Q1 2025 Earnings Summary
- Robust Unit Growth and Franchisee Confidence: Executives emphasized record restaurant openings and strong pipeline demand—with an updated guidance of 16% to 17% global unit growth and consistent strong franchisee cash flows—even in a challenging macro environment, which underscores the resiliency and expanding footprint of the brand [Index 1][Index 4].
- Operational Enhancements with Wingstop Smart Kitchen: The rollout of the Wingstop Smart Kitchen has halved order ticket times and delivered measurable sales uplift (a 5% increase in conversion in the Dallas market), reinforcing improved operational efficiency and guest satisfaction [Index 11][Index 12].
- Successful Menu Innovation Driving New Guest Acquisition: The relaunch of crispy chicken tenders has generated record guest acquisition, mirroring the success trajectory of the chicken sandwich launch, and positioning the brand for broader menu penetration and frequency growth [Index 14][Index 25].
- Weak same‐store sales growth: Guidance of only about 1% domestic same‐store sales growth—with expectations of mid‐single digit declines in Q2—raises concern that persistent macro headwinds and challenging comps could dampen future performance.
- Vulnerability in key consumer segments: The management highlighted that softness is concentrated in pockets, particularly among Hispanic and lower middle–income consumers. This dependence on vulnerable segments may result in sustained underperformance if economic uncertainty deepens.
- Risks from international expansion: Although international markets like China present significant opportunity, the current geopolitical environment has led to a cautious, deprioritized approach, potentially affecting the pace and scale of global growth.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +17% (from $145,789K to $171,094K) | Total revenue increased by approximately $25,305K (17%), driven by robust underlying business growth including net new franchise development and system-wide sales increases, which built on the growth trends observed in previous periods. |
Royalty, Franchise Fees & Other Revenue | +17% (from $67,097K to $78,775K) | Revenue in this category grew roughly 17%, largely due to net new franchise development contributing about $10M along with modest domestic same-store sales growth of 0.5% and vendor rebates; this builds on the earlier gains seen in prior periods. |
Advertising Fees | +24% (from $50,149K to $62,272K) | Advertising fees increased by about 24% YoY, mainly driven by a 15.7% rise in system-wide sales and an increase in the national advertising fund contribution rate from 5.0% to 5.5%; these enhancements furthered the momentum established in previous reporting periods. |
Operating Income | –10.5% (from $42,738K to $38,261K) | Operating income declined by roughly 10.5% because total expenses (up 28.9%) outpaced revenue gains (17%), with headwinds such as higher advertising, SG&A, increased depreciation, and a new loss on disposal of assets, marking a reversal from prior efficient scaling. |
Net Income | +221% (from $28,747K to $92,265K) | Net income surged over 220% YoY, primarily due to a dramatic turnaround in investment income (a gain of approximately $93,839K in Q1 2025 versus a loss of $303K in Q1 2024) combined with revenue growth and controlled cost increases, building on the underlying business improvements observed previously. |
Interest Expense | ~+96% (from $4,544K to $8,910K) | Interest expense nearly doubled, largely because a securitized financing transaction on December 3, 2024, increased outstanding debt by $500M and generated $7.8M in interest expense in Q1 2025, though partially offset by higher interest income; this represents a significant new cost element compared to the prior year. |
Operating Cash Flow | –43% (from $44,659K to $25,294K) | Operating cash flow fell by about 43%, primarily due to timing differences in advertising fund payments and changes in working capital, which contrasts the improved cash generation seen in FY 2024 and underscores the impact of short-term cash timing issues in Q1 2025. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Same-Store Sales Growth | FY 2025 | Low to mid‑single‑digit growth | Approximately 1% | lowered |
Global Unit Growth Rate | FY 2025 | 14%–15% | 16%–17% | raised |
Net Interest Expense | FY 2025 | Approximately $46 million | Approximately $40 million | lowered |
SG&A Expenses | FY 2025 | Approximately $140 million | Approximately $140 million | no change |
Adjusted EBITDA Growth Rate | FY 2025 | 15% | 15% | no change |
Advertising Fund Contribution Rate | FY 2025 | Increased from 5.3% to 5.5% | Increased by 50 basis points to 5.5% | no change |
Dividend | FY 2025 | no prior guidance | $0.27 per share; approximately $7.5 million | no prior guidance |
Second Quarter Trends | Q2 2025 | no prior guidance | Decline by approximately mid‑single‑digits | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Same-Store Performance | Strong growth reported in Q2–Q4 2024 with same-store sales up to 28.7% and consistent double-digit comps (e.g., 19.9%, 20.9%) | Q1 2025 same-store sales growth dipped to 0.5% with challenging comparisons and a downwardly revised outlook | Decline in same-store growth with more cautious sentiment amid tougher comparisons and macro uncertainties. |
Restaurant Expansion | Robust expansion across Q2–Q4 2024, including record net new restaurants (e.g., 349 in 2024), a very strong development pipeline, and high franchisee reinvestment | Q1 2025 delivered record 126 new restaurants, expanded into international markets (e.g., Kuwait, Australia, five new markets planned) with continued strong franchisee confidence | Consistent expansion momentum with a continued focus on growth, though volume growth metrics vary by period. |
Digital Transformation & Technology Innovation | Q2–Q4 2024 emphasized the rollout of MyWingstop and proprietary tech stacks with strong digital sales (up to 70%+) and robust guest personalization initiatives | Q1 2025 highlighted deployment of the Wingstop Smart Kitchen (in over 200 restaurants), 72% digital sales, and ongoing investments in digital platforms amid execution risks and higher rollout costs | Ongoing digital investments with enhanced tech innovation yet increased execution risks and higher implementation costs. |
