mahesh Sadarangani, our new COO, to the stage. I'm as an operator from the beginning, understanding the power of marketing and operations working together hand-in-hand as we create and fulfill demand. I couldn't be happier than having Mahesh at our side. Thank you. _

Thanks, Christina. I'm really honored to meet everyone today. Before we get started, I'd like to introduce myself. I spent the past 16 years working for private equity owned companies like the likes of Centerbridge and Apollo. Most recently, I spent my time at CEC Entertainment, parent of Chuck E. Cheese's and Peter Piper Pizza, where I had a dual role, I was the Chief Administrative Officer of CEC Entertainment, leading strategy, FP&A, revenue management and supply chain, and I was the President of Peter Piper Pizza, a $300 million unit under the CNC umbrella. As Charlie talked about earlier, I was able to cross paths with him at FedEx Kinko's as well as Michael Skipworth at Cardinal in my early days, and I'm really honored to be a part of the brand. So I'd like to tell everyone about my journey at Wingstop. I've spent the last 6 months leading channel strategy. Within the traditional channel, I've been leading our pricing strategy, managing guest experience and digging deep on our digital innovation. Within the nontraditional space, I've been building relationships with key partners, as traditionally, these have a longer sale cycle associated with them. Within the space, one of the ones that have been most exciting to watch and learn about have been ghost kitchens, which Madison will talk a little bit about later today. We've been able to talk to and visit DoorDash Kitchens, Zoom, CloudKitchens and Kitchen United, the largest player in the space today. Additionally, I've had the opportunity over my past 6 months to travel globally with the brand, visiting 5 countries where we have a presence with both traditional and nontraditional restaurants. And finally, for delivery, I've had the chance to get really intimate with our delivery business. And just to let you know a little bit about my style. When I first started Wingstop, at the same time, I actually applied to be a delivery driver with DoorDash or what you call a dasher. And what you see on the screen here is my actual earnings. In the short amount of time as a delivery driver, I was able to earn about $176, and I've got to really, really learn about their platform. I strongly believe these past 6 months have prepared me for the role at Wingstop today. I'll spend time going over 2 key pillars within the house strategy, specifically talking about digital, delivery and operating efficiencies. I'll end by talking to you about operations and our priorities. So let's get to it. Digital is our business. It's the most efficient way a guest can place an order as it's really easy for them to get online. It's injected straight into the POS as the ticket from an order goes directly back to the kitchen in the make table. And finally, our digital business has a $5 average check. For 2 key reasons: one, guests can spend more time placing that order. If you compare it to being in a restaurant and trying to place an order, sometimes you're hurrying because there's the person behind you. With digital you don't need to worry about that; and second, our upselling capabilities, like add 5 wings or adding a brownie, enable us to get that higher check. Our stated mission, again, is to be 100% digital. Our goal is to digitize every transaction. And like Charlie talked about earlier today, at the end of Q4 2019, we finished at 39%, digital. There is a clear path that we'll take to get to that stated mission of 100% digital. Starting with where we stand today at the 39% and compared to the other pizza players that Charlie talked about at 60-plus percent, we are well on our way. Delivery will continue to drive us growth with our digital transactions. And organically, we've shown that we've consistently grown 1% per quarter. I'll talk a little bit later today about innovations that will help us get above restaurant and in-restaurant to take us to that 100% digital. We've built 3 key access points that will enable you to access Wingstop anywhere, starting with our mobile app, which has garnered a 4.9 and a 4.8 rating, respectively, with the iOS and Android apps. Our guests are telling us they love it. Next, our social channels. We were the first in the space back in 2016 to be able to sell through these channels. Wingstop.com, our traditional way to place an order, is just through our website. And finally, delivery, which plays a key part in a digital order. You can only get our food delivered through the digital channels. I spoke earlier about how our goal is to digitize every transaction. We are testing innovations to drive digital and enhance operation efficiencies. Starting with the pickup lockers that you could see in the back of the room. As you can see, our pickup lockers will provide a seamless guest experience. They're going to encourage digital ordering. And one of the things that we're doing is we're going to be working with DoorDash to help simplify a delivery pickup. I'll tell you being a dasher, being a delivery driver, as I've walked into multiple brands, one of the major pain points is picking up that order so you can hurry and take it to the guest, so it's fresh and warm. With these pickup lockers that we're testing, and once we work with DoorDash to get this fixed, we will -- this will help us simplify that pickup process. Next, our ordering kiosk. I've had the pleasure of going to more than 100 restaurants in my 6 months that I've been here. And I'll tell you, we're testing these kiosks in a handful of restaurants in the Dallas-Fort Worth area. These kiosks enable us to do quick and easy ordering, and they have that higher guest check that I talked about earlier. And most importantly, they have that upsell capability. Again, you can add 5 wings or add that brownie to your order. And finally, voice activation. As you can see here on the screen with the Alexa. We were the first to offer the customized personalized ordering on Alexa that enables you to have hands-free voice-activated ordering. Delivery will be a big driver for digital in 2020 and beyond. Starting with our exclusive relationship with DoorDash, where we'll focus on the strength and scale of our relationship. As we discussed earlier, we'll have national delivery coverage in 2020. We signed an exclusive long-term contract with DoorDash at the end of 2019, where we believe that has industry low commission rates. One of the key components of that long-term contract is data sharing. We're -- while limited today, we're going to data share across both platforms, so we can get smarter on how we reach out to the consumer. And finally, as Christina talked about earlier today, we'll be launching national delivery in mid-February, where we will focus on our Wingstop channels. I spoke to you about delivery, digital and operational efficiencies, let me talk to you about what I am focused on in operations. Starting with overall satisfaction, which is how a guest rates an order. While we are still top quartile for guest satisfaction, like anyone else, we want to continuously improve and be best-in-class. And as you can see from '18 to '19, we grew 2 points year-over-year and overall satisfaction. Through our digital channels, the growth was even stronger as we grew 8 points. And finally, that comprises a top gun restaurant. When you're top quartile for overall satisfaction and digital satisfaction and you have the top quartile for restaurant audit scores, you're a top gun restaurant. We've done a really good job blocking and tackling on fundamentals, but there's so much more. So let me talk to you about my priorities. And there are 3 things, and they're pretty straightforward. First, we have a simple operating model. Wings, fries and drinks make up more than 90% of the revenue at a restaurant. We're going to continue to protect that model. Second, Charlie talked about the best-in-class unit economics. Our domestic AUVs are at $1.25 million and with an investment cost of $390,000, those deliver a 30 -- a 50% unlevered cash-on-cash returns. If we can focus on driving that AUV, we can continue to bolster our returns. And finally, our operations team, both Donnie and Charlie talked to you about the foundation of our house, and that's people. We will continue to build a best-in-class organization. So what does the future look like? I've got 5 key strategic priorities that I've listed there, with the key one being we're going to increase collaboration between our field ops and brand partners. Our end goal is to drive acceleration through bigger, better, faster restaurant openings. I want to thank everyone for their time today. So this next person, I've had the pleasure of knowing Michael for 6 years, and he needs no introduction. Here you go, Michael.

