Wingstop Inc. (WING) has emerged as a dominant force in the fast-casual chicken wing segment, consistently delivering impressive financial results and cementing its position as a category leader. With a relentless focus on innovation, operational excellence, and strategic expansion, the company has positioned itself for long-term success as it aims to become a top-10 global restaurant brand.
Business Overview Wingstop was founded in 1994 in Garland, Texas, and began franchising its restaurants in 1997. The company's core business revolves around serving classic, cooked-to-order chicken wings, tenders, and sandwiches, hand-sauced and tossed in 12 bold, distinctive flavors. Wingstop operates on an asset-light, highly franchised business model, with approximately 98% of its 2,560 restaurants worldwide owned and operated by independent franchisees as of the end of fiscal year 2024.
In its early years, Wingstop faced challenges common to growing restaurant chains, such as ensuring consistent operations, food quality, and brand identity across its franchise locations. To address these issues, the company implemented rigorous training programs and quality control measures to maintain standards as it rapidly expanded. These efforts helped Wingstop establish a strong foundation for growth and build a loyal customer following for its signature chicken wings and bold flavors.
A significant milestone in Wingstop's history came in 2015 when the company went public, listing its shares on the Nasdaq stock exchange. This move provided Wingstop with additional capital to fuel growth and brand awareness initiatives. However, the transition to being a public company also brought new compliance requirements and scrutiny that Wingstop had to navigate.
Despite these early operational and regulatory hurdles, Wingstop successfully leveraged its franchise model to rapidly expand across the United States and into select international markets. This strategic approach enabled the company to establish itself as a leader in the chicken wing segment of the fast-casual restaurant industry.
Wingstop's growth strategy has been centered on expanding its domestic footprint and accelerating its international presence. In fiscal year 2024, the company opened a record 349 net new restaurants, including 77 international locations, representing a 15.8% year-over-year unit growth. This strong development pace has been fueled by the company's compelling unit economics, which have continued to attract both new and existing franchisees.
Impressive Financial Performance Wingstop's financial performance has been nothing short of impressive. In fiscal year 2024, the company reported total revenue of $625.81 million, a 36.0% increase from the prior year. This top-line growth was driven by a 39.2% increase in royalty revenue, franchise fees, and other revenue, which accounted for $288.35 million, as well as a 38.5% jump in advertising fees to $217.63 million, and a 25.0% rise in company-owned restaurant sales to $119.82 million.
Financials The company's profitability has also been exceptional, with fiscal year 2024 net income reaching $108.72 million, a 54.9% year-over-year increase. Adjusted EBITDA, a non-GAAP metric, grew 44.8% to $212.06 million, highlighting the strength of Wingstop's highly franchised, asset-light business model. The company's annual operating cash flow for fiscal year 2024 was $157.61 million, with annual free cash flow of $105.68 million.
In the fourth quarter of 2024, Wingstop reported revenue of $161.82 million and net income of $26.75 million, representing a year-over-year revenue growth of 27.6%.
Liquidity Wingstop's strong financial performance has contributed to a healthy liquidity position. As of the end of fiscal year 2024, the company had cash and cash equivalents of $315.91 million, with no outstanding borrowings under its $300 million variable funding credit facility. The company's debt-to-equity ratio stood at -0.0877, while its current ratio and quick ratio were both 4.52, indicating a strong ability to meet short-term obligations.
Consistent and Impressive Same-Store Sales Growth One of Wingstop's most impressive achievements has been its ability to deliver sustained same-store sales growth. In fiscal year 2024, the company reported a 19.9% increase in domestic same-store sales, extending its remarkable streak of 21 consecutive years of positive same-store sales growth. This performance was primarily driven by transaction growth, showcasing the brand's continued appeal and the effectiveness of its strategies.
Wingstop's digital transformation has also been a key driver of its recent success. In the fourth quarter of fiscal year 2024, digital sales accounted for 70.3% of the company's domestic sales, up from 60.0% in the prior year period. The launch of the company's proprietary digital platform, "My Wingstop," in 2024 has further enhanced the customer experience and enabled more effective data-driven marketing and personalization initiatives.
Ambitious Global Expansion Plans Wingstop's growth ambitions extend well beyond its domestic market. The company sees significant opportunities for international expansion, and as of the end of fiscal year 2024, it had 359 international restaurants across 11 countries and U.S. territories. In the fourth quarter of 2024, Wingstop successfully added its 11th international market.
To facilitate its global expansion, Wingstop has adopted a strategic approach of partnering with master franchisees and making small equity investments in international markets. This model has allowed the company to leverage local expertise and accelerate its global footprint. In 2024, Wingstop completed the acquisition of a majority stake in its UK business, a transaction valued at over $500 million, underscoring the brand's growing international appeal.
