Delivers 15.0% Unit Growth
Domestic Same Store Sales Increased 28.7%, Driven by Transaction Growth
DALLAS, July 31, 2024 /PRNewswire/ — Wingstop Inc. (NASDAQ:WING) today announced financial results for the fiscal second quarter ended June 29, 2024.
Highlights for the fiscal second quarter 2024 compared to the fiscal second quarter 2023:
System-wide sales increased 45.2% to $1.2 billion
73 net new openings in the fiscal second quarter 2024
Domestic restaurant AUV increased to $2.0 million
Domestic same store sales increased 28.7%
Digital sales increased to 68.3% of system-wide sales
Total revenue increased 45.3% to $155.7 million
Net income increased 69.9% to $27.5 million, or $0.93 per diluted share
Adjusted EBITDA, a non-GAAP measure, increased 50.7% to $51.8 million
Adjusted EBITDA is a non-GAAP measure. A reconciliation of adjusted EBITDA to the most directly comparable financial measure presented in accordance with accounting principles generally accepted in the United States (“GAAP”) is set forth in the schedule accompanying this release. See “Non-GAAP Financial Measures.”
“The second quarter marked another industry-leading quarter for Wingstop, further solidifying our category-of-one position. With same store sales growth of 28.7%, driven primarily by transactions, our AUVs now exceed $2.0 million, a target we set only two years ago when AUVs just crossed $1.5 million. Due to the strength and staying power of our multi-year strategies, we believe we have line of sight to a new AUV target of $3.0 million,” said Michael Skipworth, President and Chief Executive Officer. “This growth in AUVs has further enhanced our best-in-class unit economics, and as we continue to open new restaurants at a record pace, we believe there is an opportunity to more than triple our current U.S. footprint.”
Key operating metrics for the fiscal second quarter 2024 compared to the fiscal second quarter 2023:
Thirteen Weeks Ended
June 29, 2024
July 1, 2023
Number of system-wide restaurants open at end of period
2,352
2,046
Number of domestic franchise restaurants open at end of period
1,988
1,749
Number of international franchise restaurants open at end of period (1)
312
252
System-wide sales (in millions)
$ 1,176
$ 810
Domestic AUV (in thousands)
$ 2,032
$ 1,704
Domestic same store sales growth
28.7 %
16.8 %
Company-owned domestic same store sales growth
14.1 %
5.7 %
Net income (in thousands)
$ 27,485
$ 16,181
Adjusted EBITDA (in thousands)
$ 51,778
$ 34,350
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(1) Including U.S. territories.
Fiscal second quarter 2024 financial results
Total revenue for the fiscal second quarter 2024 increased to $155.7 million from $107.2 million in the fiscal second quarter last year. Royalty revenue, franchise fees and other increased $23.2 million, of which $12.1 million was due to domestic same store sales growth of 28.7%, and $8.1 million was due to net new franchise development. Advertising fees increased $18.1 million due to a 45.2% increase in system-wide sales in the fiscal second quarter 2024, as well as an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024. Company-owned restaurant sales increased $7.3 million due to the addition of seven net new company-owned restaurants since the prior fiscal second quarter and 14.1% company-owned domestic same store sales growth, driven primarily by an increase in transactions.
Cost of sales was $22.7 million compared to $16.6 million in the fiscal second quarter of the prior year. As a percentage of company-owned restaurant sales, cost of sales increased to 75.9% from 73.7% in the prior year comparable period. The increase as a percentage of company-owned restaurant sales was driven by food, beverage and packaging costs primarily resulting from an increase in the cost of bone-in chicken wings as compared to the prior fiscal second quarter. Our purchases in the prior fiscal second quarter were tied primarily to the spot market, which benefited from significant deflation in the cost of bone-in chicken wings. The increase in food, beverage and packaging costs was partially offset by a decrease in labor costs and other restaurant operating expenses as a percentage of company-owned restaurant sales primarily due to leverage related to the company-owned domestic same store sales increase of 14.1%.
Selling, general & administrative (“SG&A”) expense increased $6.0 million to $28.1 million from $22.1 million in the fiscal second quarter of the prior year. The increase in SG&A expense was driven by an increase in headcount-related expenses of $1.9 million to support the growth in our business, an increase in incentive compensation and performance-based stock compensation expense of $1.9 million primarily related to our performance, and an increase in consulting and other professional fees of $1.0 million associated with our strategic initiatives.
Depreciation and amortization increased $1.9 million to $5.2 million from $3.2 million in the fiscal second quarter of the prior year. The increase in depreciation and amortization was primarily due to depreciation expense for the software assets placed in service related to our MyWingstop technology platform during the fiscal second quarter 2024.
Financial Outlook
Based on year-to-date results, the Company is providing updated guidance for 2024:
Approximately 20% domestic same store sales growth, previously low double digits;
285 to 300 global net new units, previously 275 to 295; and
SG&A expense of between $114 – $116 million, previously $111 million.
