Wingstop Expanding Globally, Aims To Be A Top Ten Brand: CEO

Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well, if you wanted like to know how many chicken wings are going to be consumed during the Super Bowl weekend, look no further than the National Chicken Council's annual report. Americans are set to eat one point three three billion chicken wings and is actually up to from these numbers, of course, for twenties seventeen. One point three billion chicken

wings is a lot of chicken. In Here to tell us how it all happens is Charlie Morrison is the chairman and the chief executive of wing Stop and also joining us here in studio Stacy Peterson, the chief experience officer for Wingstop, and they are in our New York studios coming from Dallas. All right, Charlie, one point three billion chicken wings that it's a little hard to comprehend, right, Now, how did you get into this? You, I know have done stints at Boston Market. Pizza was also in your past.

How did you combine all of this to bring it to Wingstop? Well, I was honored with the opportunity to lead this brand about six years ago when I started with wing Stop, and it's a brand that's been around since the mid nineties, was founded in the Dallas Fort Worth area where we're headquartered, and we realized what a great opportunity we had in front of us. We are all about this. Capital came in this. This is right when Capital came in and then you joined the because

they thought you would be good to do this. Yes, well that's that they thought, and so far, so good. Uh yeah. We so wings as a center of the plate item where something was something that was really not thought of many years ago. But now you look at the success of this brand and the fact that people are passionate about wings. It is great for the Super Bowl, will sell probably fourteen to fifteen million wings just on that day alone. But really it's an occasion item for

anybody for any eating occasion. What okay, you gave me the number of of wings. Can you put that into some context in terms of compared to a normal weekend or other holidays, that may make that more popular. Sure, in some cases we'll do as much business on that day as we might do in an entire week on average for the chain. So it is our biggest day of the year, one of the very big days, uh

for Wingstop. Wings are the number one consumed item for the Super Bowl, and UH we're one of the largest chains out there that's providing access to those for our for our fans. Stacy Peterson, come in for just a second and tell us about the uh the new ways in which people can consume their food. One of them is using the Alexa voice ordering system. Tell us about that venture and how you put that together. That's right.

Digital ordering has been a focus for us, and last year we really tried to extend the convenience to our guests. So instead of requiring them to download our app, which they can do, we decided to bring ordering to them. So if they're on Facebook, Messenger, Twitter, Messenger, Alexa, even now GM, on Star Marketplace, they can order ring wings directly from the apps or platforms that they choose to

be on. Okay, but I'm just curious, was there a just a little insight into the negotiation, because you know, people may be listening and thinking, gee, you know, I have a product I'd like to figure out how to get included in the Alexa artificial intelligence world. What were those conversations like, what were some of the concerns and what were some of the challenges. Well, for us, integration

as a challenge. We want our franchise operators when an order comes through any digital channel to look the same, feel the same. We don't want them to care where it came from. And so integrating that into our point of sale where at the restaurant they have a consistent process, was really key to us unleashing all of these platforms. And is the data that is put together and and stored about the customer? I mean, is that data the thing can be used for ordering U you know, ordering

and as well as supply chain operation. That's right, there's a lot that we can learn from our customers um and understand more of their behavior so that we can be more relevant to them. All right, Charlie, the menu at the wing stop. I understand that many analysts say the fact that it's simple is positive for the company. Can you speak to that. I think that's a testament to any great restaurant concept is to keep it simple, especially in today's focused environment where you have menus that

are focused on certain products. That's what we love about Wingstop. We have chicken wings, fries, and sides that makes up what we sell. Since our founding in we started with eight flavors and added three over the years. We we really innovate, as Stacy talked about, through technology more so than we do through flavors and products, and we think that's the way restaurants are gonna be well positioned into the future. You've also got an initiative outside the United

States franchising there. Tell us about that. Yeah, we operate in nine countries around the world today with signed agreements for thirteen total countries, a little over one hundred restaurants and growing very rapidly. We believe that this will position this brand to be a top ten global brand ultimately one day in the future. Because chicken and chicken wings are the most consumed protein all around the world. What about the cost of the prices, They're pretty comparable now,

they're pretty comparable. Last year was a tough year in the US for chicken wings, the commodity spiked, but outside the US very similar economics to what we see here. Are we going to get kiosks in more and more