Thanks, Mahesh. So we've talked a little bit today about the incredible unit growth that we've been able to deliver as a brand. Charlie mentioned it earlier upfront in that we've almost doubled the chain since he started with the company, and we've had an extremely successful growth rate, post our IPO, maintaining and continuing to deliver year after year on our unit growth target of 10%-plus. And what's central to this overall strategy into building Wingstop into a top 10 global restaurant brand is going to be to maintain or protect these best-in-class unit economics. And so we wanted to dig a little bit deeper in that today. And we're going to actually show you something we haven't shared before since being a public company, and we're breaking out our AUV by region. And you can see in the West and in South, we have a much higher AUV than we see in the North and the Southeast. And really, what's the key differentiation there between those AUVs really have to do with the tenure or the maturity of that market. And Madison is going to go a little bit deeper and really provide a lot of insights on kind of the fortressing strategy that we execute in our domestic business, and you'll really be able to see through an example of about 4 different markets, how -- as we -- as each market continues to mature as we penetrate it further, the AUVs continue to grow and they even get stronger. One interesting thing to highlight. On Tuesday, we were visiting with one of our brand partners in New Jersey, who has 7 restaurants. Those restaurants operate at a very similar AUV as you see right here. And unsolicited, he made the comment that those restaurants already paid for themselves, and he's ready to sign up for more development. And so being able to do that and deliver that kind of payback on an AUV that you see for the North and Southeast is really built around some of the pillars that make our restaurant operating model very unique. The first one I'd really like to highlight is we have 80% of our businesses off-premise. And we did start the national rollout of delivery a little over a year ago, but we're just kind of getting start -- so we have a -- excuse me, started there. We have a really strong takeout business that we're building off of. So we're going to continue to be able to drive that off-premise business, which is an area that a lot of other restaurant companies are trying to build and trying to create. But that off-premise business really allows us to have a very efficient footprint, on average, 1,700 square feet and that 1,700 square feet in addition to the off-premise business is really fueled by having a very focused and simple operating model, something that, as Mahesh alluded to earlier, we're going to protect that and make sure we stay true to our core. And then we also are very focused on maintaining that low initial investment. $390,000 on average in 2019. And so that low initial investment allows for a pretty quick cash payback. And even as you see some AUVs that aren't as high as maybe the South West or the West, we have an extremely low breakeven in our restaurants that allows us to enjoy a really, really low closure rate of less than 1% year after year. And Charlie mentioned it earlier, but as each one of these classes of restaurants continue to mature, those returns get better and better for our franchisees. And so Christina laid out a very clear strategy as it relates to driving AUV growth. We've got kind of our hand on that lever, if you will, as we know who our guests are, how we're going to talk to them, where they are and how to continue to drive consideration and get them in the restaurant and grow those AUVS. And so you'll see each class on this line chart not only are they growing up and to the right, but they're actually starting up a little bit higher. And you can see that in our 2017 class and our 2018 class. So this is the average unit volume for year 1 for that 2017 class of $850,000. And then you can see the year 1 volume for that 2018 class of restaurants, much stronger at $945,000. And so those restaurants are continuing to improve out of the gate. And 2019, while we don't have a full year under our belt, is following the same trend line. And it's that halo effect, if you will, of national advertising that's kind of helping soften up these markets, in addition to us just driving awareness through the physical presence of assets that are making these restaurants start stronger. And as they start stronger, franchisees' returns improve. And we're pretty confident in our kind of operating model and our 4-wall margins. And what we've done here is really stack it up against some of the best and the best in the industry. And you can see for -- and in Q3 2019, our restaurants stack up pretty nice from a 4-wall margin perspective. So something we're really proud of and something we're very focused on protecting and making sure we can maintain these 4-wall unit level economics. And so to go a little bit deeper in what makes our operating model so efficient, and those returns really strong for our franchisees. It really has to do to what I alluded to earlier, we've a very simple and focused operating model. You can run a restaurant from a labor perspective -- a Wingstop restaurant from a labor perspective with 3 people. Roster sizes on average are 15 to 20 people. And at some of our higher volumes, you can get 6 to 8 people in the restaurant. After that, there's really not much more room in that efficient kitchen that we execute. And so as those AUVs grow, we start to see our labor line become pretty fixed and start to get some efficiencies there and get leverage on that line, which is pretty unique. And as I mentioned before, when we're targeting our real estate profile in the U.S., we're looking for what other people consider B, B minus real estate, in line, there's typically a lot of vacancies, and it creates a very efficient footprint for us. And we are able to enjoy occupancy cost of mid- to high single digits. And again, another area on the P&L that we can gain some nice leverage as AUVs grow. And with that very narrow and focused menu that we execute, we're able to partner with a national brand like RMS to help us be very strategic intentional with how we approach pricing and making sure that we're taking the price where we can, not impacting transaction growth but offsetting any sort of effects of wage inflation or other inflationary aspects that we go -- that we deal with in our model. And then obviously, this is nothing new to anyone who's familiar with our story, but selling chicken wings as the center of the plate, we have a pretty volatile commodity. And so it's this model we have very efficient labor line, efficient occupancy cost, that allows the model to absorb some volatility in that commodity. That being said, we're not really just going to sit here and not do anything about it. And to provide a little bit more perspective on the impact to the P&L, if you look at our protein mix, 65% of what we sell is a jumbo bone-in wing off of that 7 to 9 pound chicken. The rest of our mix is comprised of boneless wings and tenders, making up about 35%, the balance of our mix, which we can contract for annually, but that other 65% of our protein mix as you can see on this chart on the right, where we've shown the last few years as well as an average, that heavy black line, of what the weekly pricing has done on the Urner Barry, where our fresh jumbo wings are priced. And while there's a lot of volatility there, the model still works, it can be demonstrated in the unit growth that we've been able to deliver year after year. But that being said, we want to try to minimize the amount of volatility that we see in the P&L. And how are we going to do that? We're going to do that through a strategy that's really kind of has a few prongs to it. One of which, and Christina alluded to it earlier, in the national advertising campaign which she previewed for 2020, and that is we're going to start to talk a little bit more about boneless wings. And hopefully, we're going to start driving more mix away from -- of ourselves towards the boneless product. And the more mix we drive through there, more contracted annually of our protein mix, minimizes the amount of volatility. But in addition to that, we're also exploring [ a board ] and working on a strategy around the whole bird. And so what we're doing there, and in 2019, we took a big step forward in this strategy in that we're looking at a smaller bird, a 4, 4.5 pound bird that we can use more parts and pieces of the bird than we do from that 7 to 9 pound jumbo bird because of the wings that we sell-off of that larger jumbo bird make up about 8% of that bird. And so we're focusing on how do we use more of the smaller bird, we tested in 2019, the whole wing off of those birds, learned a lot about which guests enjoy that product and what kind of sales mix we could expect to see. And so it's really helping to inform our strategy around this whole bird initiative, and we're taking another big step forward in 2020, and we're going to do a market test where we're going to offer the bone-in thigh of that whole -- that small 4, 4.5 pound bird. And in fact, we're actually going to offer that as a product for you guys to try this afternoon after the presentation. I'm excited about it. It's got great flavor. It's a really unique product. And so as we continue to understand the overall consumer demand that we can understand around the other parts and pieces of this bird, leverage the breast meat for boneless products, the tenders for tenders, there's a much smaller amount of the bird remaining, and we're able to leverage our strategic partnership with PFG to displace some of the rest of the bird and that puts us in a position where we can go out and contract annually for a certain number of birds. And again, working towards that overall strategy of how do we shift more and more of our protein mix away from the Urner Barry and the volatility that we see in that commodity. And in driving that mix and minimizing the amount of volatility, it's going to be really critical for us to maintain these best-in-class unit economics. Charlie shared how that 20 -- the AUVs grown. In 2012, $900,000. At that point in time, our average investment was about $370,000. It's only grown since then to about $390,000. We've done a great job of kind of protecting the overall investment. But as that AUV continues to grow, our franchisees, our brand partners, returns -- our cash-on-cash returns, just continue to get better. And so we're going to continue to protect that low investment cost, and we're going to continue to attack the other areas of the P&L. And make sure that we're maintaining and protecting those unit level economics. And I think the best kind of illustration or demonstration, if you will, of these cash-on-cash returns is the fact that of the restaurants we opened in 2019, 90% of those came from existing franchisees putting their money back into Wingstop. If you look at our pipeline at the end of 2019, it's still-- 80% of it is still represented by existing franchisees sign up for more restaurants. So we're encouraged by that, and we're going to make sure we remain extremely focused on protecting those unit level economics that we're continuing to drive the unit growth. The next person that I have coming up is the one who gets to go out and sell this incredible model to our brand partners. Madison Jobe is our Chief Development Officer. He's had a very storied career in the restaurant industry, and that storied career has really earned for him, the nickname, if you will, from the rest of the team as the most interesting man in the world. And so Madison doesn't always eat wings, but when he does, he eats Wingstop.

Thank you, Michael. That may be the nicest introduction I've had. Storied career, I like that because it sounds a lot better than the old guy on the team. That would be accurate, but it certainly sounds a lot better that way. And that storied career really is because I've had the opportunity over many years to work for a number of different brands, including being a franchisee in the restaurant business. So I fully understand what we're asking from our brand partners. I've worked with smaller companies, I've worked with an emerging brand. I've worked with some bigger companies and actually some that were rather mature, maybe even declining, but I certainly have not been a part of something like this brand before. And when Charlie called me over 3 years ago now to talk about the opportunity with Wingstop. Of course, I was very excited for several reasons. One, it intrigued me with the possibility to work with Charlie again as we had worked together before. Secondly, long been a consumer of the brand. At that time, there was only Lemon Pepper and Original Hot. I now know, since I've been here for 3 years, that we have a lot of other craveable flavors. And finally, this was post-IPO and being a student of the business and following Charlie's career and others that I already knew at Wingstop, I'd seen the growth trajectory, which was well underway. And the opportunity to be a part of that was something that I could not pass up. I can tell you, for a sales and development guy, this is a real dream. And so let's talk about that as I joined the company in 2017 as Chief Development Officer over domestic growth. And we will talk about that domestic growth today, what you will understand over the next few minutes is that I -- what am passionate about is growing restaurants, franchise development and building restaurants, you'll probably also learn that I'm not often asked to stand on a stage and talk about that. But we'll do it today. And our vision to be a top 10 brand globally will take us in expanding our footprint across the globe, and we'll have to do so in some very intentional ways. In the U.S., it is anchored in our fortressing approach and strategy that Michael mentioned and we'll go deeper in that today. And then we will talk about these nontraditional channels, which are not only available domestically, but globally as well. To reach our goal of having over 6,000 restaurants, that approach over time will have to be more balanced. About 50% of those in the U.S. and about 50% of those internationally. And today, we have just over 1,200 locations in the U.S. alone. And between the opportunities that we have for us in our traditional storefront units as well as the nontraditional venues, this will give us the opportunity to almost triple our growth in the U.S. As you can see from some of the slides earlier, referencing 2012 until today, what you have on the map here is to compare and contrast what has happened to the company during that time. We have opened almost 700 restaurants domestically. We have gone to 14 additional states, bringing us to 44 states in total. And we have grown our AUVs from $900,000, approximately to $1.25 million today. But what I would really call your attention to is on 2019 map, you will see the shading, the darker the shade, the further penetration that we have in these states across the country, and it is quite a contrast from where we began in 2012. Our domestic growth is anchored in this fortressing approach and strategy. And as we began to implement this process, we identified 25 key markets across the country that we wanted to focus on and make a priority for this focus fortress development and our fortressing approach varies from some others in the industry. And really, this varies in the key metrics that we watch and how we measure our effectiveness. We want to cover over 75% of the population in the DMA, in the trade areas around our restaurants. We want to build our brand awareness in the DMA so that it is greater than our national average. And these 2 key points around sales, same-store sales growth would be greater than the peer group in the market. And our average unit volumes to be at or above the national average in that DMA. And these 2 points really are the differentiators for us as our fortressing approach looks to optimize markets whereby we want to get the right balance of restaurants to serve that market effectively, where some others would maximize putting every location they might find available into a market to raise their overall sales, but at the same time, they could erode average unit volumes and over time, lead to declining same-store sales. It is our intent to do so in very intentional ways to optimize that growth so that we continue to have growing AUVs, and we continue to have unit economics that compel our existing brand partners to grow further. You see today in these 25 key markets, we have about 725 restaurants and our pipeline that is committed for the future, we have over 400 in just these 25 key markets. And so with that, in addition to that -- those counts, we believe that we have over 1,000 more locations just in these key fortress markets as we move forward to the future. And let me show you the results of what happens when we fortress and when we penetrate and when we build our brand awareness. You'll see in the examples here are these 4 DMAs. All the way, if you start on the right from St. Louis, which is a newer emerging market with only 10 restaurants in it and you work your way across to the left to Dallas-Fort Worth, our legacy market, where we've been for 25 years, you see that the penetration correlates to the restaurant performance and the results we're getting. The higher penetration we have, average unit volumes continue to grow, and our 5-year stack same-store sales is pretty strong. I think you'd have to agree with that. And I bring your attention to Dallas-Fort Worth, because we've been there the longest and you see, we have 89% penetration. This is a market where we meet those 4 key metrics that I talked about. And that we are fortressed, if you will, but we have not hit our ceiling there. Markets change, with the influx of population and the growth in the Dallas-Fort Worth market, for sure, there's opportunity for us to continue on. And we will not use this fortress strategy and this approach only in these 25 DMAs. We're applying the same approach to the smaller DMAs across the country in the same fashion as we continue to build penetration and have unit growth that will bring us to over 3,000 locations in the U.S. Nontraditional, this is an area that offers us great opportunity, as today, we only have 10 nontraditional locations. And as you see, the different kind of venues or channels here for nontraditional, we do have at least 1 of each of those. So if nothing else, we have variety. We are exploring and developing in each of these. And certainly, as Mahesh referred to earlier, where we've recently opened our first ghost kitchen, our brand partner in U.K., just last month, this is really the newest opportunity and the newest channel within the nontraditional space. It's one that we have done some work on. Mahesh mentioned some of the companies that are aggregating in these ghost kitchens. Of course, the opportunity is to open our own ghost kitchen without having others with us, but we are exploring this. We want to understand how this opportunity works, what it means to Wingstop and what is our runway long-term for adding to the nontraditional development. And this is an area where we really have the opportunity to accelerate our growth. And what gives us that acceleration opportunity today is the changes in our cooking procedure and our new speed of service platform that was referenced. In implementing this, we're able to lower our ticket times, bringing the food faster to the guest, which demand a faster ticket time in each and every one of these type of venues. And we believe that not only in the U.S., but globally, there is opportunity for over 500 nontraditional locations in these different venues that are available to us over time. I know you've seen our economics over and over again today, but it's hard not to talk about them, I will tell you for sure because they are what fuel our growth where we are today and where we continue to go forward. Many of our brand partners have other concepts, some in the restaurant space and some other franchise concepts. But rarely are these type of cash-on-cash returns available for developers in restaurants or in general franchising offerings, period. And our brand partners get that. And they get it, as you look at our development pipeline, you see since 2015, we did take a dip in 2017. If you were listening to me earlier, you might have noted that I came to the company in 2017. Just saying. Since that time, we have focused our efforts on expanding development with our existing brand partners, and we've raised the bar on bringing in new brand partners into the system. And what that has yielded us, as you see, at the end of 2019, our domestic pipeline has reached 610 commitments going forward. It's a new peak for us. And I would just add that 70% of these commitments today are in those 25 key focus markets that I talked about earlier. All the while, of course, you know our domestic restaurant count, each and every year through that time, we have built and opened over 100 new Wingstops in the U.S. So we've been very busy with that. Charlie said this earlier, and I can't think of something that is any more true. And that is, if you build them, they will grow, and our brand partners understand that. And that's what they're doing with us today. So this is our domestic growth. This is our plan going forward. And to talk about international, as we said, we would do a deeper dive, I would like to introduce Nicolas Boudet. Nicolas is the President of International. And joining him will be Marisa Carona, our Vice President of Strategy and Chief of Staff.

