WINGSTOP INC (WING)

Wingstop Inc. is the largest fast casual chicken wings-focused restaurant chain in the world, with more than 2,550 locations worldwide. The first Wingstop opened in Garland, Texas in 1994, and Wingstop began franchising restaurants in 1997. Wingstop is primarily a franchisor, with approximately 98% of Wingstop’s restaurants currently owned and operated by independent franchisees.

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Financial Snapshot

Income Statement (*values displayed in millions)

How do they make money?

• Franchise Royalties & Fees: WING generates revenue from royalties and franchise fees from franchisees of its restaurant. Each franchisee is required to pay Wingstop 6% of its gross sales net of discounts. Also, franchisees must pay a franchise fee of $20,000 for each restaurant opened. Lastly, each restaurant contributes 5.3% of gross sales net of discounts to the Ad Fund to fund national marketing and advertising campaigns.

• Company-Owned Restaurants: Although most locations are franchised, Wingstop operates some company-owned restaurants that generate direct revenue from food sales.

Good Time to Buy?

At the time of writing, WING is down 49% since it’s September 2024 52 Week High. But its financials tell a completely different story. Both its revenue and net income has been consistently increasing. From 2022 to 2023, its revenue increased 28% and from 2023 to 2024, its revenue increased 36%. For net income, from 2022 to 2023, its income increased 32% and from 2023 to 2024 their income increased 54%. That is a very impressive growth rate! The franchising business model allows Wingstop to use its resources efficiently.

Wingstop doesn’t have to invest in building and operating each new location. Instead, franchisees cover these costs. And Wingstop gets a steady revenue stream from royalties and fees. The cash just keeps rolling in.

A 49% discount can not be ignored. Add to your watchlist and follow along.

FYI

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