Sign in

You're signed outSign in or to get full access.

WI

Wingstop Inc. (WING)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered revenue of $171.1M (+17.4% YoY) and adjusted EBITDA of $59.5M (+18.4% YoY), with adjusted EPS of $0.99; GAAP EPS spiked to $3.24 on a $97.2M gain from the sale of the U.K. master franchisee interest .
  • Versus S&P Global consensus, Wingstop posted a small beat on revenue ($171.1M vs $170.9M*) and a clear beat on adjusted EPS ($0.99 vs $0.87*); EBITDA (non-adjusted) comparisons are distorted by the LPH gain, but adjusted EBITDA was modestly above consensus ($59.5M vs $57.0M*) .
  • Guidance was mixed: domestic same-store sales lowered to ~1% (from low- to mid-single digits), while global unit growth was raised to 16–17% (from 14–15%); net interest expense cut to ~$40M (from ~$46M), and D&A trimmed to $28–29M (from $29–30M) .
  • Strategic catalysts: record 126 net openings (18% unit growth) , rollout of AI-enabled “Wingstop Smart Kitchen” (200+ stores at Q1-end; accelerating to ~400 by early May) , and menu innovation with relaunch of crispy tenders (driving record new guest acquisition) plus a summer LTO/value offer (Mexican Street Spice, 20 for $20) .

What Went Well and What Went Wrong

What Went Well

  • Record development: 126 net openings in Q1, with global unit growth raised to 16–17% for 2025, underpinned by best-in-class franchise returns; “moving us along our path of becoming a Top 10 Global Restaurant Brand” .
  • Digital and technology execution: digital mix hit 72%, and Smart Kitchen cut quote/ticket times by ~50% in pilots; “a transformation…that we believe will be a catalyst on our path to $3 million AUVs” .
  • International momentum: Kuwait flagship broke the record for highest global weekly sales in its first week; Puerto Rico pacing ahead U.S. average; Australia slated to launch in Q2 .

What Went Wrong

  • Comp deceleration: domestic same-store sales slowed to +0.5% (vs +21.6% in Q1 2024), pressured by tough laps, pockets of consumer softness (Hispanic, lower middle income), and weather events; second quarter comps tracking mid-single-digit decline before easing in H2 .
  • Cost pressure in company-owned restaurants: cost of sales rose to 76.0% of sales (vs 74.5% prior year), driven by higher bone-in wing costs .
  • Nonrecurring items created noise: a $97.2M gain on the U.K. LPH sale boosted GAAP EPS to $3.24; management emphasized adjusted EPS ($0.99) for core performance .

Financial Results

Headline Financials vs Prior Quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD)$162,498,000 $161,821,000 $171,094,000
Diluted EPS ($)$0.88 $0.92 $3.24
Operating Income ($USD)$39,818,000 $41,840,000 $38,261,000
Company-Owned Cost of Sales (% of sales)77.8% 77.6% 76.0%
Domestic Same-Store Sales (%)20.9% 10.1% 0.5%

Revenue Breakdown

Revenue Component ($USD)Q3 2024Q4 2024Q1 2025
Royalty, Franchise Fees & Other$74,395,000 $75,702,000 $78,775,000
Advertising Fees$56,764,000 $56,063,000 $62,272,000
Company-Owned Restaurant Sales$31,339,000 $30,056,000 $30,047,000
Total Revenue$162,498,000 $161,821,000 $171,094,000

KPIs

KPIQ3 2024Q4 2024Q1 2025
System-wide Sales ($USD Billions)$1.233 $1.232 $1.300
Net New Openings (units)106 105 126
Digital Mix (% of System Sales)69.0% 70.3% 72.0%
Domestic AUV ($USD Millions)$2.1 $2.1 $2.1
Company-Owned SSS (%)7.3% 3.8% 1.4%
System Restaurants at Period End2,458 2,563 2,689

