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Wingstop Inc
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Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Wingstop Inc. Fiscal Third Quarter 2021 Earnings Conference Call. Please note that, this conference is being recorded today, Wednesday, 3rd, 2021.
On the call, we have Charlie Morrison, Chairman and Chief Executive Officer; Michael Skipworth, President and Chief Operation Officer; and Alex Kaleida, Senior Vice President and Chief Financial Officer.
I would now like to turn the call over to Alex. Alex, please go ahead.
[Technical Difficulty]
Apologies, ladies and gentlemen for the interruption, please hold the line while I connect.
Thank you, and welcome. Everyone should have access to our Fiscal Third Quarter 2021 Earnings Release. A copy is posted under the Investor Relations tab on our website at ir.wingstop.com.
Our discussion today includes forward-looking statements. These statements are not guarantees of future performance, and are subject to numerous risks and uncertainties that could cause our actual results to differ materially from what we currently expect. Our SEC filings describe various risks that could affect our future operating results and financial condition. We use certain non-GAAP financial measures that we believe can be useful in evaluating our performance. Presentation of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are contained in our earnings release.
Lastly for the Q&A session, we ask that you please each keep to one question and a follow-up to allow as many participants as possible to ask a question.
With that, I would like to turn the call over to Charlie.
Thank you, and good morning. We continue to be extremely pleased with our strategies, fueling exceptional results for Wingstop. The third quarter continued our streak for record-breaking restaurant development, which is a great demonstration of the resiliency for our model. These – the results we have shared today underscore the sustaining power of our growth strategies, and the interest of our brand partners in continuing growing with Wingstop.
Thanks to our proactive investments in technology and delivery platforms, Wingstop was well-positioned to navigate this pandemic. I'm pleased to say that, just as we did last quarter, we continue to lap the remarkable growth from last year. In the third quarter of 2021, we recorded domestic same-store sales growth of 3.9%, which on a two-year basis represents growth of 29.3%, what we believe to be best-in-class.
This outsized comp growth has raised the average unit volumes for our domestic restaurants to approximately $1.6 million, and these volumes are generated from an average initial investment of only $400,000. The third quarter was another record quarter for development for this time of year. We opened 49 net new restaurants, resulting in 13.1% total unit growth, despite experiencing unprecedented inflation in the cost of bone-in wings.
Our restaurant development is a testament to the continued focus of our brand partners on the long-term, and strength of our unit economics, to navigate these challenging times. We are seeing extraordinary results not only in the US, but also in key international markets. In the UK, we have opened 10 restaurants in the last 18 months alone, and the market is generating average unit volumes exceeding $2 million, well above the average we see in the US. This market has been only opened since 2018, which underscores the tremendous long-term potential.
As we communicated earlier this year, we made a minority investment in our UK operations. We believe this strategic use of our capital will continue to strengthen the development pipeline, as we look to double the UK footprint in 2022. We are excited to support our brand partner in achieving the potential for the Wingstop brand in the UK, a market we believe will serve as a model for our Western European expansion and other parts of the world.
Earlier this year, we announced our expansion into Canada with a 100 restaurant development agreement. Our first location in Toronto is on track to open early next year. We recently served our flavor to Canada with a visit from the Wingstop food truck and we couldn't be more excited by the consumer response to our products. Canada is a market well-poised to replicate the success we have had in markets like the UK and the United States.
We are also very encouraged to see our international markets continue to recover from the impact of the pandemic, with most of our existing markets already generating sales volumes above their pre-pandemic levels. And our largest market Mexico, which was one of the hardest markets impacted by the pandemic is on track to open nine restaurants this year, again, a testament to the resiliency of our model and the portability of our brand.
While we are facing near-term inflationary pressures, our growth fundamentals and long-term potential of operating over 6,000 restaurants worldwide remains unchanged and our brand partners share that vision. We are very pleased with this record pace of restaurant development and the top line growth our brand has seen which certainly provided relief from the inflationary environment we operate in today. The strength of our model is a differentiating factor for Wingstop and positioned us well to navigate this unprecedented environment.
Since the end of the third quarter, leading indicators such as cold storage inventory levels for wings are beginning to approach 2019 levels for the first time of the year. We have seen sequential improvement in the spot price for bone-in wings and it now stands at $2.87 per pound. This $0.35 drop versus the third quarter equates to approximately $75 million of cash flowing back into the system enough annually to build 185 new restaurants. While the price of wings is trending in the right direction, we remain laser-focused on executing our -- against our previously communicated goal of managing cost volatility with greater utilization of the whole bird and controlling more of the chicken pricing and supply process.
We believe that the key to unlocking a less volatile food cost for the brand is predicated on the utilization of more parts of the chicken. At the end of the second quarter this year, we launched a virtual brand called Thighstop initially available only on thigstop.com and in DoorDash's marketplace. In addition to what we're calling bone-in thighs, we're also offering thigh bites which are a juicier flavorful complement to our traditional boneless wings. Just as we pioneered wings as the center of the plate, we also believe we can make thighs a center-of-the-plate item and make them a fan favorite for a long time to come.
In September, we integrated thighs into our regular Wingstop menu, doubling our thigh sales and allowing us to further progress on our strategy of buying more parts of the bird. Staying true to our entrepreneurial spirit, we are evaluating every phase of the chicken supply chain and looking at others even outside our industry to take a page from successful playbooks like those of the retail industry to be disruptive and gain greater control over our destiny.
We are following a similar proactive approach to remain competitive in this tight labor market and leading the way in company owned restaurants. Unlike other restaurant concepts, we have a very streamlined kitchen operation with small roster sizes, which have enabled our system to better weather the severe labor challenges some of our peers are facing. With a long-term view in mind, we have increased the hourly wages and salaries of our company-owned restaurant team members, as we believe investing now will help us retain and attract talent to continue offering a great customer experience and maintain our top-line momentum.
With the top line momentum and the effectiveness of our strategy, we were able to leverage the surplus in our ad fund and rebate a portion back to brand partners in the third quarter in order to continue to fuel development. This ad fund rebate did not impact our overall media plans and provided immediate relief in this time of unprecedented inflation. It's a proactive example of keeping our brand partners focus on development and the long-term growth ahead of us. We also anticipate brand partners will take an additional 4% to 5% menu pricing, thanks to the disciplined approach in our past by the brand partners and pricing power we believe Wingstop has with consumers.
