Wingstop Drops Olo In Favor Of $50M Inhouse Tech
Diving work
- Wingstop, which accounts for 3% of Olo's revenue and 1,800 of the 78,000 locations using its technology, will divest Olo's platform in favor of its own technology when the deal between the two closes at the end of the first fiscal quarter of 2024. I'm calling on quarterly earnings. earlier this week.
- Last week, Wingstop CEO Michael Skiworth said during Wingstop's third-quarter earnings call that the brand has "built the most advanced technology platform in our technology stack" and will launch it in the second quarter of 2024.
- Olo said the move was unusual and that he typically sees brands moving from their own technology solutions to his platform.
Diving view:
Wingstop began investing $50 million into its platform three years ago, Skiworth said. Since Olo unveiled contracts with brands that typically run for three years, its would-be Wingstop has spent its entire contract cycle building its tech product as it prepares to leave the Olo platform.
Olo CEO Noah Glass said Wingstop "has the right strategy for every brand to focus on going 100% digital, collecting and using data to target traffic to increase conversion and frequency." : But we believe that this is the wrong tactic when creating software. It is very expensive."
According to Skworth, Wingstop's new platform serves a dual purpose: supporting the brand's digital business, which now has $2 billion in sales, and "creating a high level of hyper-personalization that we believe will improve conversion retention and ultimately frequency."
"Olo was unaware that other brands were taking similar steps, and Glass said Wingstop's investment in its technology pales in comparison to the $90 million Olo spends to maintain and improve its technology platform." an opinion is not even a judgment, it’s just mathematics.”
"We're not removing any corporate brand from our target market, and we won't be satisfied until we get 100% of their Olo customers," Glass said.
From an operational perspective, Skipworth called the proprietary technology solution a win-win for franchisees as it will “provide more information and transparency to the business within the four walls of the restaurants.”
According to Wingstop's 2023 franchise disclosure document, store-operating franchisees pay between $15,581 and $23,655 for points of sale, back-office software, equipment and related products. The cost of maintaining this technology and its licenses ranges from $5,000 to $6,000 per year. However, it is unclear how much of this value belongs to Olori.
