FDD Talk: How Much Does a Wingstop Franchise Make (Average Revenues and/or Profits)?

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 2021 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 2021 FDD

• Section IV – Number of franchised and company-owned Wingstop outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Wingstop’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 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 2020 Fiscal Year

Section I – Background Information

20 Things You Need to Know About the Wingstop Franchise

Announces New Growth and Technology Structure, Appoints Digital Marketing Lead

1.  In mid-August 2021, Wingstop announced the appointment of Stacy Peterson as EVP, chief digital and technology officer and the promotion of Marisa Carona to SVP, chief growth officer and Stevie Benjamin to SVP of digital marketing. These changes support the significant investments Wingstop is making to drive one-to-one interactions with the more than 25 million guests in its first-party data platform and, with nearly 65% digital sales, support the brand’s drive to achieve its stated goal of 100% digital transactions.

2.  Additionally, this new structure allows the brand to further its transition from the traditional promotion-based marketing approach that is typically seen in the restaurant industry to a digital, platform-based strategy.

3.  Charlie Morrison, chairman and CEO of Wingstop, said, “As we continue making meaningful investments in our tech stack, we decided to take a page from the structure of many leading tech companies, which often house marketing and digital/IT functions together to supplement a ‘MarTech’ structure. With this, we’ll have two distinct agile and collaborative teams that focus on varying levels of communication to our guests. One which will lead ‘micro’ one-to-one communication, and one which will lead ‘macro’ one-to-many communication.”

4.  Peterson joined Wingstop in 2013 and is well-recognized as a leading technology executive in the restaurant industry. The expansion of her responsibilities as chief digital and technology officer follows Wingstop’s incredible growth in digital sales throughout the pandemic and underscores the opportunity to engage guests through leveraging first-party data.

5.  Since joining Wingstop in 2015, Carona has been fast-tracking up the company ladder after leading key areas of the business including corporate strategy, ESG, training, and serving as chief of staff to the CEO and vice president of strategy.

6.  Benjamin joined Wingstop in mid-2021 as VP of media after successful stints leading media strategy at MillerCoors, Target, and Discover. As SVP of digital marketing, Benjamin will lead the national media and customer relationship marketing functions for Wingstop with a sharp focus on one-to-one customer marketing.

Adds Thighs to Its Menu

7.  In early September 2021, Wingstop officially added chicken thighs to its menu. Over the summer, Wingstop had tested the thighs by launching its virtual brand, Thighstop.

8.  Marisa Carona, Wingstop’s chief growth officer, said, “When launching Thighstop as a virtual brand, we knew our fans would be excited to try thighs. The response was overwhelming, and guests wanted to enjoy both their favorite Wingstop wings and new mouthwatering thighs all at once. They asked, so we’ve answered – we’re bringing it all together by adding thighs to the Wingstop menu to amplify our full flavor experience.”

9.  Wingstop’s bone-in thighs and boneless, breaded Thigh Bites can be served naked or sauced and tossed in any of Wingstop’s 11 bold, distinctive, and craveable flavors. Wingstop will offer a variety of bone-in thigh and Thigh Bites meal options to help satisfy that craving, whether it’s a five-piece thighs combo for mid-week lunch, a date night thighs meal for two, or 15-piece Bone-In Thigh Pack for a dinner with friends or family.

10.  To further celebrate the addition of thighs to the menu, Wingstop is introducing “Thigh Thursday.” Guests who order at Wingstop.com or through the Wingstop app on Thursdays can add regular Thigh Bites to any order for just $4.49 or enjoy a Thigh Bites Meal for two for $13.99, which includes regular boneless Thigh Bites with up to two flavors, large fries or veggie sticks, two dips, and two 20-ounce drinks.