With the ongoing momentum in top line growth, 2021 has seen greater levels of premium media placements and we continue to invest heavily in our one-to-many and one-to-one communications. We recently decided to take a page from the org structure of many leading tech companies which often house marketing and digital IT functions together to create a martech structure. This structure allows Wingstop to further its transition from the traditional promotion-based marketing approach that is typically seen in the restaurant industry to a digital platform-based strategy. We are already seeing an impact with our first-party database of more than 25 million guests and continuing to grow.
Thanks to our investments in CRM and our digital platforms, we continued to sustain digital sales above 60%. Due to the strong results in the third quarter and the results we have seen as we enter the fourth quarter, we are now expecting our same-store sales growth for the full year 2021 to be between 7% and 8% up from our prior guidance of mid single-digits. With our robust development pipeline, we are reiterating our guidance for restaurant development growth of 12% plus in 2021.
At Wingstop, people are the foundation of our strategy and we serve our flavor in communities throughout the world. Wingstop Charities is dedicated to enhancing and elevating the community work of our brand partners to make a difference in the lives of our youth. We recently completed our grant cycle and achieved a new milestone in the number of organizations we are supporting. Wingstop Charities has provided over $1 million in community grants and team member assistance. We are thrilled with this tremendous milestone for the organization.
I'm excited by the momentum in the business both on our topline and development growth, as well as our progress we are making against our whole bird strategy that will position us better to weather the next inflationary period in wings.
More importantly, I'm encouraged by the strong foundational investments we are making for our long-term growth. We remain confident in our strategies that will continue to reward our shareholders, brand partners, and team members as we continue on our way to become a top 10 global restaurant brand.
With that, I'll turn it over to Alex.
Thank you, Charlie. We are pleased to report strong third quarter results, especially when considering the extraordinary results we are lapping from the third quarter in 2020. Our topline momentum is continuing into the fourth quarter with October comps at 7%, despite lapping comps in the high teens last year. These results put us well on our way to achieving our 18th consecutive year of positive domestic same-store sales growth and underscore the sustaining power of our growth strategies.
For the third quarter of 2021 we grew royalty revenue, franchise fees, and other revenue by $4 million or 14% versus the prior year. The increase was driven by domestic same-store sales growth of 3.9%, 193 global net franchise openings since the year ago comparable period, and by the continued strength we are seeing in new restaurants, which are now producing AUVs of $1.2 million as they enter the comp base.
As a reminder, just a couple of years ago, our 2019 vintage generated $900,000 in sales during their first year of operations, a testament to the uniqueness of our model when you consider the average initial investment of approximately $400,000 that Charlie mentioned earlier.
It's these unit economics that have fueled the 49 net new restaurants we opened in the third quarter, which is a continuation of our record restaurant development at Wingstop this year.
Company-owned restaurant sales increased $1.9 million, primarily due to the acquisition of three franchise restaurants in the third quarter of 2021 and the openings of three new restaurants since the prior year comparable period.
In the third quarter, we recorded a gain on sale of $3.6 million as part of the refranchising of six company-owned restaurants in the Denver market. As part of this transaction, the brand partner signed a new 20 restaurant development agreement for the Denver market. This transaction is another example of a strategic use of our balance sheet to acquire restaurants, invest to showcase their potential, place them back in the hands of an existing brand partner, and position the market for accelerated development. As we have shared, we will continue to leverage this playbook and use our balance sheet to facilitate growth.
Food, beverage, and packaging costs as a percentage of company-owned restaurant sales increased by 11.7 percentage points compared to the third quarter last year. The average spot price in the third quarter for bone-in wings set a new record high at $3.22 per pound, an increase of 84% versus the prior year.
Thanks to the price mitigation strategy in place with our largest poultry suppliers, our restaurants were able to partially offset this inflation and saw an effective year-over-year increase in the price of wings of 49%.
We also are pleased to see sequential improvement in the spot price for bone-in wings with the price now at $2.87 per pound, a $0.35 reduction from the record highs we saw in the third quarter.
While below optimal levels, we are seeing frozen inventory stocks building and beginning to approach 2019 levels for this time of year, a leading indicator to deflation. With this trending in the right direction, we anticipate wing costs to continue declining in the fourth quarter.
In the third quarter, labor costs as a percentage of company-owned restaurant sales were 24.6%, a decrease of 1.2 percentage points compared to the third quarter last year. This decrease was primarily due to the lap of incentive pay provided to restaurant team members in response to the pandemic. This is partially offset by the investments Charlie mentioned we have made in wages, hiring bonuses, and training to continue attracting and retaining top talent.
During the third quarter, we made additional investments in company-owned restaurant margins, which totaled approximately three percentage points. These expenses were more elevated for the quarter in connection with training and repairs and maintenance-related to three recently acquired restaurants as well as deferred maintenance for our restaurant portfolio following a year of lower spend due to the pandemic.
We also made investments to prepare for our Manhattan launch. We are excited for our first restaurant in the heart of Manhattan to open in the next couple of weeks near Times Square. We are encouraged by the potential of this market where we have identified approximately 25 trade areas.
We anticipate restaurant margins for full year to be in the high teens to 20%, reflecting the improved outlook for the price of bone-in wings, additional menu pricing, and the continued investment in restaurant labor to remain competitive.
Shifting to SG&A. We saw a decrease of $1.5 million over the prior year, mainly due to lower variable based compensation expense and lapping COVID-19 related costs and support for our international brand partners. These decreases were partially offset by continued investments in people to support our growth in higher travel compared to 2020 when travel is limited as a result of pandemic.
For 2021, we had anticipated investing in strategic projects to support our international business. However, the ongoing pandemic has delayed the timing for these projects. Additionally, we have experienced delays in hiring.
And as such, we are lowering our full year guidance for SG&A from $64.8 to $66.8 million to $62.2, to $63.2 million, inclusive of stock compensation expense, which is estimated to be between $9.7 billion and $10.2 million in 2021. Adjusted EBITDA grew 16.2% to $21.4 million and we recorded earnings per share of $0.38, an increase of 11.7% versus the prior-year comparable period.
We remain committed to driving shareholder value and returning capital to shareholders through our quarterly dividend, which is targeted at approximately 40% of free cash flow.
Our Board of Directors has declared a dividend of $0.17 per share of common stock. This dividend, totaling approximately $5.1 million, will be paid on December 10, 2021 to stockholders of record as of November 19, 2021.