Looking ahead, Wingstop has set a new long-term target of over 10,000 global restaurants, a significant increase from its previous goal. The company believes it can achieve this ambitious target by doubling its current domestic footprint and continuing to expand aggressively in international markets.
Technological Innovations Driving Operational Efficiency Wingstop has consistently prioritized technological advancements to drive operational efficiency and enhance the customer experience. In 2024, the company launched its proprietary "My Wingstop" digital platform, which has already delivered impressive results, including a 50% year-over-year increase in new guest registrations and improved customer engagement and satisfaction metrics.
Building on this digital success, Wingstop has recently developed a new AI-powered kitchen operating system that is designed to significantly reduce order preparation times and improve speed of service. This innovative platform, which is currently being tested in select restaurants, is expected to unlock pent-up demand and further strengthen Wingstop's position as a leading fast-casual dining option.
Navigating Industry Challenges Like many other restaurant operators, Wingstop has not been immune to the broader challenges facing the industry, such as labor shortages, inflationary pressures, and supply chain disruptions. However, the company's strong brand positioning, operational resilience, and strategic initiatives have allowed it to navigate these headwinds effectively.
Wingstop's focus on maintaining optimal food costs through its supply chain strategy has been particularly noteworthy. In fiscal year 2024, the company was able to achieve a level of predictability in its food costs that it had not seen in the past, helping to offset inflationary pressures.
Moreover, Wingstop's investments in technology, such as the new kitchen operating system, are expected to further enhance the company's operational efficiency and ability to adapt to industry challenges.
Commitment to Environmental, Social, and Governance (ESG) Initiatives Wingstop has also demonstrated a strong commitment to environmental, social, and governance (ESG) initiatives. The company has implemented sustainable practices, such as reducing its energy and water consumption, and has taken steps to support its local communities through its charitable foundation, Wingstop Charities.
In 2024, Wingstop Charities awarded over $3.7 million in grants and sponsorships to various organizations, underscoring the company's dedication to giving back and making a positive impact.
Industry Trends and Market Position Wingstop operates in the fast-casual restaurant industry, which has seen a compound annual growth rate (CAGR) of approximately 10-12% in recent years. This growth has been driven by consumer demand for higher quality, customizable menu options. As the largest fast-casual chicken wings-focused restaurant chain in the world, Wingstop is well-positioned to capitalize on these industry trends.
The company's domestic presence is particularly strong, with 2,197 restaurants in the United States as of the end of fiscal 2024. This domestic footprint, combined with 359 international franchise locations across 11 countries and U.S. territories, underscores Wingstop's global appeal and potential for further expansion.
Outlook and Guidance As Wingstop looks to the future, the company is well-positioned to continue its impressive growth trajectory. For fiscal year 2025, Wingstop has provided guidance of low to mid-single-digit same-store sales growth and a global unit growth rate of 14% to 15%. The company expects its adjusted EBITDA growth rate to be approximately 15% in 2025.
Wingstop's SG&A guidance for 2025 is estimated to be approximately $140 million, which includes non-recurring system implementation costs of $4.5 million that will be an add-back to adjusted EBITDA and approximately $26 million of stock-based compensation expense. The company's interest expense is anticipated to be approximately $46 million for 2025.
At the start of the first quarter of 2025, the advertising fund contribution rate will increase from 5.3% to 5.5%, which is expected to have a net neutral impact on the P&L as this investment will fund additional operating expenses associated with the My Wingstop platform.
Conclusion With its focus on menu innovation, digital transformation, operational excellence, and strategic international expansion, Wingstop is poised to solidify its position as a premier fast-casual dining concept and achieve its ambitious goal of becoming a top-10 global restaurant brand. The company's strong financial performance, consistent same-store sales growth, and commitment to sustainability and community engagement make it a compelling investment opportunity for those seeking exposure to the dynamic and evolving restaurant industry.
Wingstop's ability to deliver industry-leading results, surpassing its previous target of $2 million average unit volumes (AUVs) and achieving its 21st consecutive year of same-store sales growth in 2024, demonstrates the strength and resilience of its business model. With system-wide sales growing by 36.8% to $4.8 billion in 2024 and a record 349 net new restaurant openings, Wingstop has proven its ability to execute on its growth strategy while maintaining operational excellence.
As the company continues to invest in its digital capabilities, expand its global footprint, and leverage its highly franchised business model, Wingstop is well-positioned to capitalize on the growing demand for high-quality, convenient dining options in both domestic and international markets. The combination of strong unit economics, consistent same-store sales growth, and a robust development pipeline suggests that Wingstop's growth story is far from over, making it an attractive prospect for investors looking to participate in the fast-casual restaurant sector's continued expansion.