Wingstop restaurant location? Stacy, Quite possible. We would love to um expedite and automate the pickup experience, so along with Chios, we could envision a day where you order digitally, You get a message sent to you that your order is ready, and you pick it up from a locker, get a code you scan in, you lock our opens, you take your food and go. So we'd like to continue that digital experience inside the restaurant. Thanks very much for being

with us. Stacy Peterson is a chief experience officer and Charlie Morrison is the chairman and the chief executive of Wingstop Oil. Oil prices down by about a half a percent right now on the NI Max w t I trades at sixty four dollars and thirteen cents of barrel. You're to tell us more about the world of energy. Is Javier Blass, our chief energy correspondent for Bloomberg Intelligence, and he joins us from London, and you can follow Javier on Twitter at Javier Blass two. All right, Javier

Blast too. Before we get to oil, I just want you to maybe speak a little bit about a photo that, courtesy of your handiwork, I was able to see on Twitter having to do with Davos and the crowd that was looking to get into the main hall where President Donald Trump eventually gave his speech. Can you just tell me a little bit about that. I was hoping that

you have forgotten about it, not at all. I thought that was really something because the crush of people to get in, as you described it, I think is sort of like a rock concert. Yeah, it was about an hour before President Trump was delivering in this speech that the word gonna before in double Switzerland. And I have been in many doubles meetings, and I have never seen that lobby area in front of the Congress Hall where

all the biggest speeches happened. Uh so pack an hour before I speech, and I have seen people like Macron Mercal, you know, you don't see that. And and it kind of felt almost like a few year backs, as would say a couple of decades back, being a teenager and going to a rock concert, and you know, all the teenagers just being uh together, crashing into the doors. And so I tweeted that, you know, it was quite extraordinary and I felt like um teenagers going into a concert.

But the main difference is were CEOs and billionaires sort of the most powerful men and woman on the planet in the in the world of business. I'm fine, and so that was quite something. And to my surprise, I was actually sleeping overnight the President trauma. I supposed it was on Air Force one. So the tweets somehow and retweeted, and then I wake up with about twenty five notifications on my Twitter timeline. To my shock, Well, all right, so that that you become a sort of a Twitter

poster a child. You know, every utterance is going to be picked over. So be careful here when we talk about energy. And maybe we can kind of link this to a President Arnold Trump, because one of his h signature, uh sort of perspectives is to allow more drilling in the Arctic National Wildlife Refuge, to push more drilling off the coast of the United States, both the East and the West coast. And also he's been a big cheerleader for domestic oil production. What is the change in US

oil production doing to global investments? What what we have seen is the US production almost at ten million bars a day. That's the highest since nineteen seventy. Actually, US production is just within a whisker of that level. It was put today by the Energy Information Administration, that's the statistical arm of the Department of Energy at nine point nine two million bars a day. So it's just gonna be ten million bars a day within the next two or three weeks. And and that is what is being

UH distrolled by President Trump of Energy Dominance Act. Only President Tim probably has done very little for for achieving these ten million barrels a day. The stay is deregulating the industry and is lower in taxes, but I would not have an impact until probably a few months. For now, with the taxation, probably we can see more investment, and certainly the the regulation of the sector and allowing UM drilling offshore of the United States. That's gonna takes if

not DKs to increase production of the country. But certainly we have seen a big increase in UH production in the United States, and that's one of the reasons that despite all the efforts but opened by cutting production, we still see oil prices really struggling to break new ground.

And we saw Bram prices that the European benchmark jumping about seventy dollars, but that was really short lived because people are starting to pay attention that while Opak is cutting production on sale, producers in Texas and elsewhere in the United States are really ramping output. All right, So what does that tell you about a forecast? Is it just difficult to predict what I mean? I'm it's always difficult to predict with the future price of anything's gonna be.