With the continued strength and resiliency of the Wingstop model in these unprecedented times and as we look ahead to the balance of 2021 and beyond, we are well-positioned to execute against our strategic long-term growth initiatives.
With that, I'd like to turn the call over for Q&A.
[Operator Instructions] Our first question comes from Andrew Charles of Cowen. Your line is open. Please go ahead.
Great, thanks. I'm just curious just amid the sales and margin deterioration in 3Q with sales that look like they're implied to further decelerate in 4Q despite the fact that October up 7, not as bad as deceleration for the full quarter that you're guiding to. The main question is do you see risk that 2022 openings will fall below long-term kind of 10%-plus guidance? And just kind of curious what you point to that's just that 2022 should be a normalized year of store growth. Thanks.
Good morning. I want to first comment on the top line performance. Same-store sales at 3.9% and a 29% 2-year comp, is something we're very proud of and won't apologize for as it relates to the sequential change or the absolute. So, I know the market is trying to absorb whether two-year or one-year are the right metrics. But in our opinion, both are great demonstrations of the health of our business.
And I would also point to a couple of things -- a couple of factors about our overall model that we believe have caused the continued strong development from our brand partners, which is our average unit volume now is approaching $1.6 million per restaurant. That's up from just a few years ago at $1 million to $1.1 million. So the strong performance we've seen over the two-year trend again above or close to 30% on a two-year same-store sales basis, it's feeling great results.
While we are dealing with the near-term situation on wing costs, we are seeing those prices start to come down. And as we commented, we are starting to take a much more proactive approach to how we can mitigate some of this volatility, but not just purely relying on the spot market or some of the strategies, we've actually put in place to mitigate that this year.
All that said, our development pipeline, as it stands today, is above where it was when we look at a year ago and above where it was around the beginning of the year. So our brand partners are still actively engaged in development. We have a strong pipeline and anticipate that the near-term headwinds are not an indicator of what the long-term opportunity is for the brand.
Thanks, Charlie. It’s Helpful.
Our next question comes from David Tarantino of Baird. Your line is open. Please go ahead.
Hi, and good morning. Charlie, I want to come back to the sales trends. And I don't think anyone would debate that two-year comps of plus 29% are really, really good. But I wanted to get your thoughts on why you think that number has trended down from Q2 to Q3, and now what you're guiding to for Q4. What in your view has caused that settling versus where you were last quarter? And I have a quick follow-up to that.
Sure. Good morning, David. Thank you. Yes. I don't think we would have expected based on our performance last year to have seen something meaningfully different. In terms of the performance, keep in mind that Wingstop was very well positioned to navigate through the challenges of the pandemic. And in that timeframe saw extraordinary growth for the brand because we had made the right investments and we're very well positioned. That's different than perhaps the rest of the market. So I think on a sequential basis our focus is on the health of the business.
While it does show that the sequential two-year and in some cases the one-year have gone down we did comment on the fact that in the fourth quarter during the month of October, we've seen comps accelerate from our one-year rate to 7% and anticipate we'll have a good strong quarter like we always do.
I think the key for us is anchoring on the long-term outlook. Our mid-term outlook is for mid-single-digit comps. We're delivering against that, if not expected to exceed that. And also keep in mind this is our 18th now consecutive year as we close this year out of positive same-store sales growth.
So the last comment I will make and continue to reiterate is the strength of our model. Our sales to investment ratio for our restaurants has grown to 4:1. So a $1.6 million average unit volume against a $400,000 investment even with a challenging margin structure, driven by things that are essentially out of our control, the macro situation anyway we feel very confident in what our future looks like. So we're not focused on the near term.
We're focused on the long-term as an organization. We're adjusting to the inflationary headwinds that are in place. Notably, we've seen wage creep like everybody else. We are paying our people, making sure that we're retaining great talent. And I think those are the right adjustments to make that really focus your business for the long-term against some of the near-term backdrop.
Great. Thank you for that. And just my follow-up is on the pricing. You mentioned 4% to 5% for the system is what's planned or an incremental 4% to 5%. When did that go into place, or when will that go into place?
Yes. Over the course of the year we've been taking price. We have another opportunity in front of us where we are actively working with our franchisees and they are going to put in somewhere between four to five points of additional price, hopefully during this quarter, certainly over the next few months. That will culminate in a total of a targeted 10% overall increase, which we believe is in line with where inflation is and aligned with consumer demand as well. So like other brands, we're making sure that we're taking our price in this environment to offset some of the near-term headwinds.
Great. Thank you.
The next question comes from Jeffrey Bernstein of Barclays. Your line is open. Please go ahead.
Great. Thank you very much. Also I had one question and then one follow-up. The broader question is just on franchise sentiment. It would seem like the record unit growth demonstrates their long-term bullish outlook which you reiterated. Just wondering what that said what are the conversations like in terms of the near-term unit development challenges, whether there's anything specific in terms of ongoing delays or labor challenges in terms of staffing or other maybe inflationary pressures they're expecting just in terms of the conversations you're having with franchisees that give you confidence in the 10%-plus over the next few years beyond just the pipeline? And then one follow-up.
Yes, Jeff thanks for the question and understand the context. The sentiment of course is challenged like it would be in any system, given the macro headwinds that we're facing. It is hard to hire people. We are adjusting our compensation strategies or have adjusted them so that we can make sure to get the right people in our restaurants that will help us sustain a great customer experience but also continued growth.
I think the outlook is one of – a challenge right now in that we've got high wing prices, we've got labor inflation so what are we doing to control it? And I think the sentiment we've had a conversation about is about taking more control. We have been reliant upon for the most part spot prices in our commodity. We believe there's an opportunity for us to exercise more control over that. And so we're working together with our franchisees to mitigate the volatility in the future by taking more control of the supply chain.
We're still trying to figure out exactly how that manifests itself but I think it's incumbent upon us to not allow such volatility to continue for the long haul, which we believe we can address.
As it relates to wage inflation, we see that as temporary in that we're going to have to pay up, if you will to make sure that we're paying our people at the levels that are expected and the market is dictating. There are a lot of people leaving the restaurant category to find jobs elsewhere. And so we're making sure that we're competitive in that respect. And I think Alex called that out very carefully that we are making the investments in our company-owned restaurants, which are the leading indicator of overall margins in the brand to demonstrate that we're making those investments because we believe in it for the long haul.