Thank you, Madison. Good afternoon. My name is Nicolas Boudet. I'm the Head of International with Wingstop. I've joined a year ago, and as Charlie said, we've met, I would say, a couple -- 3 years ago back in Dubai and ever since created a really, really deep wing envy, and I'm glad to be here to satisfy that craving. With me on stage is Marisa Carona, my partner in crime. Marisa and I have worked together quite heavily on strategy for international. And this is exactly what we're going to do, talk to you about international. But before we do so, I'd like to anchor ourselves back again to what international means for Wingstop. As you heard Charlie and many others, it is clear foundation steps into our road map to get to 6,000 stores. We play the yin and the yang. We are the 3,000 stores that will [ propel ] us to be a top 10 global brand. So what does international mean for Wingstop? Well, we need to take a 10-year back as to what it means and what we've achieved over this last 10 years. Behind me, you will see our road map. We started back in 2009 in Mexico and then recently opened our latest entry, which is French, which is very dear to my heart. But in between, we've opened many different markets. And what it just shows, which it's not saying here, is that our brand is highly portable and well accepted throughout the globe, which is a big thing for us to know and to appreciate. Not only that, ever since we started, we showed a pretty healthy same-store sales growth over the last 8 years, which has been consecutive same-store sales growth. So very impressive. There are 2 markets that comes to my attention, which I think you'll be interested to hear more about. And these 2 markets are interesting because they will inform or they have informed our strategic reflection on how we should look at international going forward. So let's take a step -- let's take a dive into Mexico. Mexico, as I said, just earned the 10-year anniversary and also is our first market. So we look at Mexico with a lot of care and a lot of love. What we did here back in 2009, we launched our brand with a model that was very close to the U.S., which we later decided to pivot. To pivot in such a way where we basically transform Wingstop into a casual dining brand. That was needed. And we're glad we did. And in fact, if you look at the same-store sales growth perspective over the last 5 years in local currency, it is really impressive in our books. Not only that, but also we managed to increase our point of sales up until late last year or at the end of the year 2019 at 91 store. Just to give you a perspective, Wingstop in Mexico is the third largest casual dining brand today. You probably also heard that we've re-upped our brand partner commitment to build Wingstop to 200 point of sales by 2028, which is a great testament of the health of the brand in that market. Moving continent. The second market, which I think will be -- you will be interested to hear is Indonesia. Indonesia equally started very early on into our journey, actually back in 2014. We, like Mexico entered very -- with a very similar model than the U.S., which we later kind of tweaked as well to accommodate more dining element into our restaurant. The same impressive results because a 5-year stack of consecutive same-store sales at around 80-plus percent, not only that, but if you note the growth ramp from the date of induction up until today, 33 stores, which is a quite impressive track record to build to that level of number of stores. There, we're confident we'll get to our 60 restaurant commitments by the year 2023. So we're very happy to have these 2 markets that are, I would say, our 4 feathers into our international journey. And we're very happy to see them growing the way they are. But back in 2019 and around Q2, you may remember that we decided to take a pause. We decided to take a pause because with the launch of the U.K. and specifically around one store, which is Cambridge Circus, we took a pause in understanding that the ability to serve and increase our transaction per hour was paramount to our success. The ability to actually reduce significantly our transaction time for 18 to 21 minutes to sometimes 5 to 6 or 7 minutes was paramount to our success. This was later reinforced by the other subsequent openings we had, not only just in the U.K. but also in France. So we took a pause and say, okay, we need to find and we need to refine the way we look at the world and the way we decide which market we're going to get into and transcend the usual yet very important, but the usual, the habitual way of assessing a market which are chicken consumption per person as well as the acceptance and prevalence of Western brands. So that's where we prompted a really, really interesting and really fundamental exercise that Marisa led, which I'd like Marisa to come on stage or -- she's already on stage, and to talk to us about the reflection that we embarked into.

Thank you, Nicolas. Good afternoon, everyone. My name is Marisa Carona, and I'm Vice President of Strategy here at Wingstop. I'm excited to be celebrating 5 years with the brand next month. And throughout that time, I've held various roles in innovation, training, operations. But we recently completed an engagement that you've heard a little bit about today. Charlie and Michael mentioned, it was an investment we made in Q4. And we partnered with Boston Consulting Group, BCG, and a strategic engagement with regards to our international expansion strategy. There were 3 key elements of focus to this strategy. First, what are those differentiators here in the U.S. that we really want to transport across the globe? Next, which markets best align with those differentiators and how do we prioritize those markets? Next, what is our path forward to execute, including the organization structure to support? So let's begin with our brand differentiators. I'll highlight them here. You've heard a lot about our premium, high-quality product today. We believe this allows us to be positioned at a premium as a brand and as a result, charge a premium as well. We're the flavor experts, you heard from Christina today that our flavors have no boundaries. While we stick true to our core, we have the ability to pulse-in local flavors depending on preferences of that market. Off-premise signing, you heard from Michael today, we celebrate 80% in the U.S., we believe this is a key differentiator for us across the globe. Our simple operating model, you also heard from Michael as well as Mahesh. This is an item, and the area of focus, that also, we believe we need to transport. And then finally, our craveable chicken wings, it's an exciting product in a high-growth protein growing segment. Next, let's move to, where do we play? We took a very robust approach with BCG to identify markets that align with our key brand strengths. Nicolas mentioned our prior approach to market selection, which was chicken consumption per capita as well as prevalence of Western brands. We took a very tailored approach along with BCG, that was both qualitative and quantitative as well as bringing in markets -- market experts from across the globe. So we first began with all countries possible. We then tailored it down to markets that had a limited service restaurant market above $1.5 billion. We then went down the funnel that you see with market attractiveness as well as market accessibility. Are these markets that we want to be in? And how easy is it to operate in these markets? I mentioned the approach was very quantitative. Some of the attributes we looked at was purchasing power, geopolitical instability, cost of labor, real estate and growth, just to name a few. We didn't stop there. We dug deeper with what we call our Archetype framework, and I'll walk you through it in detail. This is a tailored approach to us, and it really helped us design market types as they apply to 3 key criteria. So I mentioned our brand differentiators previously. Let's dive into 3 specifically. One, price point feasibility. I mentioned our premium product offering, made to order product. We believe this allows us to charge a premium price. We are much closer, we believe, to a Starbucks, we are not KFC. Next, we'll move to our costs to operate. This includes rent and labor costs, we believe we're similar to a Domino's in this regard. And then finally, we'll talk about our off-premise dining. Again, we celebrate a large off-premise business here in the U.S. We want to transport that globally. And we really want to celebrate the strength of our takeaway and delivery business. This is also a growing segment globally to the tune of about 10% to 15%. So let's walk into the Archetype framework. So you'll notice a series of axes behind me. So beginning with the x-axis, you have cost to operate. And just to orient you, we have low to high. The y-axis, we have price point feasibility and that's hitting on some of what I mentioned as far as us being a premium brand and being able to charge a premium price point. So you'll notice, low to high. And then finally, we'll have our z-axis, which is off-premise dining and the prevalence in that market, and again, closer to me is lower, closer to Nicolas is on the high end. Now let's plot our market Archetypes. So as you'll notice, these are plotted according to those axes. And just to walk you through one, we'll call it, Archetype 1, for example, in the upper left-hand corner of the screen. This market would allow for a higher price in a lower-cost-to-operate environment with a higher off-premise behavior. So again, each box behind me corresponds to a specific Archetype. And noticing that top row, just to call that out, that's where we can really position our brand as a premium in that market. So you'll see the green and gold boxes behind me. We will prioritize our growth in these areas as they align with our strengths. It allows for the ability to focus on that premium price offering and also drives very favorable royalty revenues, the greatest potential from a royalty perspective. So let's apply some tangible examples to support this framework. We'll unpack that top row. And one key area to note is that top row in these examples that we have today across the globe, they're already utilizing the speed of service platform that you'll be able to touch and feel behind us in just a few moments. So that platform is already in these markets today. Let's begin with that market Archetype 1 in Dalston U.K. Very similar to our core model, our existing U.S. model today with that speed of service enhancements. Next, we'll move in the middle, and that's our Singapore Flavor Studio. It's a smaller footprint, about 500 square feet or so, a little bit more of a focused menu. And this model is perfect for high-traffic locations, such as shopping malls. Moving over, we had a recent opening that we celebrate in the market of France, Southern France, in Toulon. This is a flagship restaurant, a little bit bigger of a dining room, but still the same engine and same speed of service model. Now you will notice that Mexico and Indonesia don't fall in a green or gold box. You heard from Nicolas, these markets have very strong unit level economics. We will continue to grow and develop there. We're not neglecting any math, but we're of particular interest in the gold and green for new markets. We believe we have the right models that align with our brand strengths. So we've unpacked the Archetype framework. Let's talk about where markets fit. So if I may recall, the funnel and the robust analysis that we performed, as far as market prioritization, let's plot them on this analysis, on this Archetype framework. Now just a few are highlighted here. But I wanted to draw your interest to China and Western Europe. These fall in Archetype 1. These are areas of interest to us. Moving to the center of the Archetype. I mentioned our flavor studio in Singapore that's able to operate in a smaller footprint. As you'll notice, for example, Japan, where you would typically see higher real estate costs, that could certainly be a very great fit, we believe, for the smaller footprint, flavor studio-type model. So we've talked about our focused approach. We've walked through our Archetype framework. These key markets that we believe align with our strengths, and where we will prioritize, particularly of interest, China and Western Europe. We're anchored in our position as a premium price offering, but I would like to walk through a little bit more the sequencing. So both based on geography where these markets are located as well as headroom, the total number of Wingstop units that these markets can support. So to that, I'd like Nicolas to come back on the stage and walk us through the next steps.

