Dive Brief:

• Wingstop will open its first Manhattan ghost kitchen in a few weeks, Wingstop CEO Charles Morrison said on Thursday during an earnings call with investors. 
• The company has identified 25 locations in Manhattan for its restaurants, which will be a combination of traditional units and ghost kitchens, Morrison said. The company plans to open those units as fast as possible, he said.
• Wingstop currently has 15 ghost kitchens around the world, and Morrison said he expects this format to play a key role in the company's growth. The investment in ghost kitchens is also substantially lower than opening a new restaurant, he said.

Dive Insight:

While Wingstop has locations in Brooklyn, the Bronx, Queens and other New York City markets, it hadn't yet ventured into Manhattan, particularly because of the high real estate prices, Morrison said. But with costs coming down, Morrison said there are now opportunities to enter this market. 

"We also, most importantly, wanted to make sure that we had a good strategy and partnership opportunity for ghost kitchen expansion, as well as delivery," he said. "This market obviously has extraordinary density. It's a delivery- focused market that makes sense for us."

Opening ghost kitchens will bolster the company's digital sales mix, which made up nearly 65% of sales during Q2. Digital is currently expected to exceed $1.5 billion annually, Morrison said. Delivery has also grown to 27% of sales in Q2, compared to hovering in the 20% range in Q1, he said. Ghost kitchens can also provide a way to boost margins.

"While our brand partners enjoy best in class sales to investment ratios for traditional Wingstop locations, we think ghost kitchens have ratios at three to four times stronger than our traditional locations," Morrison said. 

The company will be using the same playbook that it used in London, where it also has a mix of ghost kitchens and street side locations, Morrison said, adding that there is also potential in Boston, Philadelphia, San Francisco and densely populated areas of Los Angeles. It already has a ghost kitchen open in San Francisco and in North Hollywood in California, he said. 

"We like the balance of having some street side and these ghost kitchens complementing each other and creating some brand presence," Morrison said.

While ghost kitchens will be a big part of its strategy to reach 6,000 units globally, Morrison said the company didn't know what the total mix would be yet. Individual markets like Manhattan could have a 60-40 split between retail sites and ghost kitchens, but it is too early to give an exact mix, he said. 

"There are going to be a lot of ghost kitchens in that 6,000, no doubt about it," he said.