But even with those investments and even at our current EBITDA margin levels that we identified or discussed here, our restaurants are still generating great cash flow. The average unit volume for our company stores exceeds $2 million. Even at this margin structure they're generating over $200,000 in cash per restaurant on a $400,000 investment. That leads to a sense of confidence, not only amongst us but our franchisees as well that will weather this storm. There's probably no brand better positioned to weather the challenges. And that from a long-term perspective, we need not just look at the short-term as to whether we develop restaurants, but really look towards the long-term and what the upside potential is for this brand once we get through this transitional period.
Understood. And then just a follow-up, I know you guys have kind of medium-term and then long-term guidance. And I know it's too early to be getting much specificity on '22, but you made a comment before that you anticipate that the near-term headwinds were not an indicator of the long-term opportunity, which I don't think people are questioning from a long-term perspective. But specific to '22, is there any reason to believe that the mid-single-digit comp or the 10%-plus unit growth wouldn't be a realistic starting point? I know the AUV seem to have found in new homes. So it's not like, you can't build off of that. But just wondering, if there's any early indicator that may be either the comp or the unit growth might be more of a challenge in '22 because of these short-term headwinds?
Yes. I think, if you look at the drivers of the top line first as a brand, we rebated back $6.9 million during the quarter to our franchisees to put in their pockets to continue to fuel development, which we thought was a great decision and we all aligned on that as a brand. What that didn't do was take any money out of the coffers to continue to execute our advertising strategy, as we've seen in the fourth quarter with a sequential increase in the comp so far. So, I think that gives us confidence that the right strategies are in place for us to continue to deliver against our both near-term and long-term outlook for the brand, especially on the top line.
Another great lever we have as an organization is the fact that we have a database of over 25 million users. We are actively investing in to deliver a one-to-one marketing platform with our customers, that is usually reserved for tech companies and platform brands. Wingstop is in that position. I think that's going to be another great driver.
And then, as was mentioned before in the comments, we're getting very premium placements, leveraging properties like the NFL, the NBA and other really high-profile properties to leverage our advertising dollars. Next year will be somewhere in the range of $100 million to $125 million of total advertising spend. That's a big increase from where we were even a couple of years ago. So, I think all of those are great indicators as to what the potential is for the brand to continue to grow comps at the rate that we've guided towards for the midterm and the long term.
And then if you factor in the unit development again, while the P&L is challenged right now because of some of these macro issues, the restaurants still deliver good cash flow characteristics. The investment economics are very efficient for Wingstop. A $400,000 average unit investment with a $1.6 million sustainable average unit volume, 4:1 is as good as it gets. And so I think our brand partners recognize and they've been through this before. We'll navigate through the tough challenges to continue to see the brand grow.
Understood. Thank you.
The next question is from John Glass of Morgan Stanley. Your line is open. Please go ahead.
Thanks very much. Charlie, can you maybe just expand on the whole bird strategy? And if you think that's something that you can start to see benefits from next year or is this something kind of a multiyear project? And can you also just comment on the mix of the thighs? That was something you said it doubled. I'm not sure if it's material. Is that something that might also benefit cost as we think about '22?
Well, we definitely think that the introduction of thighs through Thighstop was the right strategy and yields, the desired outcome we have which is not only to just create an opportunity for a item to mix at a lower cost level than what the bone-in wings are which it has done. But we also know that it has a meaningful effect on our ability to secure entire birds, instead of just buying the wings and some of the breast meat off of the product from the spot markets.
As we look forward, as I mentioned earlier, we are exploring strategies where we can take more control of the supply chain, while it's preliminary. I think there are opportunities for us to follow the lead of some of the other large scale, both franchise and company-owned brands likes of Dunkin', Starbucks and others who -- and the pizza chains, who starts to take more control of their supply chain for the benefit of eliminating volatility and/or market exposure. And so, that's -- I think Wingstop's a brand that's finding its way into that scale level.
And so on a go-forward basis, the near term, yes, we're pleased with the mix of thighs. We're pleased with how it's performing. We mentioned it doubled in volume when we took it off just the platform that we established at the beginning with DoorDash and our own into the whole Wingstop format. Our guests were coming into the restaurant saying, we're ready to order thighs from you directly and that's working out well for us.
It's going to build over time. And it's following a trajectory that we saw many years ago, when we introduced boneless wing. So, overall, we're pleased with where that's going, a long way to go and it is making an impact ultimately to the business by way of giving us a lot of confidence in ways we can secure whole birds and take more control of the supply chain.
And if I could follow-up, it sounds like -- that sounds like that maybe it's a buying co-op maybe is what you're thinking about. I don't want to put words in your mouth, but if you could just sort of answer that part. And then, on the return of the ad fund money to the franchisees, is that a onetime? Do you anticipate that was a onetime event, or do you think that continues in the fourth quarter?
Yeah. I think the question of the buying co-op is one of -- you're putting words in my mouth, but I think at the end of the day there are a lot of options in front of us. And I think if we lean into again what scaled brands have done over time as they've grown to the size that Wingstop is, I think they made some very thoughtful decisions on how they can put together structures that support a less volatile commodity impact. And I think that's the right approach in some cases.
If I go back then to your other question, yes, I think…
No. I think…
Michael, you want to jump in?
Yeah. I think John, the ad fund rebate we gave was really around a surplus that we had, and it didn't impact any of our planned advertising strategy. And so I would think of that as more of a one-time thing than that's something that would impact.
I think the best way to think about that John is that it is a great lever we have with the strength of our advertising, the strength of our top line. But in this case definitely a known surplus that we felt like was in the best interest of the entire system to put that in place this quarter.
Okay. Thank you.
The next question is from Andy Barish of Jefferies. Your line is open. Please go ahead.
Hi guys. I’m wondering if you can share, I guess the thigh contribution or incrementality whatever you're willing to share? And has it hit that threshold? I think it was the first $100 million was royalty-free. Just a little bit more color on how thighs are helping the sales numbers in addition to obviously the cost side of the equation.
Yeah, Andy, we're not sharing any specific mix or sales data on the thighs other than it is making a meaningful contribution to the brand by way of the utilization of more parts of the bird. Quite frankly, it does not require a high mix in order for us to have a big impact on the number of birds that we can commit to. And that's really how we position this from the get-go.