Thank you, Marisa. Headroom is really -- what you're going to see on the next slide is how do we estimate the number of potential units per region? You'll note a big, heavy emphasis around Western Europe as well as China. And we believe with that algorithm we developed with BCG and together internally, we feel comfortable that these numbers are achievable within a long-term future. Now when we looked at premium brands in an international journey, we've noticed that the very successful ones approached international growth through very methodological and very sequential approach. In other words, try to create brand awareness by creating multiple points of sales in one region and then moving on to the other. We felt that resonated pretty deeply with us and wanted to emulate, and we will emulate this approach. We also felt that the concentration of efforts will permit -- enable us to be able to do exactly just that. So that is a very big learning from us that we've actually gathered through our BCG studies. Now what does that mean in terms of country-specific? The next slide will show you our 3 clear prong approach into how we are going to approach international. First and foremost, you heard it before, and I said it at the very beginning, markets like Mexico and Indonesia will serve as an example of our continued growth in these markets. We have room to grow, and we will continue to grow these markets. So these markets stay there, and we will grow. Second, we, through our algorithm and through our funnel that Marisa showed in Slide 85, have preselected the market we feel best fit our Archetype, and therefore, we will focus on new market entry around these markets, which we know Archetypes from a premium halo and an off-premises perspective would fit better. And we will try to do that also from a contiguous perspective, that is to say, not to go too far from our existing base, but try to create that continuity also from where we currently are. And then third, we have to lay the groundwork for big markets, big, big regions, such as Asia Pacific. We also believe that because of the Archetype, or preferred Archetype, that North Asia, for us, represents a very interesting and fertile ground that will also help inform and start our growth into China, which we treat as a distinct market given its size, but also its complexity. So if you put out all this together, our 10-year outlook plus 10 years, it really amounts to around 1,200 store plus. And what you see behind me is basically the stack of all these regions and how they are contributing to the overall growth of our international journey. You'll probably note or quick to note that we've taken a measured approach when it came to -- when it comes to China. China really can be the X factor for us. It all depends on many things. But I have to share with you a trip that we took recently with Charlie and Mahesh, and we actually spent a pretty intent 3, 4 days in Shanghai. And where we had a purpose. The purpose was to get information and get a feel as to whether or not our brand, Wingstop, would have a reason to win in that market. So what we did, we actually met brand leaders as well as active investors in the space, and we basically collect that information. The next slide will show you what we've learned and basically also reinforces our enthusiasm about that market specifically. First and foremost, it's not going to be breaking news, but the wings are present and well accepted in the Chinese diet. That's a fundamental. And we're happy to have that. One thing though we know is that nobody like us, anchored in flavor, unique flavors, is present in China. So from the get-go and from a macro perspective, very -- feel very strong about it. We also heard -- you also heard also during the presentation today that our DNA is all about or mostly about off premises. We play well through our accessibility and our point of entry, through digital as well as delivery plays very well. We know how to do this. And in fact, when you look at the Chinese consumer, these 2 elements are fundamental to any successes of any brand and we feel we're ready to embrace these 2 elements. Now you know China is a complex market, through too many layers and very, very different variation of what we've known and what we've been exposed to in the Western world. Therefore, Wingstop is ready to look at different ways to enter the market and not necessarily exclusively based on a franchise-based model. Therefore, we will take our time to assess very carefully what it means to maximize our success, depending on the ownership form that we would decide to take to get into China. An interesting one that also was interesting for us together is that in a Chinese consumer psyche, whatever brand actually do well in North Asia, and specifically, in Korea and Japan, has a higher chance to be successful in China. They view these markets in being influencers from a commercial standpoint, and therefore, we feel that being successful there would also, in some ways, reinforce and help us get and be successful in China. Now because it is complex, because it is a very distant market, and where if you're successful, it can actually change and transform your company, but also sometimes derail it. We want to start our groundwork now. We're not going to wait, and we are going to be taking a very deliberate approach to what it means to be successful in China. So those are the callout that I wanted to leave with you to make sure that you understood how our approach was with regard to that market. Now grounded in the BCG benchmark, we also realize that for us to be able to execute the strategy, we needed to make some investments in our G&A. That is clear, structure, informed strategy and vice versa. So we decided to take also a very deliberate approach, calculated approach in making sure that this year we will invest slightly ahead of our growth but we will take a measured approach depending on the growth, pace and -- throughout the next 3 to 4 years. So that is something that I feel very comfortable that we've discussed at length internally and believe is a pinnacle of our success going forward. So I'm about to end my presentation, and I'd like to repack this for you and to make sure you know exactly what we're focused on. First and foremost, which I think is a big deal for us internally is that we are going to make the world work for us, that is to say, we're going to match our preferred Archetype from an operating model, which is based around premium halo, off-premises behavior and low to moderate cost of operation, and we're going to go heavy in these markets that fit our DNA the best way possible, okay? So with clear path, clarity around where and why. Second, we want to do business with like-minded brand partners. Partners we trust fundamentally, but also have 3 key characteristics on how we do business together. First of all, they're well capitalized. Second of all, they have access to real estate, and they are world-class operators. So we are really spending a lot of time there in our brand partner selection. And then lastly, as I talked about in the previous slide, was to invest in our G&A to be able to enable that strategic approach into how we are going to grow international. So very, very confident that based on what we've done in the last 10 years, we are setting ourselves for success over the next 10 year plus. With that being said, I'd like to ask Marisa to take over, and she will walk you through the corporate social responsibility for Wingstop. Thank you very much.

Thanks, Nicolas. As we close on our presentation today, we've had a lot of dialogue on numbers, results, goals, objectives, but would like to anchor us back to our vision of becoming a top 10 global restaurant brand. And in doing so, as we grow, and I mentioned, I've been with the brand 5 years, so it's been very exciting to see our trajectory. As we grow, we want to ensure that we're doing so in a responsible and sustainable way. We're very intentional in our growth. So I'd like to walk you through how we're thinking about corporate social responsibility. But it's really anchored in our mission, "to serve the world flavor." So service to all of our stakeholders, mindful of the impact of our restaurants around the globe, and our platform is authentic to us, just like our 11 craveable flavors. So let's walk through our stakeholders. If you're familiar with the CEO roundtable of Q3 '19, this may look a little familiar, but it all begins with our guests, serving them a great quality product with a phenomenal experience. More and more, in talking with our guests, spending their money at a responsible organization is becoming more important to them. Next, we move to our team members and our brand partners. Really focusing on items, such as diversity, inclusion and pay equity. Since our IPO, Wingstop, along with our brand partners, have created 10,000-plus jobs. So again, with that comes a responsibility to be a sustainable and thoughtful organization. Moving on to our shareholders, a key stakeholder. But our focus on CSR is becoming something that our stakeholders as well are asking for. In particular, we have an investor, BlackRock, and they're really an advocate in the CSR space. Our focus on CSR is in alignment with them. Next, we move to our supplier partners. One of the areas I'd like to highlight here is minimizing food waste. So food waste accounts for over $1 trillion on an annual basis across the globe. What can Wingstop do to minimize our part, both in the restaurant and upstream our supply chain? For that, I'd like to really thank Barclays for helping us navigate the food waste landscape. Finally, the communities in which we serve. To that, we'd like to highlight some of the work of Wingstop charities. Wingstop charities has 2 arms. First, we'll touch on Wingstop Foundation. The mission of Wingstop Foundation is to help team members in times of crisis. Again, as we're growing and becoming a larger and larger organization, we have a tremendous amount of team members. So I want to make sure that we are there for them in times of crisis, whether that's a medical emergency or natural disaster. Wingstop Foundation is largely funded by team members, for team members to help them out in those times of need. We also have Wingstop Charities. And that's really a platform for our brand partners to engage with the communities. We operate via a [ grant cycle ] so we can really make sure that we are working with our brand partners in areas that are important to them in the communities. Of particular focus is engaging youth, and that's in the pursuit of their passions, and that could be education, arts, career or sports. I encourage you to visit wingstopcharities.org after this presentation and there is a donate us -- a donate here button, if any of you would like to participate and donate. So we'd love to showcase some of the work of Wingstop Charities, and we had a team member in need, a General Manager from South Carolina that he and his family faced hardship just this last holiday season, and would like to showcase some of the work for you. [Presentation]

So you all may have noticed, our SVP of People, Donnie Upshaw in the video as well. He is also the head of Wingstop Foundation. But at this time, I'd like to thank you for your time, and I'd like to invite Charlie back up to the stage.

Thank you, Marisa. There you go. All right. Well, hopefully, you've learned a lot about our strategy to become a -- and our vision, to become a top 10 global restaurant brand. Our team has walked through every facet of it. And I can tell you, they speak with confidence because we have the best thing going right now in restaurants. As we noted, people are the core to everything we do, it's so important to our business. And we've been able to demonstrate a path that clearly gets us to over 6,000 restaurants by way of our domestic footprint that's gaining exceptional traction under Madison and Mahesh's leadership as well as our new international strategy, which is a little bit of a pivot away that leverages the technology and the investments that we've made to make sure that we've got the right path forward to continue to deliver on that objective. I want to close with just a couple of summary thoughts, and then we'll move on into a question-and-answer session after a quick break. First, as I mentioned, we've got a multiyear strategy to grow the top line. We've seen an 80% increase in system-wide sales since 2015, and if you listened and watched what Christina and her team are doing to help continue to propel our growth and take us into that next cycle that we expect will continue to maintain that strong positive growth, we've got the strategy to do it. We're maintaining our best-in-class unit economics. Our investment cost for our franchisees has been held very, very stable over the past few years, we're going to continue to protect that with Mahesh's leadership, with Madison, with Michael and the team, we're working on ways to mitigate volatility, maximize our effort within the 4 walls of the restaurant and also maximize that average unit volume. That's going to lead to industry-leading cash-on-cash returns for our brand partners, which means they're going to continue to invest in our business and grow their value, as I described earlier. And we, we will continue to be very disciplined in our use of cash, making sure that we're positioned for the next phase of growth. We made a conscious decision in the fourth quarter to invest and partner with BCG to help make sure that our strategy, our thinking was solid and sound so that we knew we could take that and execute it well into the future. We have one of the best kind of models in the business today. It's an asset-light, highly franchised model. It's a low-capital-need business, and we can still obtain leverage in the levels of 6 to 7x our EBITDA. And by maintaining that, we're going to continue to generate a lot of cash, continue to return that in some way, shape or form back to our shareholders, continuing to drive amazing shareholder returns, a reminder, since IPO, over 400% total shareholder return from Wingstop. As we look forward into the future, we've been anchored on a long-term algorithm that talks about low single-digit same-store sales growth and 10% plus annual unit growth. And we're not going to shy away from that. But I think it's important that we recognize and introduce today what we expect over the next 3 to 5 years, continued strong same-store sales growth, bringing that up to mid-single digits, continued 10% plus annual unit growth, which is best-in-class. And within that, some investments. Wise investments, we believe, that are anchored on the strategy that we put in place with BCG to fund our international efforts and accelerate the growth there. So look for about $4 million to $7 million worth of investment over that time frame to make sure that we have the infrastructure and the team that's right and well positioned for long-term growth. Again, we're going to continue to maximize free cash flow, delivering best-in-class returns. Ladies and gentlemen, that's our show for today. We're going to take a quick 10-minute break. We'll come back in here, and we'll have the entire team up here for a question-and-answer session. We've got about an hour. So if you would, take a quick break, we'll be right back. Thank you very much. [Break]

Hi, we're back. I think we may have a couple of stragglers coming in. We're going to go ahead and kick this into a question-and-answer session for everyone. I'll give you a little bit of ground rules here. We'd love, first, for you to introduce yourself as to who you are when you ask the question. And if you can do your best to limit it to one question, that'll give us an opportunity -- we have an hour, it will give us an opportunity to make sure that we give everybody a chance to ask a question. So 1 question does not connote 4 parts, we know sometimes that happens. So we have people in the room with microphones, please raise your hand and they'll get to you as quick as we can. Who's up? Right in the back. Yes, sir?

