FDD Talk 2019: Wingstop Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk 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 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Wingstop franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Wingstop outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Wingstop’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average, median, highest, and lowest annual net sales information for (1) all Wingstop Restaurants (both franchised and affiliate-owned), (2) separately for all franchised Wingstop Restaurants, and (3) separately for all affiliate-owned Wingstop Restaurants, in operation in the United States during the entire 2018 Fiscal Year

Section I – Background Information

21 Things You Need to Know About the Wingstop Franchise

Launches New Brand Platform

1.  In late February 2019, Wingstop launched a new brand platform and creative campaign called Where Flavor Gets Its Wings. Additionally, Wingstop kicked off the Flavor World tour, heading across the U.S. giving out tens of thousands of freshly-made, free wings, with fun activities including a chance for fans to step into Wingstop’s flavor world by starring in a personal virtual ad or a chance to score free wings for a year.

2.  Wingstop is bringing to life its vision of giving people the freedom to explore flavor without boundaries by launching Where Flavor Gets Its Wings. This new brand platform and creative campaign is part of Wingstop’s largest national advertising effort, featuring spots that showcase flavor favorites. As Wingstop moves toward its vision of becoming a top 10 global restaurant brand, this campaign celebrates the core fans who have built the brand over the past 25 years while inviting new audiences into Wingstop’s flavor world.

3.  Maurice Cooper, Wingstop’s chief marketing officer, said, “We’re embarking on an amazing journey to excite people so they can overcome the flavor indifference that keeps them stuck with bland and predictable fast food choices. Where Flavor Gets Its Wings is the first campaign we’ve launched that speaks to any eating occasion. Our longtime fans of Wingstop and the masses demanded a better flavor experience and will agree that Wingstop fits every lifestyle moment that food and flavor enhances.”

4.  Wingstop is hitting the road with its food trucks to sample its flavors at iconic places and moments along the Flavor World tour. Throughout this tour, 11 wing-eating fans around the country will discover a green ticket for free wings for a year inside their wing boats – one fan for each of Wingstop’s 11 iconic flavors.

5.  The Flavor World tour will also offer a chance for guests to star in their own virtual Wingstop ad. Through a custom VR experience, guests can immerse themselves inside one of Wingstop’s Giant Bags or green screens.

6.  The Flavor World tour’s first stop was at LA Live, followed by the South Beach Wine & Food Festival (Feb. 22 to 24, Miami). Fans were able to follow Wingstop on Instagram and Twitter to find out where the rest of the Flavor World tour stops would be throughout March and April.

7.  Where Flavor Gets Its Wings is a fully-integrated brand effort, developed by Wingstop’s new lead creative agency Leo Burnett. The campaign is also part of Wingstop’s expanding paid media portfolio, amplified through new relationships with Discovery Inc. and Scripps networks, as well as advertising across prime time, Spanish-language, and sports programming, including NBA on ESPN, NBA on TNT, Fox, and others. This is just the beginning of an approach that reaches the brand’s core and new audiences.

8.  In addition to Wingstop’s new creative vision and consumer engagement moments, the brand is transforming the ordering experience for guests. Wingstop recently introduced a revamped Wingstop.com, Wingstop app, and personalization tools like the new Wing Calculator, increasing usability and speed to place a Wingstop order.

9.  The brand is also expanding delivery to more markets nationwide. Wingstop has already launched delivery in Los Angeles and Houston, and the brand plans to roll out delivery to 80 percent of its restaurants by the end of this year.

Celebrates 25th Anniversary with 25 Days of Flavor

10.  At the beginning of July 2019, Wingstop celebrated its 25th anniversary with the launch of 25 Days of Flavor (for the first time ever) – a limited-time expanded menu featuring 25 unique flavor options and Wingstop’s exclusive Sprite Triple Chillin’ Coca-Cola Freestyle flavor. The celebration led up to National Chicken Wing Day on July 29, when Wingstop gave fans five free wings with any wing purchase, plus donated $1 per transaction, up to $100,000, back to local communities through Wingstop Charities.

11.  Maurice Cooper, Wingstop’s chief growth and experience officer, said, “For 25 years, Wingstop has served the world flavor with passion and an obsessive commitment to craft, authenticity, and quality. 25 Days of Flavor is the biggest flavor and product launch in our history, offering variety like never before. This celebration is how we honor our dedicated and loyal fans, by giving them the craveable reward they love most: that signature Wingstop flavor.”

12.  During the 25-day celebration, Wingstop built on its current flavor offerings, including limited-time flavors Ancho Honey Glaze and Harissa Lemon Pepper, by introducing six new wing flavors, two new dips, one new side, and an exclusive beverage offering – bringing their total menu to 25 unique flavors in honor of 25 years.

13.  The limited-time flavor remixes were inspired by Wingstop’s fans and their creativity and love of discovering bold new experiences. The limited-time flavors included:

• Lemon Garlic: The Romeo and Juliet of the flavor world – often kept apart, but meant to be together. Garlic Parmesan wings have been united with iconic Lemon Pepper, kissed with buttery goodness.

• Dragon’s Breath: This flavorful firestorm cleverly combines Spicy Korean Q with the combustible flavor of Atomic to barrage the senses with crushed red pepper, Chile de árbol, habanero, and cayenne.