We put some advertising behind this, but primarily this was supported by public relations work and things we did in the marketplace to launch it and then a digital strategy behind it. So -- but we haven't really done a lot of until just recently as put it on TV or do anything like that to truly grow it. What we want to know is number one, how well does it execute, how well do people engage with the product. I think we're happy with that and why we -- that was why we made the decision to go ahead and fold it so quickly into the total Wingstop platform. As we mentioned it doubled our results. But we still have ways to go. We're on our way towards getting to that $100 million level. We didn't expect to be there by this point anyway. So we've still got some time ahead of us. But overall it's moving along at about the pace we expected it.
Great. I appreciate that color. And then as a quick follow-up just on the 300 basis points you called out on company-owned margins was that pretty much idiosyncratic to the 3Q? And as we think about the margin improvement at the company-owned side in the 4Q, is that something that sequentially helps to that extent?
Good morning Andy, this is Alex. Yes, you have that characterized correctly. It was specific to the third quarter. It related to some preventive maintenance work and catch-up that we were doing on the repairs and maintenance side as well as connecting to our three restaurant acquisition, training and catch up maintenance work as well. That was unique to the quarter.
Thanks guys.
The next question is from Jeff Farmer of Gordon Haskett. Your line is open. Please go ahead.
Thank you. A quick follow-up and then a question as well. On the follow-up, is the 4% to 5% incremental menu pricing, is that fully contemplated in the same-store sales guidance for 2021?
Yes, that is.
Okay. And then on the question. Shifting to G&A…
Let me -- can I clarify? Let me clarify that for you Jeff. I mean that comes in over time. So you don't have a full quarter effect of that. I just want to make sure that you didn't expect that to be a full quarter effect. Over the course of the quarter, we'll put that 4% to 5% in.
Okay. That's helpful. And then shifting to G&A. So the prior G&A guidance, well, prior to the G&A guidance update provided today at least over the last two years you've seen your absolute G&A dollars grow by roughly $8 million to $9 million annually. And you've told us several times that that's in support of digital and some international development investments, some other things. The question I have is looking forward to 2022 and 2023, is that still a workable or a good run rate to think about in terms of how G&A dollars will grow moving forward?
Hi, good morning. Yes. I think over time as we've called out before that we anticipate we'll grow into a rate of somewhere between 2% to 3% of system sales for G&A. So we'll have more details as we move into 2022. But I think about it more as a percent of system sales. And that's based on where top 10 brands have matured to over time.
Okay. Thank you.
The next question comes from Michael Tamas of Oppenheimer. Your line is open. Please go ahead.
Thanks. Good morning, everyone. I think you mentioned that you returned some of the ad fund to help with unit development in the near-term here. So I'm just wondering, can you just talk about some of the constraints? Following up on an earlier question. How much are you sort of constrained either by the near-term cost rises or supply chain that's sort of like impacting franchisees' ability to get open some units here in the near-term?
Yes. There's no constraint to get the restaurants open. I think when made that decision, again we recognize there was a surplus anticipated in the quarter, of dollars based on our strong growth rate that we were able to put back in the pockets of our franchisees to shore up the P&L and deal with some of these macro headwinds while developing new restaurants. I think our performance demonstrates that they weren't pulling back at all, in fact, another record quarter for Wingstop.
So I see that as purely a great opportunity for us to pull a lever that was beneficial to our franchisees and they appreciated that very much. Without impacting the top line by way of our current year cadence and performance, with same-store sales. So all in all it was the right decision. There are some supply chain challenges associated, with equipment that we are seeing but those are not meaningfully impacting development. If anything it might cause a week or two delay to get refrigeration into restaurants and things like that. That's pretty normal in the industry right now and I'm sure others are talking about that. If not they're dealing, with it I can assure you. So -- but that's the natural reality, of what's going on with some of the logjams that we're seeing in the supply chain across multiple industries, not just ours.
Yes, absolutely. Thanks for clarifying that. And then not to harp on the near-term at all but I think that the October, two-year trend is a little bit above what you're guiding to for the fourth quarter. And I'm just curious if there's anything over the next two months that you guys are thinking about that we should be aware of, or if that's just sort of some conservatism on your part, if my math is right. Thanks.
Well I think you've called that out properly. Again 7% in October is an exceptional performance given the two-year rollover. But there's nothing other than the price that we expect to come in throughout the quarter associated with franchisees decisions to raise their prices. And then we do have a strong media plan in place for this quarter focused on driving the top line. And as I mentioned before premiumly placed media even compared to where we were a year ago or even early in the year. So all of those are strong indicators towards our confidence in the top line in the fourth quarter.
Thanks so much.
The next question is from Chris Carril of RBC CM. Your line is open. Please go ahead.
Hi, Good morning. Thanks for the question. So you noted some encouraging sequential trends in Wingstop prices recently. So curious as to what you're hearing from your suppliers as to what's driving that easing in pricing? Is it improving labor trends on the supplier side, or is there seasonality or some other dynamic on the demand side that's impacting spot prices?
Yes. This is the fun part of describing what goes on in the chicken industry that I'd love to talk about. It is -- they are seeing people coming back to work and improving. But the bigger problem that was out there had to do with the breeders stock at chickens that was -- that had to be replaced. And so they have made great progress, in what they call pullet placements, which are the chickens that create the eggs that ultimately become chickens that go to work for Wingstop. That's how we like to put it.
And that was up about 18% just in June alone, which is a good indicator and a leading indicator of more volume of chickens that are going to be coming through the system but there's about a six-month lag to that. One interesting statistic, I'd call note to, which I think is very important is breast meat frozen inventory stock are at five-year lows right now. And that product is the highest demand and why they grow chickens is for the breast meat primarily.
With frozen stock so low those inventories need to be rebuilt. And we anticipate that those will start to grow once these pullets yield more birds that will flow into the system. And we expect that to be somewhere around the turn of the year, so December into January into the first quarter. If those inventories start to rise that's good for wings, because on the wing side, our frozen inventories are approaching 2019 levels now, which is really good news for us. As those frozen stocks continue to rise, which we would expect that they will as more birds come online that's going to help support lower prices.
So we expect that that will be the case going into 2022. We've expected that all along. We're starting to see the market dynamics finally play out to our benefit. And as we mentioned, prices are now down around $2.85 a pound as of yesterday. So a couple of pennies below even what we said this morning. They're already coming down. So we're excited about what that potential is for Wingstop. But again we need this number to be well below in the $2 -- well below the $2 a pound level for us to be comfortable.