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Domestic Same-Store Sales GrowthFY 2025Low- to mid-single digits ~1% Lowered
Global Unit GrowthFY 202514%–15% 16%–17% Raised
SG&A ExpenseFY 2025~$140M (incl. ~$4.5M system implementation) ~$140M (incl. ~$4.5M system implementation) Maintained
Stock-Based CompensationFY 2025~$26M ~$26M Maintained
Net Interest ExpenseFY 2025~$46M ~$40M Lowered
Depreciation & AmortizationFY 2025$29–$30M $28–$29M Lowered
Quarterly DividendCurrent$0.27/share (Feb 18, 2025) $0.27/share (Apr 29, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/Technology InitiativesMyWingstop placed in service; system implementation costs rising . Announced AI-enabled Smart Kitchen; intent to reduce quote times; rollout over ~12 months .Smart Kitchen deployed to 200+ stores by Q1-end; target ~400 shortly; cutting quote/ticket times ~50%, improving satisfaction and conversion; full rollout by year-end .Accelerating deployment and measurable impact
Supply Chain/Food Costs2024 delivered predictability in bone-in wing costs; mid-30% food cost target; visibility into 2025 and 2026 .Company-owned cost of sales up to 76.0% on higher wing costs YoY; management reiterates predictable food cost strategy .Stable strategy amid higher spot costs
Macro & ConsumerQSR value promotions intensifying; Wingstop leaning on quality/value .Pockets of consumer softening (Hispanic, lower middle income); guidance embeds Q2 mid-single-digit comp decline; expect return to growth in H2 .Near-term headwinds, improving in H2
Product Performance & Menu InnovationChicken sandwich and personalization drove frequency; brand awareness investments .Relaunched crispy tenders; record new guest acquisition; tenders now mix above sandwich; Mexican Street Spice LTO with 20 for $20 value .Positive traction driving individual occasions
Regional/InternationalStrong Canada momentum; U.K. pipeline growth; Western Europe opportunity .Kuwait record opening; Puerto Rico pacing ahead U.S. average; Australia launch in Q2; 5 new international markets in 2025 .International strength broadening

Management Commentary

  • “Despite increased uncertain across the consumer landscape, our Q1 results showcase the resiliency of the Wingstop brand and the staying power of our long-term strategies.” — Michael Skipworth, CEO .
  • “Through the deployment of this new kitchen operating platform, we have seen consistent order times that are half of our standard quote time…a transformation in our restaurants that we believe will be a catalyst on our path to $3 million AUVs.” — Michael Skipworth, CEO .
  • “We opened a record 126 net new restaurants in Q1 and updated our guidance to 16% to 17% unit growth in 2025…We believe our international business continues to be supercharged for growth.” — Alex Kaleida, CFO .
  • “For modeling purposes, our outlook reflects…same-store sales decline by approximately mid-single digits [in Q2]…As the lap for comps ease in the second half, we anticipate returning to growth through the third quarter.” — Alex Kaleida, CFO .

Q&A Highlights

  • Comp cadence: Management guided Q2 comps down mid-single digits on a very tough two-year stack (45.5%), with return to positive growth in H2 as laps ease .
  • Smart Kitchen impact: Early sales divergence in Smart Kitchen stores vs controls; +5% delivery conversion in DFW test vs other markets; Q1 guidance does not incorporate Smart Kitchen benefit .
  • Franchisee focus: Discussions centered on unit growth; ~50 brand partners opened in Q1 across 33 states, illustrating broad-based development momentum .
  • Loyalty program: Wing ID scale (>50M profiles) enabling hyper-personalization; pilot planned for Q4 2025 and systemwide launch in 2026 .
  • Product mix: Tenders relaunch attracting individual eater occasions, lowering average ticket but expanding consideration set; tenders now mix higher than sandwich .

Estimates Context

MetricQ3 2024 Consensus*Q3 2024 Actual*Q4 2024 Consensus*Q4 2024 Actual*Q1 2025 Consensus*Q1 2025 Actual*
Revenue ($USD)$159,870,450$162,498,000$164,580,480$161,821,000$170,943,520$171,094,000
Primary EPS ($)$0.9569$0.8940$0.8650$0.9484$0.8656$1.0258

Values retrieved from S&P Global.*

Additional Q1 2025 comparisons:

  • Adjusted EPS ($0.99) vs Primary EPS consensus ($0.8656*): beat of $0.12 .
  • Adjusted EBITDA ($59.5M) vs EBITDA consensus ($57.0M*): beat of ~$2.5M .

Key Takeaways for Investors

  • Development-led growth remains the core thesis: raised 2025 unit growth to 16–17% on robust franchise returns and international momentum .
  • Expect near-term comp pressure (Q2 down mid-single digits) from tough laps and pocketed consumer softness, with an improving trajectory in H2; watch monthly comp updates and any evidence of stabilization .
  • Smart Kitchen is a real operating catalyst: measured reductions in quote/ticket times and conversion lift in test markets; full rollout by year-end could re-rate AUV trajectory toward $3M .
  • Mix innovation plus value: crispy tenders relaunch and the Mexican Street Spice 20-for-$20 deal broaden individual occasions and acquisition funnel while preserving brand quality/value positioning .
  • P&L watch-outs: higher wing costs elevated company-owned cost of sales to 76.0%; monitor food cost trend vs supply chain predictability claims and advertising fund leverage (raised to 5.5%) .
  • Capital returns supportive: ongoing $0.27 quarterly dividend and active buybacks (ASR + open-market) with $191.3M capacity remaining; net interest expense trimmed to ~$40M on reinvestment proceeds .
  • Trading lens: stock likely sensitive to comp cadence and Smart Kitchen rollout milestones; upside if H2 comps turn positive as guided and operational KPIs show sustained improvement; risk if consumer softness broadens or wing cost pressures persist .