Jon Tower, Wells Fargo. Thanks for putting on the show. A question, I think, more for Michael. On the unit growth side, 2 years in a row now, I think the numbers have come in slightly below expectations. Mid-year 2018 took the growth numbers up and then at the end of the year, there was a hiccup. This year, similar the numbers, I think you talked 136 to 142 in terms of gross net openings and fell below it. So can you just explain maybe what transpired in the fourth quarter? And the pipeline still looks pretty good. So maybe get into that as well?

No. It's a good question. And the fourth quarter was a really strong net-new-unit-opening quarter for us, something we're pretty proud of. And there is always things that come into play when you're opening a restaurant, particularly when it relates to inspections and the delays that could come with that. And so we don't get too caught up in kind of trying to hit a number. I can tell you that as we sit here today, kind of those handful of restaurants that fell outside of our expectation are open today. So it's not something we're too excited or concerned about. And as you noted, and Madison highlighted earlier, going into 2020 with a pipeline, a record pipeline for us of over 600 restaurants, is something we're pretty excited about.

Jeff Farmer with Gordon Haskett. Are there additional details you can share about your new DoorDash contract? And how that came about?

Mahesh, you want to -- anything else we didn't cover? _

Yes. I think the key things that weren't listed on there is, we've listed some -- 10 key KPIs that we want to manage our contract to, to make sure they meet those, so we meet the needs of our guests.

John Glass, Morgan Stanley. Thank you very much for the class information about new stores in the U.S., I think it's very helpful as we haven't seen that data in a while. Of course, it always begets a question though. There was a big disparity between Western stores and the southwest, $1.4 million in the eastern, northeastern stores are like $900,000. What is -- is there any -- can you just -- what's behind that? Is it just the age of the class is older in those other markets? Is there something else that's geographically different that the volumes would be that much different from east to west, north to south?

Yes. John, thank you for the question. Michael mentioned it, but it -- I'll reinforce it. It really has more to do with the maturity of the markets, and it fits clearly with our strategy to fortress key markets. If you remember, Madison had a slide and he showed how markets are maturing along that journey. And actually, the inverse of what you would expect to happen in fortressing happens for Wingstop, which is the same-store sales growth actually accelerates. A lot of that has to do with the penetration levels in the market, growing the brand faster so that over time, all restaurants rise up to that level. So really, those northeast and southeast markets are all about just not having the density in those markets and the maturity of that market, not the restaurants themselves but the market, to be able to grow. But we continue to see them grow at that same trajectory that, that slide I showed you with each of the different classes growing, they all continue to grow like that. So that gives us confidence that they'll, too, down the road, as they mature and are fortressed, will continue to demonstrate those types of economics you see in the west and the southwest.

Jake Bartlett from SunTrust. My question was about targeting the 67% of the light users that were heavy QSR users? And also just in the context of fortressing, does that require you to move out of your current strategy of what types of markets you go into? And then in that question, does the economics start to change as you continue to fortress or attract those users?

The easy answer is no. I don't think it changes a thing as it relates to the markets we go to. A good example of that would be a fortressed market like Dallas-Fort Worth. We have restaurants in the urban core where our heavy users are very prevalent. But as we've grown and seen that market mature and gain scale, we're out in the suburbs where the incomes are higher, the demographics change, families are more prevalent that we want to attach ourselves to. And I think what Christina mentioned is that there is a huge segment of people out there that represent a huge chunk of the QSR transactions that are out there. Those people aren't using us. And it's not because they don't fit with our brand. It's purely that we haven't tailored our messaging to them. So I think that only does what Michael or -- I think showed, which is as we invest in national advertising and continue to expose new people to this brand, especially in those nonfortressed markets at this point, that's going to drive up the average unit volumes of our new stores and make them stronger. So I think it's absolutely not changing our development strategy, it's more about the work that Christina and her team have done to make sure that our advertising is being pointed well beyond our core.

Nicole Miller from Piper Sandler. Can you compare and contrast, when you talk about the international opportunity, there's a lot of frameworks you could license or franchise, thinking the way you do it versus a master franchise partnership as an example? And how and why you landed on the strategy that you have? How big are you allowing any one partner in the system to be? And what's the mode of communication? What's formal? And what's informal?

I'll lean in with Nicolas as well on this, but I'll start. First, we're not sure exactly what we think too big is as it relates to an international partner. Our focus is that we do have a partner per country. Now a market like China is much different, and so I think that's a market we will have to segment as we go through our work to understand what the right approach is. We also may or may not adopt a traditional franchise model in a market like that. Joint ventures are very prevalent and for good reason, and putting together a real infrastructure before you even get in there is critical. So we have a lot of work to do there, but it just depends on the market. Mexico, we've signed an agreement to be as large as 200 restaurants by 2028. We love our partner there, and he and his team have done a fantastic job of building the infrastructure to be able to scale up to that level. Do you want to add anything to that, Nicolas?

Not really, I think you covered it all. I think China is probably going to require a more regional approach because of its size and complexities. So there no decision yet, but most likely going to be a different approach. And we haven't yet encountered too-big-to-fail type of exercise with any of our markets. And we like the fact that to work with one brand partner per country is a good approach for us.

And Nicolas, do you want to call out a little bit about your philosophy on how you communicate with each of the markets and the countries to answer the other part of the question.

Oh, absolutely. I think it's a number of points, formal and informal, mostly informal, through market visits, through business reviews on a regular basis. And what I like with Wingstop is the ability to reach the decision makers pretty quickly, which you don't find in other brands, where you have a lot of layers up until you get to the franchisee or the brand partner. So I found myself to WhatsApping owners very quickly, "Hey, how is yourself today," and whatnot. And found this communication very [ reciprocal ] and very quick. But yet, in the same time, we are a publicly traded company. And sometimes, we have to have a formal approach to business issues and challenges, and we do. And I think we're no different other than being very, very buttoned-up and then -- compared to the others. But yes, I found that it also gives us the ability to have that high touch, personal touch, yet in the same time, also holding our contract, brand partners to our respective responsibilities.

Question?

It's Chris O'Cull with Stifel. The company's decision to advertise boneless wings and some other components of the chicken seems to be really motivated by the margin or the need to improve the cost structure. But can you talk a little bit about whether promoting boneless wings and some of these other items would broaden the appeal of the brand or if you're able to really go after a segment of the consumers that are growing or something that -- help me understand the marketing reasons for doing it?

Christina?

I think there is a couple of things. One is, I would say, is grounded on consumer need. And so while it is beneficial from a margin perspective, it starts with the consumer for us as well. And when we look at it, we see that we have a large piece of our current base, about 60%, that uses both classic and boneless pretty frequently. And so it allows us to capture new occasions that maybe other brands might be able to get and bring them back to Wingstop and continue to drive our differentiation through flavor.

Matt DiFrisco, Guggenheim. On the international side, I was just curious, can you sort of correlate how you've talked about in the past, how many of your domestic stores are coming from existing franchisees? I realize you don't have a large footprint right now. I think it's 9 countries. Can you sort of just quantify how many of the future 3,000 stores will stem from those 9 countries? And then just a little bit of a follow up, Mike, on that. How should we think about as you transition more to a international growth story, the flow through, master franchisees tend to get less of a royalty, you -- would come towards you. So does the contribution per store of an international store flow through at 50%, per se, of the royalty stream that you might get domestically?

Okay. A lot in there, and I may bounce this one around. Our existing partners that we have today are -- we are going to grow with them and continue the growth path based on the potential of that market. It does make up a large majority of that stacked chart that you saw that ramps us up to the 1,200 restaurants where we will grow then is to find new partners in new countries. Nicolas identified a couple of markets in Western Europe that we want to immediately get to work on as well as start to make some -- put some deals together in Asia, mostly in some of the northern markets where we believe those are great entry points into China. Those will be typically with a single partner. Most, if not all, of those should be under a master franchise agreement, unless we were to do a joint venture. We don't look for a subfranchise relationship that would dilute the margin structure. And then as Marisa noted, the way we've constructed this strategy is to be able to maximize the royalty potential by our higher-price-point premium that we want to deliver in those markets that are able to receive it. So what we've learned in markets like the U.K. and France and others is that we can charge a higher royalty rate, as much as 5% or 6%, which is similar to what we do in the U.S., which means that they're not going to be dilutive necessarily to the long-term algorithm for the brand. Some of our earlier markets are on a lower royalty rate, I think you know that. But on a go-forward basis, we would expect these to be higher royalty markets, delivering higher average unit volumes and therefore, maximizing the AUV. Second part of the question? Did I...

I think you did it.

[indiscernible]

That was? Okay. I wanted to make sure I caught that one. Okay. Yes, yes. Existing -- how many are coming from the existing? I don't have a number exactly on that, but I think if you took that stacked bar chart or stacked line growth chart -- you guys know what those are called. If you add that up, I think you can see that it's probably a 50-50 split by the time we get to the 1,200. Something like that. Getting closer to the front. Go ahead.

Mary Hodes from Baird. Michael, could you talk about what level of annual EBITDA growth would be associated with the 3- to 5-year outlook? And just within that, how you might expect core G&A to grow annually?