I'll add one little data point for you for benefit. We've done a lot of research and understanding into what it costs to actually produce a chicken. We think it's somewhere in the $1.30 plus or minus a pound range. So it's hard to imagine that it costs an additional $2 to just trim the wings off. So we do see that there's real opportunity in the market for the prices to come down to where the feed costs inputs and everything else associated with it would be in balance.
Great. Thanks for that detail, Charlie. For my follow-up, I did want to ask about labor at Wingstop. So, obviously, one of the big advantages of the brand is your lean labor model. So curious as to how you and your franchisees are balancing that goal of maintaining that lean labor model, while ensuring that restaurants remain fully staffed amid the just broader industry labor challenges? Thanks.
We always have and always will continue to have a very lean model. The actual roster size for our restaurants is quite a bit smaller than most brands out there. We usually like to have around 16 people plus or minus on a roster at the volumes that we execute. And our labor does become very fixed very quickly at the high-volume of a very single commodity that we sell with simplified cooking platforms. So all of that is still intact.
That doesn't mean we're not looking for ways to improve that. Part of our strategy on looking at the supply chain could incorporate ways to simplify the prep side of our production and get smarter on that. We make everything in-house and it's for good reason. It's our quality. Are there ways we can improve that? We're looking at that.
From a dining room perspective, we still only have about 200 restaurants plus or minus that have their dining rooms open today out of 1,500 in the U.S. And so that's a good indication to us that we can further simplify our model by reducing the size of the dining rooms and leveraging the strong delivery business that we're seeing.
In fact, when others are seeing their delivery volumes drop, Wingstop is actually seeing delivery continue to increase. If you look at it year-over-year, we're now at 27.2% delivery. That's almost 3 points better than where we were a year ago. And we know it carries a higher average check. It's beneficial to our business.
So I think our franchisees, as well as all of us, corporately feel like the digital side of our business is really what the long-term is all about, how can we create efficiencies inside the four walls of the restaurant to mitigate some of these challenges we're seeing in the near-term on labor.
All of that said, we are seeing wage inflation and we should see wage inflation, because the market is dictating that right now. And so, our approach is to make sure that we invest now for what's best for the long term.
Thank you.
The next question comes from Jared Garber of Goldman Sachs. Your line is open. Please go ahead.
Good morning. Thanks for the question. Wanted to swing back to the unit growth outlook on the international side. Obviously, you noted that some of the SG&A projects were sort of pushed or delayed and some of that related to some of the back-end work you were working on related to international growth.
I just wanted to get a sense of if you could help frame what exactly that work that you're doing is and maybe how we should think about that cost or that project flowing into 2022? And then further to that, how we should be thinking about maybe the acceleration or the level of unit open across the international business, as it relates to unit growth over the next couple of years? Thank you.
Yes. Thanks. Good question. And I appreciate you bringing up the international performance. I think, all-in-all, we're very excited about the international potential for this brand, always have been. As you know and we know, most of the markets outside the U.S. have not rebounded the way the U.S. has in terms of reopening and building their businesses back. Wingstop has seen that happen now over the course of the last couple of quarters.
Notably our performance in the U.K., those restaurants are doing very well. Average unit volumes exceeding $2 million, which is a great indicator of what we believe is right on strategy for the future of this brand. We're really making great progress.
The other markets, Mexico, for example, is a market that is now starting to approach their 2019 level volumes on the top line. They opened even nine restaurants this year, when they were probably one of the hardest hit with the pandemic. We were there to support them. And now we're seeing the benefits of that support paying off for Wingstop and expect growth to be strong into the coming year.
Canada, we also mentioned our first restaurant will open in Toronto, hopefully, in the first quarter. That's a 100-store development agreement. I think the key for the projects is, one big area of focus is China. We obviously were delayed because of the pandemic and getting back into China and just doing some of the groundwork necessary to build the organization, prepare ourselves for the likes of a joint venture deal. Those things typically take a lot of time.
The pandemic probably pushed us back somewhere between eight to 12 months in our progress. We're back working on that right now and would hope to be in China within a reasonable period of time, but we're going to do it right and be very diligent as we go.
Other markets are starting to reopen and we're starting to see the development engines start to pick up. So we're excited about what the potential is for the long-term overseas. But certainly the pandemic put a headwind in front of us that was very difficult to navigate. But I think at the end of the day we're coming out perhaps even stronger than we were before.
Great. Thanks. And then just one quick follow-up, sort of, on a different topic, but just wanted to get a sense of how we should be thinking about shareholder returns going forward. Usually you're on a cadence of somewhat of every other year sort of a special dividend. And I think that largely relates to the leverage levels. It looks like we're sort of approaching those leverage levels the next quarter or so where we might be thinking about layering that in. Can you make any comments and just help frame that for us if that's still the right way to be thinking about it? Thanks.
Thanks, Jared. Appreciate the question. You're right. With the cash generated from our business we do quickly delever from our last event. But historically, we've had a pattern of about 18 months of relooking at our leverage on our balance sheet. So it's a conversation that's ongoing with the Board and we'll continue to have that dialogue on the best way to generate the shareholder returns.
Great. Thanks so much.
The next question comes from Dennis Geiger of UBS. Your line is open. Please go ahead.
Great. Thank you. First just a quick follow-up on the labor staffing question. I was just wondering if you could speak a bit more to staffing levels and operations. Curious if you saw any impact on operations and sales in the quarter based on staffing levels across the system? And if you have a sense on sort of how close the system is or maybe the system is fully staffed right now.
Yes. We definitely have seen the impact of really high turnover that all of us are experiencing in the industry right now. That puts some pressure on the training side of the business. So there's an investment necessary to train up new team members and bringing them on board as well as compensation to make sure that we're attracting the right talent.
The good news of our brand is the high off-premise mix, the efficiency inside the four walls tends to insulate us from having any sort of meaningful negative impact on the guest experience. Since we're not serving in a dining room and we're not seeing long wait times like others have I think that's a great strength of the Wingstop model as we're able to deal with some of these challenges and deal with them with very low rosters if we need to.
We don't like to have our rosters challenged in terms of their size but we know that we can operate at lower levels and still deliver a great guest experience. But our focus is not only in our company restaurants as Alex mentioned earlier, but also in our franchise system is to get staffed up and make sure we maintain that by way of adapting to the macro environment that we're seeing in front of us.
Great. And then Charlie just one more. I think you spoke some to this but just wondering if you could talk a bit more about customer behaviors. Any kind of shifts that you've seen at all over the last couple of quarters really last several months be it across channel mix which I think you spoke to some menu use anything more on check versus traffic? Any kind of notable shift there worth calling out? Thank you.
