Domino’s Has Upgraded Its Chicken Wings. Will Wingstop Become A Bigger Competitor For The Pizza Giant?

The pizza wars between Domino’s, Pizza Hut and Papa John’s seem as old as time, and they’ve only intensified with the onset of digital ordering capabilities. 

But Domino’s might be eyeing a new competitor that has nothing even closely resembling a pizza on its menu. 

Inarguably, Wingstop

WING
and Domino’s have been two of the strongest performers through the COVID-19 crisis, thriving thanks to their digital prowess easing consumers’ ability to access their food off-premise. That’s been a big deal amid nationwide stay-at-home orders and lingering safety concerns.

Interestingly, Domino’s Q2 earnings call last week devoted quite a bit of time to the chain’s new chicken wings.  

During the call, CEO Ritch Allison called the wings “greatly improved,” with “terrific new sauces.” The chain’s website shows those wings are available in hot buffalo, honey barbecue, sweet mango habanero and garlic parmesan. 

There are a few reasons Domino’s is prioritizing chicken wings. For starters, it’s a growing category. The National Chicken Council estimates this year’s wing consumption will grow by 2%, on top of last year’s 5% growth. In 2019, Americans consumed nearly 1 billion servings of wings. 

Additionally, bone-in chicken retains heat well, which makes it a delivery-friendly product–an enormous advantage in an off-premise-only world created by the coronavirus. 

“One of the things we’ve observed as we’ve seen this huge boom in delivery over the course of the last couple of years is we’re trying to keep an eye on product categories that customers are really adopting at higher rates for delivery,” Allison said during the call. “And certainly wings are one of those.” 

There’s also the allure of Wingstop’s market share position, as it’s largely insulated from competition. Sure, there are chicken wing players in Wing Zone and Zaxby’s and Buffalo Wild Wings and so forth. And all of those are fine and good, but unlike those concepts, Wingstop’s menu is laser focused on wings. Wingstop CEO Charlie Morrison has even acknowledged that his chain has no “true competitor.” 

Domino’s just may be wanting a piece of that market share. And why not? Wingstop’s Q1 same-store sales, reported in May, were up nearly 10%–a rare success story in the middle of a crisis unlike any the industry has seen before.

Of course, that’s pure conjecture. For Domino’s, for now, Allison is keeping things a bit more internal, stating, “as we’re honest with ourselves, our wings needed to improve.” 

This isn’t the first time Domino’s has owned up to its need for improvement. In 2009, the chain famously introduced its “Oh yes we did” campaign, overhauling its entire pizza recipe from crust to sauce and supporting that campaign with brutally honest customer feedback. Since that campaign, Domino’s has generated 37 consecutive quarters of positive U.S. comp sales. Shareholder return in that time has increased by over 2,000%.  

Just like the chain’s pizza revamp, Ritchie said its updated wings are “a sign that continued menu innovation doesn’t always have to be something brand new, but can be a major renovation of existing products that customers have simply told us need to be better.” 

Will it have the same success as its pizza iteration? Time will tell, but a few analysts like the potential. 

In a note released Friday, RBC Capital said the upgrade could generate more trial and higher checks. BTIG analyst Peter Saleh wrote: “… the upgraded product quality coupled with the investment behind advertising to support the rollout could allow the brand to take share in this multibillion-dollar category.

“Furthermore, we note that the aggressive price point of 79 cents per wing compared with Wingstop, which is typically north of $1 per wing, could result in some pricing pressure across the category.” 

Indeed, pricing and menu diversity could be advantages for Domino’s here. The chain is attaching its 10-piece wing offer to its $7.99 value offering. For context, my local Wingstop in Louisville, Kentucky, offers 10 wings for $9.79. Still, Allison said the value proposition will be a boon for franchisees’ top and bottom lines.

“We started some years ago with our large, three topping pizza at $7.99 and, over time, we’ve expanded that. And now we’re looking at wings as another opportunity to add that mix-and-match platform,” Allison said. “We’re going to continue to stay focused on new product development, but with the parameters that … we don’t do it just for news. We’re going to do it if we think it brings sustained sales and profit to the franchisees.” 

Potential chicken wing war aside, Wingstop and Domino’s will maintain a level of share-of-stomach competition over digital orders in general. Customers will prioritize “easy” and “convenient” for the foreseeable future and both brands are well suited to meet those demands.  

It’s also important to note that while Domino’s is focused on its improved wings, the company is not taking its eye off of its traditional pizza competition. 

“There’s a big opportunity to continue to earn more business from the customers in the U.S.,” Allison said. “We still only serve about one out of every five QSR pizzas that are going to get eaten tonight and our share is significantly better than that in a number of international markets, which gives us a lot of confidence.”