But we're gonna get results from Royal Dutch Shell tomorrow and we'll also get results from Chevron and Exxon for the remainder of the week. What can you tell us about the future oil prices? Well, I think that we're going to have very good results for for the three companies that you mentioned. We have Royal Dutch Shell reporting before the opening of the market tomorrow morning here in London, and we have Excellent and Chevron doing likewise before the

opening of the market in New York on Friday. Uh Q force would be a good month for all the oil companies. Prices where up. We have good production number from everyone, so I'm expecting that probably where on a quarterly basis, probably we're gonna see the strongest quarter since at least meet two thousand and fourteen in terms of

oil prices. For two thousand and eighteen, clearly we're seeing a big push towards the upside from opeque production cuts led by Saudi Arabia with his cutting even more than he said that he was gonna do. But at the same time, we're gonna have a ceiling from the ushil producers which they're gonna really pump a lot more oil that probably the market was expecting only two or three or four months ago. So probably what we're gonna see prices in a in a very narrow range, probably with

a sixty dollar floor because of open production cards. But any any time that we go about seventy maybe seventy five dollars for brain, we're gonna see a huge incentive for US producer producers to to to pump more, and uncertainly the price will be capped there. Thank you very much for being with us. Javier Blast is our chief

energy correspondent for Bloomberg Intelligence. You can follow him on Twitter at Javier Blast two, and you can also check out his photographs from his attendance at the Dollar's World Economic form last week. Interesting photographs and some images of the excitement that was generated by the arrival and the speech of President Donald Trump. Well, if you're thinking about purchasing an automobile or a vehicle, chances are you should

place a call to Scott Painter. He is the founder of Fair, but he's also the former founder of True Car, and he has a history in the automobile industry as a disruptor, and he joins us now from Santa Monica. Scott, thank you very much for being with us. Maybe just give people a little bit of your the short bio, because you've been doing this since you were in school. Well, I've definitely been focused on trying to improve the way that we all buy in Shop four and ultimately owned cars.

So what we've created, it Fair, is an app that represents a totally new way to get a car. It's digital, it's all on your phone, it's completely flexible, and that customers can actually see the car they want and walk away without a commitment to a long term purchase decision or ownership contract, and it's designed to be simple. What we offer is an all in monthly payment that provides the car a warranty, roadside assistance, standard maintenance, and we

even now offer month to month auto insurance. So it's designed to be sort of like an iTunes account for your car. Is it similar to a long term rental or even a short term rental for an automobile? Yeah, it's not a rental agreement, it's not a lease. It was created with a deep understanding of how both work. It is an entirely new type of contract. It's really um.

It represents a new way to get access to mobility. Um. It's clear that modern customers want simplicity, savings and flexibility, alright, But having having that in mind, what can you walk us through what exactly happens? Because you mentioned that are you've got an app on your phone you'd like to drive from where you are a Santa Monica. I don't know to uh, San Diego? What happens when you pick

up your phone? Sure, the way that the app works is as soon as you download the app, it does ask you to scan your driver's license because you're going to be driving our vehicle and you need to be a registered legal driver, and so we're looking to actually validate your driver's license. We're also looking for ability to repay, So unlike a car loan or at lease where you actually have to have good credit or a long payment history.

As long as we can detect that you have the ability to repay or to afford the car, we go ahead and digitally link you either to your bank account or a credit card, and then you begin to subscribe effectively to that car. And so you're shopping from cars that are all for sale at local dealers, and we're simply a better way to get that car. And we're an alternative to traditional financing in the sense that we are not lend you money. We're just giving you access

to the car that you want. Once you select the vehicle inside the app, you can either have that vehicle brought to you or you can pick it up at your local dealership. But the entire process happens digitally in the app. In fact, you even signed the agreement with your finger. There's no negotiating with a dealer or no back and forth or confrontation. We effectively buy the car and simultaneously provided to you through that new agreement. What is what is your venture with Uber? How is that