I wouldn't say there are any notable shifts that have changed especially in the dynamic for Wingstop. I think one thing we've been very pleased with is we've maintained a solid digital mix and also growing our delivery mix. I think those are counter to what the trend has been in the marketplace as people go back out and dine-in somewhere. We've seen our business continue to not only grow, but also to see the mix shift working to our advantage.
And it's what we would have expected as a brand like ours. So I think all that factors in. One could have said well gee Wingstop could have been a real really impacted by the shift of consumer behavior back to a dine-in format. And that's just not the case. We're still growing.
We're growing on a strong two year basis 29% plus. I think that's indicative of the strength of this brand. But from a check perspective pretty consistent with where we've been we still see at least a $5 higher average check for digital orders, strong delivery performance the check average as well. All systems are right where we would expect them to be. The thing that is the challenge for us are the things we can't necessarily control right in front of us the macro headwinds.
Great. Thank you.
The next question comes from Chris O'Cull of Stifel. Your line is open. Please go ahead.
Thanks. Good morning, guys. Alex the margin guidance implies a fairly wide range for the fourth quarter. Can you help us understand the assumptions that go into the high and low end of that range? And then I had a follow-up.
Yes, Chris great question. Part of what we wanted to indicate was we're still doing a lot of hiring and training investment not only to ready for our New York market open, but also the amount of hirings we've instituted some bonuses as well at the restaurant level to help attract that top talent for our restaurant. And then as Charlie indicated there's still some volatility, while we're encouraged by what we're seeing on the Urner Barry there's still some volatility in our wing prices. So we just want to indicate a bit of what that might look like for the quarter.
Okay. And then Charlie if chicken prices revert back toward historical average prices or at least the trend line then how are you thinking about maintaining a strong value proposition with consumers given the amount of pricing taken this year to mitigate the pressure? And what I'm trying to understand if the system will leave higher prices unchanged and then just be more aggressive with maybe promotional activity or if there's other alternatives that you're considering?
Well, I think there are a couple of thoughts on that. Number one we've always believed we have sufficient pricing power in the brand and have historically been on a cadence of one to two points of price per year consistently baked into the P&L of the brand. This environment we're in which we don't believe is transitory in any way shape or form is driving the need to take price where consumers are willing to address and adopt that.
And I think we're seeing it across the board. This will be a level set for the future perhaps and we will revert back to our cadence. But we've always believed that we do have pricing power in this brand. And while it's challenging right now I think that will stabilize. As we look to the wing market will it stabilize and get back to historical levels we don't know. And we're not going to just bank on that. That's why we've commented several times that we're going to look at strategies where we can take more control of the situation.
Okay. Thanks guys.
The next question comes from Jon Tower of Wells Fargo. Your line is open. Please go ahead.
Great. Just mostly follow-up as many of the questions are already asked. It doesn't seem to be the case, but on development did franchisees or you deal with any supply chain issues with respect to equipment in the stores? And did that impact perhaps a few stores in the margin in terms of opening during the period? And then my other question is, I know you had mentioned many times Charlie on this call the idea of taking more control of your supply chain and that the plan is still evolving. But do you potentially see requiring any capital spend on your behalf to kind of get that going?
Hey Jon, thanks for the questions. First and foremost on equipment I mentioned before we're dealing with some of the challenges everybody is, but we generally -- because we have such a simple model and very standardized footprint we tend to forward buy a lot of our equipment. And so very -- some of it is impacted for instance chip shortages -- microchip shortages impact more pieces of equipment than you'd ever imagine in the restaurants notably POS equipment can be impacted.
Refrigeration has been a challenge for a lot of people. But ultimately what that means is really just perhaps a near term short-term delay of a couple of weeks on getting an opening in versus being a reason to not develop. So that's what we're dealing with in the macro environment. We're putting everything in place to make sure we mitigate that including leveraging our balance sheet if needed to secure more equipment and have that available to us.
On the supply chain side hard to say. Our preference certainly would be to find ways that we can leverage more of the bird with our existing supply relationships. But at this point we're going to evaluate all possible options in front of us and see what makes the most sense for the long-term success of the brand. And I think I'd just play against again what others have done in front of us. They've been faced with those exact same questions and made some those decisions as well.
Got it. Thank you.
The next question is from Nick Setyan of Wedbush Securities. Your line is open. Please go ahead.
Thank you. The wing cost commentary goes in the face of traditional seasonality heading into the Super Bowl and March Madness. So just to confirm do you expect wing cost to go in the right direction here as we head into February and March.
Yes. I think this year is a little atypical maybe a little -- it's a lot atypical for what we've seen historically which is a pattern of rising prices in anticipation of the big event. I think with the really high wing prices, many have started to opt out of the wing market, if you will and modify their menus which is helping improve the supply levels that we're seeing especially in the frozen stocks.
I will say that, we put away all the frozen inventory we need to be able to navigate through the Super Bowl timeframe. We expect that most also have done the same. And so, the dynamic is actually -- appears to be playing towards a continued pattern of a lower price for the product going into the first quarter. So, a little different than what we've seen historically. But again, this is a onetime event really driven by the pandemic more and the ability to get people back to work than it is any sort of natural cadence of the market.
Thank you. And on the royalty, just royalties and fee as a percentage of franchise system sales sequentially has ticked down a little bit. Is that a function of just Thighstop and you're not collecting royalties there because with the improvement in international, I would have expected that to at least hold steady? And if it is because of Thingstop is that a phenomenon that should kind of last into the first half of '22?
I think there are two factors affecting this both I'd say are balanced in the impact on the effective royalty rate. One is Thighstop. And yes, I do believe that will factor into the first half of next year.
Second is our international business. The royalty rates generally are lower overseas. And so the mix has modified, because of the performance of the international markets, and they're working their way back as I mentioned, but it has had a drag if you will on the effective royalty rate by their lower performance. So I just wanted to call both those up.
Thank you very much.
The next question comes from Peter Saleh of BTIG. Your line is open. Please go ahead.
Great. Thanks. Charlie, you mentioned you have been taking price throughout the year and plan to take another 4% to 5% over the course of the next couple of months. Have you seen any sort of pushback on order counts from customers either through delivery or pick up any sort of noticeable impact? And then I have a follow-up.