• Bayou BBQ: Inspired by the flavor-mixing voodoo of New Orleans wing lovers, this flavor combines Hickory Smoked BBQ with a spike of Cajun seasoning.

• Mango Volcano: A blend of Mango Habanero’s signature fruity spice with sweet Hawaiian will send flavor cravers’ taste buds to a heated tropical island.

• Hot Lemon: This remix of the classics adds the kick of Original Hot to the beloved Lemon Pepper seasoning, creating a combo that’s equal parts zesty and spicy.

• Atomic BBQ: Hickory Smoked BBQ cranked up to eleven with a generous dose of Atomic makes for some truly explosive flavor.

• New ranch dip, fries, and drink were also available – Harissa Ranch dip, Atomic Ranch dip, and Lemon Parmesan Fries; Exclusive Coca-Cola Freestyle flavor, Sprite Triple Chillin’.

Moves Corporate Headquarters to Addison, Texas

14.  Near the end of June 2019, Wingstop announced that it had signed an agreement to acquire a 78,000 square foot, state-of-the-art office building in Addison, Texas (just north of Dallas), where it plans to relocate its corporate headquarters. Completed in 2010, this thoughtfully-designed facility offers an attractive layout with increased open areas, as well as designated space for innovation and kitchen testing to support Wingstop’s next phase of growth. The price of the building was $18.3 million.

15.  Charlie Morrison, Wingstop’s chairman and CEO, said, “We are at a pivotal moment in Wingstop’s path to become a Top 10 global restaurant brand and believe this new corporate headquarters will support our strategic growth priorities by creating an environment for innovation and collaboration. As we continue to invest in initiatives that position us for long-term success, attracting and retaining top talent is key to ensure we scale the business and continue to deliver best-in-class results. Our current facility does not provide the expansion capacity for our long-term growth. We believe that our investment in this facility will generate meaningful returns and create value for our shareholders now and over the long-term.”

16.  The office is a three-story, modern corporate office building that will be occupied solely by Wingstop, allowing for increased flexibility and scalability as compared to the company’s current multi-tenant building format. The design consists of a combination of open office areas, common spaces, conference rooms, training facilities, and a fitness center. The new facility will also house Wingstop’s global test kitchen, innovation center, and a mock Wingstop restaurant.

17.  Addison, Texas is conveniently located just north of Dallas with access to three major airports, a network of highways and tollways, as well as attractive residential neighborhoods in the surrounding areas. Wingstop’s new corporate headquarters will be less than four miles from the current headquarters building, ensuring minimal disruption for Wingstop employees and partners following the move.

Company History

18.  Wingstop was founded in 1994 by Antonio Swad and Bernadette Fiaschetti in Garland, Texas. Swad and Fiaschetti had already opened another franchise, Pizza Patrón, in 1986 and wanted to expand to wings. From the beginning, Swad and Fiaschetti wanted to offer a wide variety of wing flavors at an affordable price using high-quality ingredients.

19.  In 1997, Swad and Fiaschetti began franchising the Wingstop concept and by the early 2000s, they had sold over a billion wings. A few years later, in 2003, Wingstop was acquired by Gemini Investors, which then sold the company to Roark Capital Group in 2010.

20.  Over the next few years, Wingstop continued to grow across the United States and internationally. Today, there are Wingstop restaurants in the United States, Mexico, Colombia, Panama, Singapore, Indonesia, Malaysia, United Kingdom, and the United Arab Emirates.

Entrepreneur’s Franchise 500

21.  Wingstop did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Wingstop franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Wingstop’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  767
• Outlets at the End of the Year:  901
• Net Change:  +134

2017

• Outlets at the Start of the Year:  901
• Outlets at the End of the Year:  1,004
• Net Change:  +103

2018

• Outlets at the Start of the Year:  1,004
• Outlets at the End of the Year:  1,095
• Net Change:  +91

Company-Owned

2016

• Outlets at the Start of the Year:  19
• Outlets at the End of the Year:  21
• Net Change:  +2

2017

• Outlets at the Start of the Year:  21
• Outlets at the End of the Year:  23
• Net Change:  +2

2018

• Outlets at the Start of the Year:  23
• Outlets at the End of the Year:  29
• Net Change:  +6

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• This financial performance representation contains actual, historical average, median, and high/low annual net sales information during a 52-week fiscal period (from December 31, 2017, through December 29, 2018) for (1) all Wingstop Restaurants (both franchised and affiliate-owned), (2) separately for all franchised Wingstop Restaurants, and (3) separately for all affiliate-owned Wingstop Restaurants, that were open for business in the United States during the entire 52-week fiscal year (from December 31, 2017, through December 29, 2018).

• Included in this Item 19 are the results for all Wingstop Restaurants in the system in the United States that were open for operation during the entire Measured Period from December 31, 2017, through December 29, 2018 (the “2018 Fiscal Year”), including both franchised and affiliate-owned Restaurants.

• The average for the Measured Period includes all Restaurants that were open during the entire 2018 Fiscal Year, even if their ownership changed during that time period.

• Excluded from this Item 19 are the results of 105 franchised Restaurants that opened during the Measured Period and therefore were not open for operation during the entire Measured Period, 12 franchised Restaurants that were temporarily closed for multiple days in a row during the Measured Period, and 8 franchised Restaurants that closed during the Measured Period.

Franchised and Company-Owned Wingstop Restaurants