tied together? Well, what we're announcing today is that we have completed the acquisition of Uber's exchange leasing portfolio and entered into an exclusive partnership with Uber on a national basis. And it turns out that Uber drivers are just like modern consumers. They also want the same simplicity, savings and flexibility, and so we provide Uber the technology so that if you're an Uber driver and you download the Uber app and you indicate that you don't have a vehicle, that's

when you'll be introduced to Fair going forward. But Uber has a community of drivers that they have been supporting for the last two or three years with a leasing program that allows drivers to get into these vehicles, and we have acquired that entire business from Uber and we're now their go forward partner to provide those drivers with

that flexible option. And it really is about an extension of their commitment to their driver community, and it allows Uber to be focused on its core competency, which is growing ridesharing, and it allows Fair and the expert on our team to focus on our core competency, which is really providing these kind of flexible ownership options through a totally digital platform. Scott, how much does this cost? Well? Traditionally, Uber drivers today are either renting or leasing vehicles. This

represents about a fifty savings over a traditional rental. Now that's if you're if you're an uber driver. Well that whether you're an Uber driver renting a car, or whether you're a consumer renting a car. Okay, all right, I just wanted to make it make that clear. So for example, let's say you wanted to drive from Santa Santa Monica down to San Diego. What does it cost to actually complete this transaction just quickly? Well, so our cars are

really for longer term use. So we're really building the product so that consumers can keep the car for as long or as little bit. Okay, let's say you wanted it four months. Just give me a figure. Yeah, so it would be about half the cost of a rental. So traditionally, if you were going to rent a car for a month that you were going to use for right sharing, there might be a hundred and fifty dollars a week, so maybe four a month. This is going to be half of that. And we got to leave

it there. We got to leave it there. Scott Painter, thank you very much. He is the founder of Fair. They're based in Santa Monica. Well, coming up today, we've got the results from Facebook as well as Microsoft. Tomorrow will be getting earnings from Apple and Alphabet as well as Amazon. And here to help us understand what we can expect is Michael Scanlon. He his portfolio manager for

Manu Life Asset Management. He's based in Boston, home to Bloomberg one oh six one Boston, Newburyport and thirty in Metro West and the South Shore. Michael, great to have you with us. Let's begin with Facebook if we can. This is a company that at least an annual terms, is doing thirty six billion in revenue and putting fifteen billion dollars in its pocket. That's the net income. Tell us what you look for from Facebook? Well, good morning

and thanks for having me. I think with Facebook, you know expectations that results are going to be strong again tonight. I think probably more of the focus will actually be on the commentary that's given on the call, just in light of some of the announcements they made a couple of weeks back in terms of de emphasizing third party

in more emphasizing people's personal network of posts. Well, this will be what to get them to stay more frequently is to have a longer period of time that they would stay on Facebook, and also to blunt the criticism having to do with news and information that is perhaps not the real or is not backed by anyone who actually knows anything about the topics they're they're posting about exactly. Yeah.

So you know, the argument here is if if you're in the bull camp on Facebook, which we own the stock and the John Hancock Balance Fund, is that the any decline in terms of just adload that you're seeing on there will be offset by positive pricing. And you know, if they're reducing the amount of space that they have available to advertisers, that ultimately the price of that advertising should increase in opted any decline in terms of growth

and adlade. Okay, alright, so that's Facebook. Turn your attention now to Microsoft. They were talking about a one billion dollar revenue company. They do twenty six billion dollars in profit. What are you looking for with Microsoft? With Microsoft, the focus continues to be on this transition, which you know really gains steam. One. Sofia Nadela came into power Microsoft, taking over the ce role CEO role from Steve Balmer uh in that you know, it's this whole transition of

the cloud. Right. Their commercial cloud business is outperformed every metric that the company has laid out that the analyst community was expecting, and it continues to be on a really strong growth trajectory. So I think people will be continued to focus on what the revenue growth trajectory looks like there and just with a margin profile and the commercial cloud business looks like. Do you think that there will be any interest in an increase in the dividend.