Operational Efficiency & Cost Management | Q2–Q4 2024 discussions centered on managing food cost volatility, achieving predictability in supply chain costs, and maintaining strong unit economics despite inflation challenges | Q1 2025 reaffirmed these strategies with advanced supply chain measures, record cash flows, and integration of digital tools (Smart Kitchen) supporting unit economics | Consistent focus on cost control and operational efficiency, further bolstered by digital enablers despite external cost pressures. |
International Expansion Opportunities | Q2–Q4 2024 showcased aggressive international strategies including the U.K. acquisition, expansion in Western Europe, Canada, and a strong global pipeline | Q1 2025 announced five new markets, record international unit openings, and maintained a cautious approach toward China amid geopolitical uncertainties | Robust global expansion continues, though there is a more cautious stance in geopolitically sensitive markets like China. |
Menu Innovation & New Guest Acquisition | Q2–Q4 2024 highlighted the success of the chicken sandwich along with digital strategies driving record new guest acquisition and enhanced guest retention through personalization | Q1 2025 introduced the relaunch of crispy chicken tenders with 12 distinct flavors, which spurred record new guest acquisitions and increased repeat visits | Enhanced product innovation is driving new guest acquisition with broader menu offerings reinforcing repeat consumption. |
Consumer Segment Vulnerabilities & Limited Brand Awareness | Q2–Q4 2024 noted consistent, though modest, gains in brand awareness with persistent double-digit gaps and resilient consumer behavior under pressure, albeit with some vulnerabilities | Q1 2025 explicitly identified pullbacks among Hispanic and lower middle-income consumers and maintained a 20-point brand awareness gap, prompting targeted remedial strategies | Continued consumer vulnerabilities coupled with a persistent brand awareness gap, accentuated by the current tougher macro environment. |
External Macro & Environmental Headwinds | Q2–Q4 2024 touched upon consumer anxiety, inflation in food costs, and localized environmental challenges such as wildfires, while noting resilience in quality–value perception | Q1 2025 emphasized intensified macro uncertainties (consumer sentiment at its second lowest since 1952), along with specific challenges like California fires and severe winter weather | Heightened macro and environmental headwinds in Q1 2025 are prompting a more cautious outlook compared to previous periods, with operational adjustments being made. |
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Comp Guidance
Q: Why only 1% same-store comp?
A: Management explained that despite localized pullbacks amid macro uncertainty, a strong track record with record new openings and operational improvements underpins the modest 1% guidance now, with expectations to rebound later. -
International Expansion
Q: What’s the plan for China and expansion?
A: Leaders are enthusiastic about international growth, noting record new units and promising opportunities in markets like China and India—although China remains cautious due to current geopolitical factors. -
Smart Kitchen Impact
Q: Does the Smart Kitchen boost sales immediately?
A: They cited early evidence of improved order speeds and a roughly 5% conversion lift in test markets, with benefits expected to compound as the rollout nears 400 restaurants. -
Tenders Relaunch
Q: How are new tender offerings performing?
A: The relaunch has driven impressive new guest acquisition and balanced daypart sales, mirroring early successes seen with the chicken sandwich launch and promising strong menu expansion. -
Ad Fund Expansion
Q: What drove the 50bps ad fund bump?
A: The additional funding, which now totals a 5.5% ad fund, is earmarked for MyWingstop’s operating costs and high-impact partnerships like the NBA, reinforcing brand awareness. -
Delivery Trends
Q: Is the delivery channel demand accelerating?
A: Management confirmed steady growth in delivery, noting that faster order fulfillment is visibly boosting conversion rates, underscoring its strategic role. -
Mature Store Trends
Q: Are mature stores driving robust unit economics?
A: They pointed out that roughly 10% of restaurants already exceed $3M AUVs, with strategic adjustments in operational pressure supporting solid returns in mature stores. -
Loyalty and CRM
Q: What’s next for your loyalty program?
A: Building on a robust database of over 50M users, the firm is transitioning successful CRM insights into a hyper-personalized loyalty program aimed at deepening customer retention. -
Consumer Segment Strategy
Q: How to counteract Hispanic segment pullbacks?
A: Management is deploying targeted messaging and value-based tactics in markets where pullback is evident, ensuring that the enduring “indulgent Wingstop” promise remains front and center. -
Smart Kitchen Communication
Q: Will guests be informed of faster kitchens?
A: Rather than overt announcements, the strategy is to let the improved, faster service naturally elevate customer perceptions as part of the overall experience. -
Ticket Mix Dynamics
Q: Why is ticket size impacted by the new mix?
A: The shift toward individual, tender-driven occasions—contrasted with traditional group orders—leads to a smaller average ticket size, reflecting changing consumer behavior. -
Sales Stack Guidance
Q: How does the 3-year compare affect outlook?
A: Leaders clarified that although second-half comparisons ease relative to prior periods, a robust 3-year stack still supports expectations in the high-30% range, guiding overall outlook. -
Tender Mix Specifics
Q: Is the tender mix outperforming other items?
A: Early data indicate that tenders are rapidly gaining favor, even outperforming the chicken sandwich in new guest acquisition, which bodes well for broader menu diversification.