No. I think it's a good question. And our timing is a little bit challenging right now because we haven't released Q4 and full year 2019. That being said, our plan is to -- in addition to these 3- to 5-year targets that we shared today, to provide some clarity around G&A and more specifics on 2020 when we report Q4 earnings. And so I think we'll have more details to come in a few weeks when we do that.

Andrew Charles from Cowen. Within the 3- to 5-year outlook, I was pleased to see you target mid-single digit same-store sales on average. And this accounts, obviously, for lapping a very robust delivery rollout in 2019. That was obviously very successful. And you clearly like the performance for stores in year 2 of delivery to guide this favorably. Can you help walk us through the performance you've seen in year 2 that's embedded in this strong outlook? And I ask within the context of the company's comp-gap domestic system average, it was the widest gap it's been since beginning of 2018, which are further -- I would argue -- I would think are further along with delivery relative to the overall system.

Not necessarily. The company stores were part of the rollout process and delivery, but they weren't necessarily an early player. So they're enjoying the first year benefits that we saw. Now we have the test restaurants in Las Vegas. But if you go to the Dallas-Fort Worth market where we have more penetration, those restaurants came along as the entire market came along. You could effectively put a mid-year convention to our delivery rollout as you're thinking about how it impacted growth. We got to 94% by the end of the year, but it was pretty evenly paced throughout the year. So we have the rollover effect of delivery. But keep in mind, too, we didn't market it much at all. And so what Christina laid out is the first example of what our advertising strategy will be, which is to clearly anchor in our minds, Wingstop delivers. And with that, we don't know yet what the potential upside is from that. We have a few little examples where DoorDash did some marketing for us. It helped us with some of our performance. But if you think about the building blocks of our same-store sales growth, the benefit of a little bit of price that we're going to take strategically that Mahesh and his team have anchored us on, the benefits of digital and what it means to the check average for the company and then the drivers of national advertising, 20%, a higher spend in our ad fund without having to increase the contribution, that's meaningful compared to a lot of brands. And then lastly, anchoring in on delivery as a key driver. I would even throw a fifth one there because I think Christina just talked about it, getting people who aren't aware and understanding that we have a diverse line of products that would fit their needs, that might steal a couple of occasions away as well. So all the right drivers are there. Delivery, we think it's going to be a big thing for Wingstop. I don't see a brand out there that's better positioned to execute delivery in the third-party way the way Wingstop is, and it's a big reason why we've selected a single provider of that service.

Jeff Bernstein from Barclays. Looking at the multiyear outlook, it seems like not only the 3 to 5 year, but the 5-year and beyond, still 10% plus unit growth which most companies as they get larger, have a tough time sustaining that, and you've been kind of right at that level. So it does seem like in the past, that 10% came from the U.S. pretty much. And now over the next number of years, the U.S. is going to contribute less, international is going to contribute more. With that as a backdrop? It seems like it's a little bit of a higher risk scenario, at least at this point in your life cycle. I'm just wondering if you could talk a little bit about your confidence going into all these new markets. Obviously, you've done a pretty in-depth study, but it does seem like there are some markets, I know on the slide you showed earlier when you showed different markets you entered in different years, like Singapore and the UAE, they were more than 5 years ago, but each one of them had less than 10 units. So I'm just wondering, are those markets where there have been more challenges? Or maybe you could list a market or 2 that has had a challenge, what that commonality might be?

Sure. And it's an excellent question, Jeff, and I appreciate it, and one we've thought a lot about. It is a big deal to say that we are going to grow by 10% plus over the long-term compared to any other brand that's out there, especially at our size. However, a lot went into the thinking around how we frame this strategy. And if you look at the pipeline for the 1,200 restaurants that we predict in the international space over the next 10 years, it doesn't require a substantial change in the number of restaurants domestically that have to go into the ground. That said, we can do better on the U.S. front, and I think that question came up right off the bat. Mahesh and his team partner with Madison and his team to make sure that not only is the development pipeline really well established, which we've been able to really get brand partners to sign up for more and more deals, but at the same time, I think it was important what Mahesh said, he anchored his final comments on bigger, faster, better new store openings. We can do better, and we will do better. And under his leadership, I think we have a clear path forward as to make sure that we're not just auditing our restaurants, but we're working with our brand partners and helping them develop a mindset around creating value and growing this business. We want to grow with them, and now is the time. And so I think the combination of a bigger pipeline, the combination of excellent leadership in operations is going to put that together for the U.S. business. Commonality is -- yes, so international, where we've seen maybe a challenge to market that we have more confidence in now going forward, I think the great example might be Singapore. Would you agree, Nicolas? So Singapore, very high cost market. We've deployed historically our traditional restaurant asset in a mall location with extraordinarily high real estate costs. I mean they can be 20%, 30% or better, right?

Easily, yes.

Easily. And so Nicolas, since he arrived, was really the catalyst to this idea of a concept of the flavor studio, how can we simplify our model down, get it down to 500 square feet, where it becomes very affordable but yet generates an exceptional volume, even though we noted, it's about $500,000 a year AUV. While that might seem small for a 500-square-foot restaurant, it's quite efficient and is a moneymaker for us. That in and of itself can help accelerate growth in key markets where we felt like we were real estate challenged, simply by the cost structure.

Will Slabaugh from Stephens. I had a question on domestic franchisee profitability issue. You obviously had phenomenal same-store sales growth, I would think higher delivery fees, though, and we know wing costs were up a little bit. So I'm curious how we think about franchisee profitability in '19 versus '18. And then as we think about those delivery costs coming down a little bit with the new contract with DoorDash, how that might affect it?

Well, first and foremost, they did come down. And the deal that Mahesh negotiated with DoorDash was paramount to making sure that we had best-in-class margins for delivery. So while it is a transaction that we have to pay a commission on. Our rates are quite low. In fact, we believe they're the lowest in the industry. And they -- we have mechanisms in place that I'll add to his earlier comment, that allow us to bring those rates down even further by how we operate and how we execute in the restaurant. So yes, wing prices were fairly stable for the year. I know, on a percentage basis, they looked up. But against our algorithm, they're right where they need to be, and we're appreciative of that. In fact, we had some relaxing in wing pricing during the fourth quarter this year, popping up ahead of the Super Bowl. That's natural. But the typical dynamics haven't played out, and that's a good thing. And we believe that with the product you're going to try here in a little bit, the thigh product, our guests are going to be really impressed by whole wings, thighs, and other things that they can enjoy, that take some of the pressure -- as Michael laid out, some of the pressure off of the wing market, which allows it to become a little more stabilized.

Nick Setyan, Wedbush. Can you maybe talk about some other drivers of comp, other than sort of the marketing and awareness in digital? Like faster cook times, for example. I mean are we going to bring that into the U.S. from international? I know you were testing it in Dallas. Anything around menu innovation or other sort of nonmarketing things?

There are a few things that we try from time to time. As you know, we don't have a lot of LTOs for our brand. Once in a while, we'll put a flavor event out there, and we may roll out a new flavor. And it's only if Chef Bella has come up with something that he puts his stamp on, and Christina and the team say, this is something that our guests would help drive frequency. I think that's important to help us drive growth. But really, I think as Christina laid out, our strategy centers, first and foremost, on making sure that we're introducing guests that don't consider us to this brand. And the weapons we show up with, notably our 11 bold, distinctive flavors, are plenty of ammunition to be able to cause us to just keep pulling that lever and driving new guests into the business. And I think we tried to play that out in the messaging that Christina laid out for you in the presentation. So much of the same. And that's good because over 25 years, we've been able to keep this thing quite simple and not look for an LTO, for example, to drive it. Now as it relates to things like the cooking platform that you'll get to experience here later, that really opens up doors for opportunity, and it probably is a little more development-oriented than it is a platform change that we would make in the U.S. Some -- we're testing it to see if that holds true, and I think our early indications are that, that cooking platform helps, but we have plenty of capacity in our restaurants. That oldest restaurant that's doing $3.5 million a year has the same footprint of a kitchen that any other Wingstop restaurant does. And they have a bigger walk-in cooler, they have a little more dry storage space, and I think they have 2 extra fryers at $3.5 million.

2.

2 extra fryers to get from $1.5 million to 2 -- to $3.5 million. That's all it takes. Same sauce-and-toss table, same cooking platform, everything. So at the end of the day, we don't feel like we need that platform to create capacity. What we need that platform to do is open opportunities for us to address occasions where it's high footfall, like an airport, individual occasions that have to be turned around very quickly. And when we do that, we found out in the early stages of the investigation that Nicolas and team did overseas, that it works really well.

Katie Fogertey from Goldman. I was just wondering, in your test markets, when you were looking at the whole wing product, what mix did that get to as we're thinking about almost a 65% bone-in versus boneless. What do you guys think that you can ultimately shift that to and maybe contemplate what you think that thigh can also do to that overall mix?

No. It's a good question. We saw -- we saw a mix and it was mid-low single digits, but not high. But at the same time, we were really doing a little bit of just digital advertising around it. So it wasn't receiving a heavy amount of advertising to support it. But at the same time, we were gaining a lot of insights as to exactly which consumers chose that product versus which ones didn't. And so there could be a regional play here and so we're going to continue to kind of progress our learnings on that front. The thigh test later this year is going to be extremely helpful on that. And obviously, we're going to try to figure out how we can drive that mix as high as we can. But there is more to learn, and we're pretty encouraged by the early results.

The one thing I'd add to that. We offered up that test on a national basis, which is unusual to do. Part of the reason for that was to pull whole wings out of the market because they do cannibalize them almost 1:1 and see what impact that could have on commodity prices as well. So when we put the right product out there, fresh, ready to order, we complement it with the thigh product that will do more of a market test on in this case. We're starting to build that strategy for how all of these products come to life in our brand. So as I've said in the past, Michael and I both, this is going to take time before we get there. So I would not look to this particular test on the thighs to be something that would be as big an event as we did with the whole wings, but there was a deliberate reason why we did it that way.

Tucker Walsh, Polen Capital. On delivery, can you speak to the intermediate term, the anticipated change in the unit dynamics -- the per unit dynamics. And then long term, what's the current thinking in terms of what it will impact each of the units?

When you -- if I can ask for clarity, when you talk about unit dynamics, are you talking about the P&L impact?

Yes, the P&L impact, just talking about revenue and then what the cost would be.

Okay. Can you expand on that question in the sense of looking for commission rates or...

No, I'm just talking about anticipated. Perhaps anticipated boost and then also what will happen with the cost structure.

Oh, okay. So let me clarify something real quick. So what we have not given is any guidance or any indication as what the boost would be. What Michael and I talked about, based upon the impact of this particular contract is that we would see what was almost 1.5, 2 points worth of degradation to margin relax once we got the new commission structures in place. Those are meaningfully in force in Q4. So when we report Q4, we'll have more information on that. _

One thing I would add is when we started our phased rollout of delivery in late 2018, we saw pretty consistent results. Again, not supported by advertising, but we saw delivery mix kind of in those low teens, and it's been pretty consistent, market in and market out. And if you think about our brand, how we're already extremely high off-premise brand to begin with, we behave and look very much like Big Pizza. Obviously, we believe that delivery is going to be a really big long-term opportunity for us.

