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FDD Talk 2015: The Wingstop Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on October 12, 2015

in Chicken Wings Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings

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Wingstop Franchise Photo by Rogansan

In this FDD Talk 2015 post, you’ll learn the following:

  • Section I – Background information on the Wingstop franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Wingstop franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Wingstop’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average annual net sales information for (1) all Wingstop Restaurants (both franchised and company-owned), (2) separately for all franchised Wingstop Restaurants, and (3) separately for all company-owned Wingstop Restaurants, in operation in the United States during the entire 2014 Fiscal Year

Section I – Background Information

Wingstop Keeps It Simple

As it continues to deliver a hip atmosphere for its target audience, 18- to 34-year-old millennials, Wingstop is still keeping it simple. The chain, which has a retro aviation theme, puts its primary focus on cooked-to-order chicken, keeping wings and chicken tenders as the star attraction. Ninety percent of sales come from chicken and sides.

IPO: 61 Percent Boost

Wingstop went public on June 12, 2015, with its initial public offering price of $19 per share boosted from the original proposed price of $12-14. Shares opened at $30.50 and jumped as high as $31.99 on the first day of trading before closing at $30.59, representing a 61 percent boost from its IPO price and capping off a highly successful launch. The stock has performed well since, despite a dip in August.

The chain has enjoyed increases in same-store sales of 36.2 percent in the past three years (13.8 percent in 2012, 9.9 percent in 2013 and 12.5 percent in 2014). Wingstop has had 11 straight years of positive same-store sales increases.

Sauces Are Central

Wingstop’s hand-sauced and tossed wings, boneless wings and crispy chicken tenders are available in 11 bold sauces: Original Hot, as well as Cajun, Atomic, Mild, Teriyaki, Lemon Pepper, Hawaiian, Garlic Parmesan, Hickory Smoked BBQ, Louisiana Rub and Mango Habanero.

The chain, which says it’s in the flavor business rather than the wing business, also offers hand-cut seasoned fries. While Wingstop sticks to the basics with its wings offering, the sides menu is fairly expansive. In addition to fries, customers can order baked beans, potato salad, coleslaw, cheese fries, veggie sticks and fresh-baked rolls, as well as dips, hot cheddar cheese sauce and wing flavor on the side.

800th Restaurant Opens in 2015

The chain, based in Dallas, Texas, was founded in 1994 in Garland, Texas, by Antonio Swad, who also founded Pizza Patrol. Wingstop started franchising in 1997, and Swad sold the chain to Gemini Investors in 2003 to focus on his pizza chain. Wingstop has been owned by Roark Capital Group since 2010.

The 800th Wingstop restaurant opened in September 2015 in Hillsborough, New Jersey, and the chain plans to add 120-130 new franchise locations by the end of 2015. In addition to the United States, Wingstop restaurants are located in Mexico, Russia, Singapore, the Philippines, Indonesia, and the United Arab Emirates.

Troy Aikman, NFL Hall of Famer and a three-time Super Bowl champion, is the national spokesman for Wingstop.

CEO Eyes 2,500 U.S. Locations

CEO Charlie Morrison says Wingstop has aggressive expansion plans and is eyeing 2,500 locations in the U.S. alone. Morrison told The Wall Street Journal in June 2015 that the chain’s simple approach appeals to younger people who appreciate the basic menu and quick service (the restaurants have seating, but 75 percent of business is take-out).

He also noted that while Wingstop will continue to increase marketing efforts in print, television and digital formats, social media will be the primary means to establish and nurture connections with the target audience.

No. 70 on Franchise 500 List

Wingstop was ranked No. 70 in Entrepreneur’s 2015 Franchise 500 list, up from No. 77 in 2014. The chain also reached No. 36 in Entrepreneur’s 2015 Fastest-Growing Franchises and No. 107 in Entrepreneur’s 2015 Top Global Franchises, up from No. 47 and No. 108 respectively.

Section II – Estimated Costs

  • Please click here for detailed estimates of Wingstop franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis

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