No, we have not. I think our performance is indicative of that on our two-year rates for sure, and definitely on our one-year rate. And then the performance in the fourth quarter another good indicator that we're not seeing the drag that you would otherwise expect from taking a lot of price. But I think a lot of that is because of the macro factors more so than anything. There's just a lot of demand out there right now.
Great. And then just on the third quarter numbers and maybe the outlook for 4Q. Do you feel like there was any impact either in third quarter or your outlook for fourth quarter from just having less stimulus fewer unemployment dollars out there, benefit dollars out there. Has that impacted you guys at all?
No. I don't think that's had any sort of impact on us in particular if anything if it were expected, I think our performance might be different, but I think our brand has demonstrated great resilience to even not having to rely on that stimulus if you will to grow. And so I don't see any impact associated with that.
Thank you very much.
The next question is from Joshua Long of Piper Sandler. Your line is open. Please go ahead.
Great. Thank you for squeezing me in. Charlie, I had a question on the -- your cultural aspect, which is a huge part of the story and the long-term investment thesis. And then a lot of the people pipeline or investments into your people pipeline that you've talked about in a couple of different ways on the call. Curious if you're seeing that flow into more candidates at the store level or even at maybe corporate depending on how you think about that?
And so are we thinking about these investments to kind of keep pace for? I know you talked about getting ahead of and investing ahead of what is going to be kind of an overarching dynamic here. But just curious if you're starting to see that kind of those investments allow you to hold that pipeline steady? Is it accelerating? Is it kind of what's the movement in real-time in terms of being able to invest into that pipeline? And then I had a quick follow-up on labor as well.
Sure. I truly believe and I appreciate the first part of the question on culture that companies with strong cultures are best positioned to be able to navigate some of the most challenging environments. And I know we've always said even prior to the pandemic that, it will be a great test for us and the quality of our culture if we can navigate through it with great results, which I think we've been able to prove.
But it's been tested. There's no doubt, and it's tested by way of a lot of the turnover that we've seen at the store level, even at the corporate level that a lot of companies are facing. I've talked to other CEOs, who say the same thing. We're all in this together, but we're all dealing with a very difficult environment. And we're going to have to adapt to the new way the world is moving and we're demonstrating that.
So I do think that look, we're increasing -- we're seeing wage rates increase at the store level both on the company and franchise side pretty consistently. We're paying what we believe is a fair amount and a proper amount to get the right talent in the organization to build for the long-term. While that creates near term pressure, I think the long-term outlook is very good.
And we are starting to see the pipeline of talent improve quite a bit. And the brand is still able to attract the best and brightest talent to come in and work with us to develop our long-term strategy and execute against it. So all-in-all, I feel good about where we are right now. It was a little harder a couple of months ago, but we are starting to see some improvement.
I appreciate that color. And Alex in your comments in line with some of the international investments that might have slipped you mentioned some hiring delays and it sounded like those might be at the corporate level, but just wanted to see if there's any additional context you could share there in terms of what hiring or kind of where in the organization those delays were being experienced.
Yes, Josh, I think it really just points to what Charlie said on a minute ago on just the challenges everyone is facing with tracking talent. So we are encouraged by what we're seeing by the end of the quarter and the pace of hiring picking up and entering into Q4, which is why kind of the guidance was positioned the way it was on SG&A.
Got it. Thank you.
The next question comes from James Rutherford of Stephens, Inc. Your line is open.
Hey, thanks for slotting me in here. I just wanted to ask on the unit opening piece of this. The unit openings from the franchise business in the U.S. were consistent with prior quarters this quarter. I know that usually fourth quarter is a bit stronger for openings.
And I was just curious if you maintain the number of openings into the fourth quarter that puts you at your 12% or better guided growth for the year. But if you do have that seasonal step-up you'd close in maybe on that 13%. I'm just curious for the very near-term what your thoughts are on -- on unit openings. Thank you.
Yeah. I think as a brand we've -- this year has demonstrated our ability and what we've desired to do which, is to if you will smooth the cadence of openings over the year. We've always believed that should be the case.
We've always had a strong fourth quarter, but I think the demand for growth has shown that now we're starting to see this quarter-to-quarter cadence be fairly consistent. We're quite confident in our outlook for the balance of the year.
Any adjustment to that would be centered on any supply chain challenges we mentioned before. But right now we feel very good about where we are for the full year outlook.
Thanks for that. And I know it's a small part of the smaller part of your business, but can you update us on where the dine-in is now as a percentage of sales and if that's another lever at the margin to add some incremental sales? Thanks very much.
Yeah. We actually saw -- even though we've only had about 200 restaurants open we saw a pickup in their mix. These were restaurants that were historically higher dine-in mix outpaced the system average.
So that wasn't too surprising to us as they've had their dining rooms open for a longer duration. But I don't think -- I think the levers that Charlie mentioned in terms of same-store sales on our advertising strategy, our work in CRM and continue to build the delivery business are going to be the long-term drivers of our growth.
The next question comes from Jim Sanderson of Northcoast Research. Your line is open. Please go ahead.
Hey thanks for the question. I had a quick follow-up question on menu pricing going into the New Year. Any feedback on how you expect consumers to react as far as transaction count as we see the full impact of the 10% price increase heading into 2022?
Yeah. I think if you look at kind of what's going on a macro basis, total savings rates are at all-time highs for consumers. They have a lot of money and a lot of cash out there. They're spending that money. They're dealing with the inflationary environment. It's not just in restaurants. It's across the board everywhere.
And I don't think we're seeing a slowdown in demand. And I think that, our assessment is that that will be consistent with the staff. I think there's a window right here where we can deal with some of these price hikes to follow the real inflation that's out there.
But I think that from our perspective this is necessary, obviously to combat the inflation especially on the wage side. And like others have done, we're not the only ones in the market who have done that. I think it's a necessary adjustment. So I don't anticipate seeing that affect transactions the way it would have in a more typical environment we've seen in the past.
And as far as the delivery segment goes, you mentioned strength in digital is delivery mix growing? Is it relatively stable as far as a percentage of sales?
Yeah. I mentioned earlier, we've grown delivery mix on a year-over-year basis by almost three percentage points. So 27%-plus is where we sit today.
And that's still with a 15% premium above what you could buy in store?
Yeah, which is a good indicator of consumer tolerance for that pricing, so to your last question we tend on the marketplace side with DoorDash we price up about 15% over our typical menu price and we're seeing it grow. So that's a great indicator of what you're talking about before.
All right. Thank you, Charlie.
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