Jake Bartlett from SunTrust. I had a question about the pipeline of commitments internationally. You shared it for the U.S., I believe you ended last year about 524. So I'm just hoping for an update there. And then just given the recency of the engagement with BCG, will it take a while to kind of start to ramp up? I'm trying to kind of gauge when we should see an acceleration in international growth?

Well, I think we provided you with a chart that gives you an idea of what we think that ramp up looks like, and it's scaled. So I would guide you to that to get your own perspective on that, but it is following a lot of the hard work that Marisa and Nicolas and the team put together to make sure that we -- we didn't try to immediately show that we were going to take off in a hurry that we do have to go in and engage potential partners in new markets. We do have to take this new platform to existing markets. We do think that's going to help the growth rates in existing markets, but it's going to take time. So I think that's the best indication as to what you can expect to see in terms of the ramp-up based on that. And then from a support perspective, part of our objective is to put the investments in our business, predominantly through people to make sure we've got them in the places, we've got the right people in the markets to make sure that we can execute this strategy. You'll see that go into effect immediately. There's a gentleman upfront who has been so patient up here, and I want to make sure we get to him. Okay.

Alex Chan from Jefferies. In some of the marketing we previewed, we didn't see a lot of price points. Wondered how you're thinking about value and that balance between traffic and check in the 2 national campaign windows. And then with respect to delivery marketing or the recent price points or bundles involved in that?

Christina?

I think what we learned this year, and Charlie alluded to it as well, is that we not only drive the brand awareness, but we give consumers a reason to visit and we talk about the brand in a compelling way. We don't have to come in and lean in from a price point perspective, and I would see us continue that strategy from a national perspective to tell our story and again, drive that consideration.

I agree.

Peter Saleh from BTIG. Just coming back to the DoorDash partnership, can you talk about the data that you're getting now from this partnership? It sounds like it may have improved a little bit versus 2019? And are you now agnostic versus the way you get the order, whether it comes through your own app or whether the DoorDash app? _

Yes, to answer your second question first, we are agnostic. As we look at commission rates, both are industry leading. They're the lowest in class that we believe are lowest in class. Your first question in terms of the KPIs and the data sharing that we are, I talked about the 10 KPIs that are key to our long-term contract. I'll tell you, we manage those on a weekly basis, and we share those such that we can then take those down to the restaurant level to help drive improved performance. So it's that size and scale relationship we have with DoorDash that will continue to feed that data to our restaurants so we can drive continued improvements in our commission rates.

And I think as it relates to customer data, historically, with our strong relationship with DoorDash, it's kind of been more on a ad-hoc basis as we're trying to run, as Charlie mentioned earlier, maybe some very specific promotions. But under this new contract that we've negotiated with DoorDash under Mahesh's leadership, we're kind of opening up those lines, if you will. There is obviously consumer privacy issues, we have to navigate through some opt-in components. But at the end of the day, it's going to be a pretty wide open communication line with them, so that we can leverage and grab as many occasions as possible with those consumers.

To simplify, it means that we would be giving information and receiving information. So it's part of the partnership in that respect.

Andrew Charles from Cowen, again. Michael, great detail on all the AUVs. Just piecing it all together, you shared that same-store sales grow each year across opening your vintages. You showed that first year sales volumes are up impressively to $945,000 because of national TV advertising delivery, and you're seeing that manifest, obviously, in ramping amount of openings in the pipeline. But I'm just curious, when I compare that to the $900,000 AUVs in the southeast, northeast, where there is more white space, you're theoretically deriving more development. Why are those -- why are the opening year volume so much higher to what you're seeing relative to the average in the east and southeast?

I think it goes back to the earlier question around where we are in the tenure and maturity of each of those respective markets. And so Madison showed those 4 examples. And as we penetrate the market more, we see that -- something you really don't see anywhere. You see, as we penetrate more, same-store sales growth gets stronger, the AUVs grow. And so it's really more about the maturity of each of those respective markets. That's the biggest difference.

Maybe a reminder on the New Jersey stores that you educated on as well?

Yes. The New Jersey stores that we visited the brand partner with earlier this week, even though they are at a lower volume than the system average, somewhere in that mid $800,000 range, they've already received their entire investment back from a cash flow generation of each of those restaurants. And they're begging us for more development opportunities right now. So that's who we want to grow with and that's kind of what we want to see. And as they build more restaurants, the comp's going to continue to improve, similar to what we've seen in history. And those overall cash-on-cash returns are going to improve as well.

And they have them under construction already.

That's right.

Mike Tamas from Oppenheimer over here. You guys talked about a targeted message towards the infrequent or nonusers. Is that about just national advertising? Is there something else you guys can do in terms of more direct line of communication with some of those consumers?

Yes. I think it's within those infrequents, as I mentioned, it's really about driving that consideration and becoming a top-of-mind choice. If you remember, across the bottom, we talked about the percentages that we're already aware and are already actively considering. I think introducing boneless as a means to help bring in that variety, but also delivery which removes any accessibility challenges, will take us to be a top-of-mind consideration. As I mentioned and I showed earlier, the work that we did in 2019 is already paying off and is moving those consumers up. And so we're seeing that translate in our business at the same time. So as we drive more consideration, we pull them in and they're staying with us.

Matt DiFrisco with Guggenheim. Regarding delivery, you were pretty reluctant to get into it initially, Charlie, because the quality and the service and there's obviously a value disparity. There's a charge for that. You keep comparing yourselves to the pizza guys. The most successful pizza guy appears to be the only guy not still on the third-party delivery systems and does their own delivery. What's the hurdle that you would have to get to, to do your own delivery? Or what's the sales figure per store? Is that how we should think about it.

Yes. I don't -- we've talked about this a few times, and we can estimate a mix level that would say, there might be a balance where we would do it ourselves. I'll always ground us in the -- hey, I was in that business in pizza a long time ago. Mahesh has been around it a little bit. Others have, Christina. It's not easy, Madison. It's not easy to execute a delivery platform. You don't just go hire people and put them to work. You have to manage the process, manage the insurance, manage the drivers. They're hard to find. They're hard to pay they turn over frequently. And so it's a mountain of an effort, plus within the 4 walls of the restaurant, you would have to make investments to make sure you could stage the product in a manner that's conducive to internal delivery. So that's a huge decision we would make. Other pizza players are using third-party delivery, and I'm not sure that's only because they're trying to make sure that they're in the conversation when it comes to marketplace transactions, more so than they need the delivery footprint. That's a reactive play perhaps. What we're taking is a very proactive play to say, if you want to get pizza, go get your pizza guys, if you want wings, go to Wingstop. We happen to have a great third-party partner and only one. We're not using the other players because of exactly what Mahesh and the team have negotiated in, which is key KPIs and a quality occasion. So the DoorDash really is, first and foremost, our delivery engine before they are a marketplace for us to go find transactions. We benefit from the marketplace, but our long-term approach -- you didn't see in our advertising. It didn't say, Wingstop delivers via DoorDash or go to doordash.com to deliver Wingstop. And I know if DoorDash were listening to me right now, they'd be going. Yes. That makes sense. That's the way our partnership is constructed. It's to build it over the long term, not to capitalize on today's momentum. Go ahead.

Brian Vaccaro with Raymond James. So as you lean a little more into the boneless side of the menu, can you talk about any quality or product spec changes that you made in those products? And then, Mahesh, just a quick follow-up, if I could. You said you're increasing collaboration between the field ops and the brand partners, can you put some more context around that? And are there any G&A components we should be mindful of?

Sure. I'll go first on the boneless product. About -- it was middle of last year, we did make quite a few improvements to the product. We improved the breading -- we improved the breading to meat ratio, we also reduced the amount of sodium or salt that's in it. And so before we leaned in to the national TV message to drive mix, we wanted to make sure we were putting our best foot forward. So I look forward to you guys trying that here in a few minutes. _

On your second part of your question, increasing collaboration. Madison and both Michael spoke about how 90% of our new store count in 2019 was done by existing brand partners. In terms of increasing that collaboration, the one thing I'll focus on and that Charlie and I continue to talk about, is building those relationships. And I want to make sure I meet these brand partners, spend time with them, listen to their concerns, both good and bad, so we can continue to move the business forward.

Jim Sanderson, Northcoast Research. Just wanted to explore a little bit more of the shift to [ grain-based ] chickens and the smaller birds, if that opens the door to maybe bringing back whole wings on a regular basis, other parts expanding your menu?

Yes. I mean that's the strategy in and of itself in its simplest form is when we shift down from the 7 to 9 pound bird, where, just based on how big our business is, our menu mix today, we're using such a small percentage of the bird. We can't take ownership of the whole thing. And so moving down to 4 pound, 4.5 pound bird allows us to use much more of the bird than we do in the jumbo bird and therefore, with our partnership with PFG, we're able to then go out to the growers and contract for the birds. And as you mentioned, we can get into a fee-based pricing model. And so we're basically -- when we know what the fee is which we could hedge, you pretty much -- you're going to pay a margin to the processor, and then it creates the predictability and shifts some of the mix away from that highly volatile bone and wing commodity that we see today.

Jeff Bernstein, again, from Barclays. Michael, just 2 questions from a financial standpoint. One, it looks like relative to 5 years ago, you're now comfortable, I guess, I thought you said maybe 6 to 7 turns of leverage. I know in the past, that was 4 to 5. So I wasn't sure if I missed a point where that was raised in past or whether that's effectively saying you're more comfortable with elevated leverage now, only because it does seem some of your heavily franchised partners are now erring on the side of maybe going at the lower end or fallen below and it seems like maybe you're more comfortable taking on more. My other question was just a clarification from what was asked earlier about EBITDA growth and EPS growth, I guess? In years past, you've said the long-term algorithm was for 13% to 15% EBITDA and 18% to 20% EPS growth. And I know you were talking about how it's a little squishy right now because you haven't reported the fourth quarter, but should we still assume that, that are the growth algorithms for the next 3 to 5 years, the 13% to 15% and 18% to 20% not just 2020, which I know you haven't guided to yet?