The dividend now is about one Microsoft, so not as much focused on the dividend, you know, with this tax reform package that we're getting in, obviously, Microsoft and a lot of the other big cap tech names which you mentioned in the introduction are primary beneficiaries here where it's going to free up a lot of cash that they

can put to work. So with Microsoft, there is some expectation that they will increase the repurchase authorization or the regular amount of buy back that they've been doing, which will will be a nice incremental tail one for the stock. All right, Well, the shares of Microsoft right now, they're up at dollar four. The stock has gained nearly ten so far this year, all right, look forward to tomorrow. Would you like to begin with Apple, the iPhone maker,

because they'll be reporting their results tomorrow. So surprisingly, you know, the last handful of weeks here, there have been some negative supply chain data points that have been coming out in commentaries around iPhone X builds. Apple's stock is underperformed tech more recently. You know, it continues to be very attractively valued. They they're obviously investing a lot with the data that with the release they put out after the

tax reform package. But from a total return perspective, you know, you're getting a very nice buy back in thirty five plus billion a year plus the dividends, so you're kind of getting a six percent type capital return before they grow their net income or the multiple gets rerated higher. So we still like Apple in the portfolio. Um, and you know, again the commentary will be interesting with some of these negative data points. Indeed, Apple shares down about

one percent in the month of January. And just to note, here's the scale, right, two hundred and twenty nine billion dollars in sales, and they may have a profit of forty eight billion, and they sell hardware. That's a kind of amazing as the Yeah, and not only that, you look at the stock price or so the stocks at about a hundred and sixty six dollars on a net cash basis, they have just under thirty dollars per share

and net cash. So this stock trades at a you know, four point five point discount to the S and P five hundred uh and even more than that if you were to adjust for the cash, which you know, more and more that should be coming back to shareholders. Why do you think that it trades at this discount? I mean, is it always because there's the footnote or the asterisk that says, you know, they rely so much on the iPhone and YadA, YadA, YadA. It's exactly that. And there's

cycles within the iPhone. This iPhone XT cycle is expected to be a very big refresh cycle. Uh So there's a bit more not maybe boom bust isn't it the right description for it. But from year to year, there is a bit of a bump and drop in earnings, uh at the net income level, just because of the units that are sold. I mean, most people refresh their phone and kind of a two year basis. Uh. Such, just a little bit of an up and down, which you know results on a lower multiple. Okay, let's turn

your attention to Alphabet. Now, Alphabet, of course the parent company of Google, talking about a hundred billion dollar a company that has about a quarter of that as profit, twenty three billion dollars worth of profit on an annual basis. What are you going to look for from Google? So Google continues to be our largest position in the portfolio. You know, when you look at this company, there just seems to be be a very clear runway to north

of FX neutral revenue growth going forward. Uh, there's still you know, broadly speaking, a tremendous amount of global advertising that is still in traditional forms be a TV print that needs to come digital, and you know, name like Google is going to be a primary beneficiary there. Obviously there'll be some others as well. Um, but for Google to continue to grow on this north of a hundred

billion dollar base of revenues, it's just extraordinary. And when you look at the multiple, it doesn't trade at all that much of a premium to the market, especially when you adjust for the nearly hundred and forty dollars a share that they have in cash. All Right, I'll give you a chance now for Amazon. Amazon a hundred and sixty one billion dollars a year in revenue, But they're

not interested in profits, are they. Uh? That's always the knock on the stock, right is that you know, Amazon doesn't throw a whole lot to the bottom line with this company when you look at it longer term and you discount the potential cash flow, and if they ever took their foot off the gas in terms of the investments, there would be an extraordinary flow through. Now you're hard pressed the fault them for the investments that they've made

because they have generated such extraordinary revenue growth. And I think you're going to see that in this holiday season. You know, they put out a release talking about prime membership and new prime offerings that were adopted during the holiday season, and all points everything points to a very very robust holiday season for them, and then the AWS business continues to be in a nice trajectory and generate

slots of cash flow for them. Thanks very much, Michael Scanlon, as portfolio manager, Manu Life Asset Management, joining us from Boston. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramowits one before the podcast. You can always catch us worldwide on Blue or Radio m