Launches Sustainable Uniforms

11.  In November 2021, Wingstop announced the launch of its new uniform program, which features an array of clothing made from recycled plastic water bottles. Based on Wingstop’s anticipated order volume and usage, the brand estimates more than two million plastic water bottles will be recycled to make the new clothing. Sustainable clothing is just one of many initiatives Wingstop is implementing to support its Environmental, Social, and Governance (ESG) efforts.

12.  According to Marisa Carona, Wingstop’s chief growth officer, “Wingstop is mindful of our footprint and how we give back to the communities in which we serve. The new uniform program is an exciting step toward making large-scale changes for the better and is a great asset as we continue curating a highly-engaged workforce that is proud of where they work and what that company stands for.”

13.  The stylish yet eco-friendly uniform line from The LogoLink Group, affiliate partner of Boundless Network, features a front of house “crew member tee,” back of house “chef shirt,” manager polos, caps, and visors as well as optional outerwear like vests and jackets. Not only can team members feel great in updated fashionable and functional uniforms, they can also feel good about reducing their footprint.

14.  The launch of Wingstop’s new uniform program comes just months after the brand moved into its new Global Support Center (GSC) in Addison, Texas, which is 100 percent powered by local wind from the Engie Live Oak Wind Farm in San Angelo, Texas. After acquiring the building in 2019, the three-story, single-occupancy corporate office building underwent a complete interior renovation requiring more than a year of design and conceptual strategy.

15.  Excess building materials, furniture, and office supplies collected during the renovation were donated on behalf of Wingstop Charities to the Dallas Area Habitat for Humanity, Genesis Women’s Shelter, and Cristo Rey Fort Worth College Prep.

16.  To capture Wingstop’s great work and commitment to ESG, Wingstop launched a website called Flavor for Good, which outlines three key focus areas for the brand: waste management; diversity, equity, and inclusion; and community.

Company History

17.  Wingstop was founded in 1994 by Antonio Swad in Garland, Texas. Swad had years of experience in the restaurant industry after founding Pizza Patrón in 1986. He developed the idea for Wingstop, which would focus on serving a variety of wing flavors at an affordable price. From the beginning, Wingstop targeted the night time crowd as the first location was only open from 4 p.m. to midnight.

18.  Three years after opening the first Wingstop, Swad began franchising the concept. Over the next few decades, Wingstop quickly expanded across the United States. In 2003, Wingstop was acquired by Gemini Investors. Under this new leadership, Wingstop pushed both national and international expansion and made changes to the company’s operations. Wingstop began serving lunch in 2005.

19.  Less than a decade later, Gemini Investors sold Wingstop to Roark Capital Group in 2010. Today, there are Wingstop restaurants across the United States, Mexico, Colombia, Panama, Singapore, Indonesia, Malaysia, Australia, the United Kingdom, and the United Arab Emirates.

Entrepreneur’s Franchise 500

20.  Wingstop ranked No. 22 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Wingstop franchise costs, based on Item 7 of the company’s 2021 FDD.

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

• 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 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

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

2019

• Outlets at the Start of the Year:  1,095
• Outlets at the End of the Year:  1,199
• Net Change:  +104

2020

• Outlets at the Start of the Year:  1,199
• Outlets at the End of the Year:  1,320
• Net Change:  +121

Company-Owned

2018

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

2019

• Outlets at the Start of the Year:  29
• Outlets at the End of the Year:  31
• Net Change:  +2

2020

• Outlets at the Start of the Year:  31
• Outlets at the End of the Year:  32
• Net Change:  +1

Section V – Financial Performance Representations (Item 19, 2021 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 29, 2019, through December 26, 2020) 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 29, 2019, through December 26, 2020).

• 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 29, 2019, through December 26, 2020 (the “2020 Fiscal Year”).

• Wingstop did not materially change the Wingstop Restaurant franchise concept or business model due to the COVID-19 pandemic. Except as noted below in the financial performance information for the 2020 Measured Period, Wingstop has not modified any 2020 financial performance information disclosed in this Item 19 to account for any disruptions related to temporary closures, reduced operating hours, or suspended indoor sit-down dining.

