Why Shake Shack, Wingstop ended 2023 on top

The past couple of years have been challenging ones for the dining industry as high food prices and economic headwinds led many consumers to cut back on unnecessary indulgences. Still, people can't eat at home all the time, and there's always demand for restaurants that serve up good food and a welcoming ambiance without breaking the bank.

So with Q4 2023 under our belts, we dove into the data to check in with two dining chains that are especially good at giving customers what they want: Shake Shack and Wingstop. How did they perform during the final quarter of 2023? And what lies ahead for them in the new year?

Leaving Dining in the Dust

Shake Shack, curiously named after an amusement park ride from '70s hit movie, "Grease," continues to impress. Following a robust third quarter, the gourmet burger joint with over 500 units maintained strong positive year-over-year visit growth throughout Q4 2023, finishing out the year with a remarkable 24.3% foot traffic jump in December 2023.

Wingstop, another darling of the fast casual industry, also ended 2023 with a bang. Whether celebrating the New York Knicks with a special lemon garlic flavor or jumping on the dry January bandwagon with its own "dry rub January", the popular chicken restaurant draws crowds by staying up-to-date with popular trends. And throughout Q4 2023, Wingstop saw positive visit growth ranging from 12.8% to 16.3%.

Shake Shack Shakes Things Up

The ongoing success of these two chains in a difficult overall environment shows that there's more than one way to win at the dining game. With limited-time offerings like White Truffle Burgers, and sandwiches that feature Kimchi slaw, Shake Shack's relatively upscale offerings have traditionally drawn affluent audiences. However, as the chain has continued to expand, its customer base has diversified — with the median household income of its captured market dropping by 8.6% over the past four years.

Over the same period, the share of ultra-wealthy families and educated urbanites in the restaurant's captured market declined, while the share of young professionals and urban low-income consumers increased. Wider audiences, of course, means broader appeal and more people getting addicted to Shake Shack's delicious offerings.

Wingstop: Dinner for the whole gang

Wingstop, for its part, has pursued a somewhat different strategy. Positioned as an affordable eatery straddling the space between fast food and fast casual, Wingstop draws less well-to-do consumers. Combining foot traffic data with demographics from STI's PopStats shows that the median HHI of Wingstop's captured market came in at $62.1K in Q4 2023, well below the nationwide baseline of $69.5K.

But despite targeting a demographic with less discretionary income, Wingstop has carved out a niche for itself as a to-go dining destination for people seeking the perfect place to sit down to a nice, big meal with the family. In Wingstop's four biggest markets – Texas, California, Florida and Illinois — the chain's trade areas featured more persons per household than the statewide averages in Q4 2023. And Wingstop's captured markets were also over-indexed for families with children –—showing that parents are particularly likely to visit the restaurant.

Key Takeaways

Though food prices have stabilized and consumer confidence has begun to recover, last year ended on a tough note for restaurants. But while the category as a whole has yet to fully regain its footing, chains like Shake Shack and Wingstop are finding success by leaning into evolving consumer demand.