Entrepreneurs setting up a Wingstop franchise will find themselves in good company. Rapper Rick Ross owns more than 25 Wingstop franchises, has repeatedly helped publicize the company, and even gave his son a Wingstop outlet for his 16th birthday. But even if you’re not planning on laying down some beats between serving up tender chicken, there’s a lot to be said for a Wingstop franchise.
How much is a Wingstop franchise?
Setting up your first Wingstop franchise costs between $347,600 and $759,100, not including the costs of the property and the legal fees associated with finding a place (Item 7, FDD 2021). This includes initial fees to the company, furniture and equipment, initial inventory, and opening advertising.
Fewer of these costs go through Wingstop than with some other large brands. For example, furniture and opening inventory are acquired through approved independent suppliers, rather than via the parent company.
How much is the Wingstop franchise fee?
Franchising with Wingstop involves two initial fees. First, there’s a $10,000 development fee that you pay before starting to develop plans for the restaurant. Then there’s a $20,000 franchise fee when you sign the franchise agreement for a restaurant developed under the development agreement. Both fees are applied per restaurant, meaning that you effectively pay $30,000 in agreement fees for each restaurant you franchise (Item 6, FDD 2021).
Once the restaurant opens, franchisees pay 6% of gross sales to Wingstop in royalties. Under an incentive program introduced in 2020, it’s possible to have this fee reduced to 2% in the first year and 4% in the second, to help the restaurant get started. On top of royalties, restaurants pay 4% of gross sales into the company’s ad fund, and the company’s franchisees have the power to collectively vote for an increase in this fee. Both royalties and ad fees are paid weekly.
How much does a Wingstop franchise owner make?
The average Wingstop franchise made $1,470,516 in net revenues in 2020 (Item 19, FDD 2021), but this isn’t what you get to take home.
Because of the lack of information, it’s hard to work out a figure for profits. Looking at other chicken restaurants might give you an idea of expenses and profitability, and Franchise Chatter’s comparison tools can help you with this. Our Wingstop franchise review, available to premium subscribers, also digs into the details for a better comparison.
How to franchise a Wingstop?
Wingstop has a six-step process for franchise applicants. First, you will have to submit a request for consideration. If this is successful, you will be contacted by the company’s Franchise Development Team, who will discuss your qualifications. This leads to completing an application, which is evaluated by Wingstop, and if they think that you’re suitable then they will provide you a Franchise Disclosure Document. Applicants who get this far then attend a discovery day to learn more, at the end of which a development agreement can be issued and the process of finding a location and setting up the restaurant begins.
When assessing applicants, the company considers a number of factors. Your level of experience running restaurants, and in particular multi-unit operations, is important, as they want franchisees with the skills and experience to make the restaurants succeed. Your financial position is critical, as is your personal and financial reputation, which could affect the company’s image. On top of this, they look for a certain sort of personality: someone motivated and committed, who will fit with their culture and brand.
What are the pros and cons of a Wingstop franchise?
Wingstop is a relatively low-cost franchise to get started with. In return for the initial fees, you get all the advantages you would expect from any franchise, including training and support, a large combined national marketing budget, strong brand recognition, and a tested business model. Wingstop is a company that’s seeing good financial growth, which is a healthy sign for your restaurant’s potential. On a day-to-day level, a relatively simple menu makes the restaurants relatively easy to run.
From another perspective, that simple menu can be a downside, as it limits the number of customers the restaurant can appeal to. And while the initial franchise fees are relatively low, the ongoing royalty and marketing fees are relatively high, meaning that you’ll take less of the restaurant’s earnings home in profits.
Is Wingstop for you?
Wingstop is a growing brand with strong financials at the company level. A large marketing budget and the enthusiastically applied star power of Rick Ross keep it in the spotlight, boosting sales and expansion. If you want to be part of a brand that’s pushing hard for growth, but where the restaurant itself has simpler processes, and you’re willing to accept lower ongoing earnings in return for lower up-front fees, this could be for you.
If you’re not convinced, then there are plenty of other chicken franchises. Subscribe to Franchise Chatter to compare the pros and cons of Wingstop with other options that might better suit you.