• The net sales information for franchised Restaurants presented below was obtained from weekly royalty reports submitted by franchisees to Wingstop and information polled by Wingstop from point-of-sale systems in the Restaurants. Wingstop has not independently audited that information. Net sales information for affiliate-owned Wingstop Restaurants was obtained from the affiliate’s internal records.

• The average for the 2020 Fiscal Year includes all Restaurants that were open during the entire 2020 Fiscal Year, even if their ownership changed during that time period.

• Excluded are the results of 131 franchised Restaurants and 2 affiliate-owned Restaurants that opened during the 2020 Fiscal Year and therefore were not open for operation during the entire 2020 Fiscal Year, 45 franchised Restaurants that were temporarily closed for multiple days in a row during the 2020 Fiscal Year, and 5 franchised Restaurants that closed during the 2020 Fiscal Year.

Franchised and Company-Owned Wingstop Restaurants

• Number of Franchised Restaurants:  1,151
• Number of Affiliate-Owned Restaurants:  30
• Total Number of Restaurants:  1,181
• 2020 Average Annual Net Sales:  $1,488,622
• Number and Percent of Franchised Restaurants Whose Actual Net Sales Exceeded the Average:  484 (42%)
• Number and Percent of Affiliate-Owned Restaurants Whose Actual Net Sales Exceeded the Average:  26 (87%)
• 2020 Median Annual Net Sales:  $1,380,928
• 2020 Highest Annual Net Sales:  $4,464,757
• 2020 Lowest Annual Net Sales:  $408,289

Franchised Wingstop Restaurants

• Number of Franchised Restaurants:  1,151
• 2020 Average Annual Net Sales:  $1,470,516
• Number and Percent of Franchised Restaurants Whose Actual Net Sales Exceeded the Average:  500 (43%)
• 2020 Median Annual Net Sales:  $1,359,722
• 2020 Highest Annual Net Sales:  $4,464,757
• 2020 Lowest Annual Net Sales:  $408,289

Company-Owned Wingstop Restaurants

• Number of Affiliate-Owned Restaurants:  30
• 2020 Average Annual Net Sales:  $2,184,858
• Number and Percent of Affiliate-Owned Restaurants Whose Actual Net Sales Exceeded the Average:  15
  (50%)
• 2020 Median Annual Net Sales:  $2,172,436
• 2020 Highest Annual Net Sales:  $3,744,094
• 2020 Lowest Annual Net Sales:  $886,937

• Net sales are defined as gross receipts net of (that is, after deducting amounts for) sales tax, coupons/promotions, and voids.

• Average annual net sales are calculated by dividing total sales during the Measured Period for all Restaurants in the system that were open for operation during the entire 2020 Fiscal Year by the number of Restaurants that were open for operation during the entire 2020 Fiscal Year.

• Median annual net sales represent the middle annual net sales figure during the Measured Period for all Restaurants in the system that were open for operation during the entire 2020 Fiscal Year, with an equal number of Restaurants with net sales above and below that figure.

• The franchised Restaurants that were open for operation during the entire 2020 Fiscal Year and whose average net sales during the Measured Period are reported above, are substantially similar to the Restaurant franchises Wingstop currently offers.

• The actual average annual net sales numbers reported above do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the net sales figures to obtain your net income or profit.

• You should conduct an independent investigation of the costs and expenses you will incur in operating your Wingstop Restaurant. Franchisees or former franchisees, listed in the Franchise Disclosure Document, may be one source of this information.

• Chicken wings and other chicken products are the principal food items sold by Wingstop Restaurants. The availability of these products from independent suppliers throughout the United States and their wholesale cost are determined by market factors (including the supply needs of competitive businesses) over which Wingstop has little control. These supply chain issues will impact your operating costs and results during the franchise term.

• Some Wingstop Restaurants have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.

Key Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️