Sure. First question on leverage. Back in late 2018, we entered into our first time as a -- of a whole business securitization. And through that mechanism as well as confidence in the free cash flow generation of the business as well as the future EBITDA growth that we expected, we felt comfortable taking our leverage up to that 6% to 7% range. So that's what we did at the end of 2018. And as you've seen, as we progress through 2019, we've continued our historical pace of deleveraging pretty quickly. And so we expect to be back on our historical cadence of about every 18 months, being at a position that would allow us to evaluate the balance sheet and potentially recapitalize that. And so as Charlie noted earlier, in the materials, we do feel very comfortable in that 6% to 7% range. And then as it relates to profit metric guidance, if you will. A couple of things. One, we're not going to get into any specifics today, as you noted, because we haven't really reported our 2019 numbers. But what we've done and kind of the shift we made about 1 year, 1.5 years ago, was really focusing on these long-term targets, specifically the top line drivers that we believe based on kind of our model and the predictability associated with it. It's pretty easy for you to model down to kind of what those profit metrics are. The one exception to that is that, in years where you saw in 2019, where we've had some accounting changes and resulted in some -- I guess, difficult to model SG&A numbers, we wanted to lean in on a little bit there and provide more clarity. And so as we referenced earlier about anticipating some G&A investments to support our international growth, I think you can expect us to come out with some specifics around G&A. And we believe with that, in addition to kind of the 3 to 5-year targets that we introduced today, you should be able to model the profit metrics pretty easily.

Jeff Farmer, Gordon Haskett. You did touch on it, but you showed a chart, which highlights that major shifts in the company's advertising strategy can drive what looked to be a multiyear run of improved same-store sales. Do you see the concept as currently in one of these multiyear advertising driven same-store sales inflections? I assume, yes. So the real question is, do you think this persists for 2 or 3 years? What's the tail on this thing?

Yes. I think it's safe to say we're in one of those runs based on 2019, 2018 performance, notably lapping strong performance year-over-year. And the levers that we have that we can pull to continue the momentum without having to have a chicken sandwich event or something like that to do this. What I would also say to that is that this strategy also in terms of funding perspective, has the potential for us to continue to increase the funding. As you may know, within our franchise agreement, we do have the opportunity to increase the rate that our franchisees pay. We're opting not to do that in 2020, but it still is afforded to us as a way to continue to grow. And then as we add more dollars, as Christina very carefully mentioned, to the fund, things like partnerships, notably in sports and other things beyond just the TV spots that we do can really start to expand the reach and the message of our brand to a completely different audience. So we did present this as a long-term outlook. And we put that slide up there for a reason.

Jon Tower, Wells Fargo, again. A question for you. Just on the ambition to get to 100% digital transactions over time, just below 40 today. Some of your quick service peers in the mid-60s, they have a different model where they charge their franchisees a transaction fee per every transaction. And I'm curious to know the decision-making or the reasoning why you have not pursued such a philosophy?

Well, there are a couple of reasons. One, philosophically, I like to charge our franchisees, royalties and franchise fees. And I'd love for them to contribute dollars into marketing because I think that's ultimately what fuels long-term sustainable growth. Other brands charge them fees for food and other things, including technology that they have built and invested in. In a lot of cases, our investments in our very asset-light model have been in partnerships and connecting technologies together in a very thoughtful way that has built a world-class tech stack, I won't say technology stack, I wouldn't sound cool that way. A tech stack that is very flexible. And our franchisees do pay for the services provided within that stack. So OLO is a big engine behind it, the DoorDash relationship, and there are a few other parts and pieces around making sure that we've got all the right safety nets within this infrastructure of our restaurants. From a risk perspective, they do pay for that. So we have the right to charge a fee to our franchisees, it's built into our franchise agreement. We've elected not to because we'd rather them take that money and use those relationships and then spend that money on things we think will grow the top line.

Mike Tamas, Oppenheimer, again. I think you mentioned that you're going to be on national TV more this year than last year. So how much more is that? And when do you think we'll see that happening?

Christine?

You'll see that in the first part of the year as we look at building on our media plans and as you saw, we showed the calendar for when we'll be active on there, and that will equate over to about an additional 2 weeks of television.

But one thing we're doing is making sure that we maintain breakthrough levels of TRPs. So while we had a few weeks of TV, we're up upping the ante and the quality of the programming, and we did big -- did that in a big way this year and then also the depth of the TRPs.

Correct.

John?

Sorry, one more, and it's John Glass. Can you talk about have you tried ghost kitchens yet? Or is this a thinking about it topic? How do you deal with -- in a franchise system, how that works? And in general, how have you dealt with -- or have there been any channel conflicts in delivery in your franchise systems, right, in a market where maybe you have a split market, and I'm not sure how many those are? Or whose delivery order that is that may or may not be an issue now or in the future?

We have one that we mentioned, it's in the U.K. And under Nicolas' leadership and a great partner we have there that's very innovative we've developed one, it's doing quite well. It's very new, about a month old.

Month old.

A month old. Generating great volumes in a very low investment scenario. I'll start, maybe Mahesh can jump in or Nicolas. But yes, we're looking at them. We haven't done one in the U.S. yet and I know other brands have. A partner like Kitchen United affords us the opportunity to step in and be 1 of 10 brands or whatever it is in their kitchens. We certainly could execute that. It does come down to making sure that we place them in areas where we don't have overlap with franchisees. So there is a challenge with an existing mature brand in that. However, the markets that we like those for are the markets that we have very low penetration rates. We don't have a restaurant in Manhattan. And so there's a great opportunity to leverage this type of footprint to not have to go pay $400,000 or $500,000 for a 1,200 square foot location near Times Square, for example. And so it is, clearly, in our mind, like anything else we do, John, just like delivering and other thing, we're going to take a very measured and deliberate approach to make sure we do it right. But there's a lot of thought that needs to go into it that you're calling out, especially with franchisees. We want to make sure that we're being supportive and collaborative with them. Do you want to add anything to that?

No, you said it perfect.

Okay. Well, see he educates me well. We got Andrew up here.

Andrew Charles. Maybe one of the -- one topic that wasn't broached was just the new oven, baking equipment I noticed in the back of the room. And just so that relates to the U.S., you use it, obviously, in certain international markets to help speed service. Is that going to be reserved exclusive in the U.S. for nontraditional locations where speed is probably a more critical part of the occasion? Or is there open mindedness to utilize these in more -- in retrofitting more traditional locations to help expedite the service?

Well, hard to be specific and definitive on that. As I mentioned or as the team mentioned, we're testing it in a few locations in Dallas and have been for a while, and we definitely can increase speed of service, but we're not -- we want to see what that translates to. Does it make for a better occasion? Does it add capacity? Are guests more satisfied? And in some cases, the combination of a pickup blocker and this equipment, what does that look like? And Mahesh has been studying us a lot. So I'll probably kick it over to you. But I don't think there's a definitive answer other than nontraditional for sure. If you go to any of our 10 nontraditional locations out there or if you go to London to the Dalston Street or Cambridge Circus location, you'll see it in action, it's in France. It works. It does help us get over the hump, if you will, with the new market and the new location in a high football area, that whole -- I gotta wait 16 to 21 minutes to get my wings. That makes a big difference. And I think what that does is helps us enter the market in a bigger way. So far, we're kind of 3 for 3 on installations in that regard. So more to come. Do you want to add anything to that? _

I'll just add that as we think about the added protein, so for example, you all are going to be trying [ thigh ] of the day, that's something we need to be mindful and thoughtful of as we look at this feedback cooking platform. So these are things that we'll test as we continue to evolve and learn more about where to put this cooking platform.

We got time for maybe 2 -- 1 or 2 more questions before we eat wings, of course.

I'll make it quick then. This is Jake Bartlett from SunTrust, again. And Marisa, I just had a question. I was looking at that metrics and I just want to make sure I understand it, I guess, I haven't heard Western Europe in the context of low-cost environment and low-cost market. So just help me understand that should maybe -- the markets that have a premium positioning for price and that qualifies, I just want to -- it didn't quite kind of fit with what I'd understood.

Sure. Well, I think -- and I can start and Nicolas or Charlie, feel free to jump in. But as you'll notice, for example, Dalston U.K. we're able to operate with a little bit more favorable unit level economics given the footprint location. So it's a positive location for the business because of its location in the market. So I think we're able to tailor, if you will, placements in a market in order to ensure we're producing favorable unit economics to the brand partner.

Sorry. Similar to the U.S., where you go in kind of you Tier 2 or 3 markets, and that keeps the cost down?

Yes. One comparison point could be, for example, our Cambridge Circus location, which is a flagship for the market. So that's going to be -- although business is very strong there, as Nicolas mentioned, that's going to be a bit higher real estate cost. So I think the ability to be flexible and nimble according to -- of the Architype framework, is really powerful.

And I'll just to add to what Marisa said. I think Dalston, which is a part of London, which is not the same as Cambridge Circus, which is more in the West End on the -- next to Covent Garden has a much higher real estate exposure than those would have. And we feel that the Dalston having the same prices than Cambridge Circus with a moderate cost is what represents for us the sweet spot to be in. So Western Europe, as you probably infer, is not really a place where cost is really low. But on -- in the same time, we know that if we apply the Dalston principles in Western Europe, we'll be able to have the benefits of having the same pricing that we currently have in that part of the world and the moderate cost as well. So that would be our sweet spot.

One more. We'll make this the last one.

It's Chris O'Cull, again, with Stifel. So just -- I had a question regarding the whole wing strategy -- or the whole bird strategy. What type of mix do you need to see in terms of thighs and tenders and whole wings to make it a success in terms of lowering your cost or removing some of the volatility in the cost, but also in terms of consumer demand because when you look at the whole wing promotion you ran earlier this fall, it didn't look like a big success from a consumer standpoint, but it sounds like you've possibly benefited from some cost, so there were some cost benefits. So what kind of mix do you need to see in some of these other items to say, this makes sense, let's move forward with this.

I think one thing to highlight in the whole wing product that we tested in 2019. I think Charlie mentioned this earlier, it was a frozen product, not a fresh product. And that really did have some implications as to how it mixed, how guests received it. And so there's opportunity for us to get better there. Obviously, we're going to try to drive that mix as much as we can. And the higher we drive it, the more predictable our food cost is going to be, and the less volatile it's going to be. Have we defined success yet? No, we haven't. I think as we continue to test and learn with it, we will then kind of go from there and understand kind of how we can set some goals and understand what we should expect from a broader scale launch.

I think another -- just to add to that, anything we do to reduce the demand on bone-in wings that maintains transaction counts and keeps people coming in or adds new guests is a big win to the economics. Every -- $0.01 a pound in bone-in wings, can have an impact on your P&L, $0.10 is a big deal. And so the more we can reduce volatility by managing against spikes is going to be important. So there's a lot to unpack, do they become everyday items, do they become LTO options, which pieces and parts of that bird makes the most sense for those. A lot to unpack there, but I think this next test we do over the summer is going to really kind of fortify our thinking as to where we go and then probably later in the year, we'll be able to talk about what success looks like for us. But an easy rule of thumb is, every 1% from 65% down of bone-in wings makes a big difference. All right. Ladies and gentlemen, thank you very much. Just outside the door, we got a little cocktail reception for you, some wings. You're going to -- we're going to introduce you to these thighs. They are sauced and tossed in lemon pepper. Am I right on that? So we'll be happy to answer any other questions you have out there as well. So thank you for your time today. We appreciate it.