Additionally, the Company is reiterating guidance for 2024:
Depreciation and amortization of between $18 – $19 million; and
Stock-based compensation expense of approximately $20 million.
Restaurant Development
As of June 29, 2024, there were 2,352 Wingstop restaurants system-wide. This included 2,040 restaurants in the United States, of which 1,988 were franchised restaurants and 52 were company-owned, and 312 franchised restaurants were in international markets and U.S. territories. During the fiscal second quarter 2024, there were 73 net system-wide Wingstop restaurant openings.
Quarterly Dividend
In recognition of the Company’s strong cash flow generation and our commitment to returning value to stockholders, on July 30, 2024, our Board of Directors approved an increase in the quarterly dividend payable to Wingstop stockholders from $0.22 to $0.27 per share of common stock, resulting in a total dividend of approximately $7.9 million. This dividend will be paid on September 6, 2024 to stockholders of record as of August 16, 2024.
Share Repurchases
During the fiscal second quarter of 2024, the Company repurchased and retired 75,862 shares of its common stock at an average price of $381.29 per share. As of June 29, 2024, $96.1 million remained available under the share repurchase program previously approved by the Company’s Board of Directors.
The Company has repurchased and retired 721,814 shares of its common stock at an average price of $217.32 per share since inception of its share repurchase program in August 2023.
The following definitions apply to these terms as used in this release:
Domestic average unit volume (“AUV”) consists of the average annual sales of all restaurants that have been open for a trailing 52-week period or longer. This measure is calculated by dividing sales during the applicable period for all restaurants being measured by the number of restaurants being measured. Domestic AUV includes revenue from both company-owned and franchised restaurants. Domestic AUV allows management to assess our domestic company-owned and franchised restaurant economics. Changes in domestic AUV are primarily driven by increases in same store sales and are also influenced by opening new restaurants.
Domestic same store sales reflects the change in year-over-year sales for the same store restaurant base. We define the same store restaurant base to include those restaurants open for at least 52 full weeks. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and permanent closures. We review same store sales for domestic company-owned restaurants as well as system-wide domestic restaurants. Domestic same store sales growth is driven by increases in transactions and average transaction size. Transaction size increases are driven by price increases or favorable mix shift from either an increase in items purchased or shifts into higher priced items.
System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees. This measure allows management to better assess changes in our royalty revenue, our overall store performance, the health of our brand and the strength of our market position relative to competitors. Our system-wide sales growth is driven by new restaurant openings as well as increases in same store sales.
Adjusted EBITDA is defined as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization (EBITDA), further adjusted for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, and stock-based compensation expense.
We caution investors that amounts presented in accordance with our definitions above may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate certain non-GAAP measurements in the same manner.
Conference Call and Webcast
The Company will host a conference call today to discuss the fiscal second quarter 2024 financial results at 10:00 AM Eastern Time. The conference call can be joined telephonically by dialing 1-877-259-5243 or 1-412-317-5176 (international) and asking for the Wingstop conference call. A replay will be available two hours after the call and can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 (international), then entering the replay code 7955331. The replay will be available through Wednesday, August 7, 2024.
The conference call will also be webcast live and later archived on the investor relations section of Wingstop’s corporate website at ir.wingstop.com under the ‘News & Events’ section.
About Wingstop
Founded in 1994 and headquartered in Dallas, TX, Wingstop Inc. (NASDAQ:WING) operates and franchises more than 2,350 locations worldwide. The Wing Experts are dedicated to Serving the World Flavor through an unparalleled guest experience and a best-in-class technology platform, all while offering classic and boneless wings, tenders, and chicken sandwiches, cooked to order and hand sauced-and-tossed in fans’ choice of 12 bold, distinctive flavors. Wingstop’s menu also features signature sides including fresh-cut, seasoned fries and freshly-made ranch and bleu cheese dips.
In fiscal year 2023, Wingstop’s system-wide sales increased 27.1% to approximately $3.5 billion, marking the 20th consecutive year of same store sales growth. With a vision of becoming a Top 10 Global Restaurant Brand, Wingstop’s system is comprised of corporate-owned restaurants and independent franchisees, or brand partners, who account for approximately 98% of Wingstop’s total restaurant count of 2,352 as of June 29, 2024.
A key to this business success and consumer fandom stems from The Wingstop Way, which includes a core value system of being Authentic, Entrepreneurial, Service-minded, and Fun. The Wingstop Way extends to the brand’s environmental, social and governance platform as Wingstop seeks to provide value to all guests.
In 2023, Wingstop earned its “Best Places to Work” certification. The Company landed on Entrepreneur Magazine’s “Fastest-Growing Franchises” list and ranked #16 on “Franchise 500.” Wingstop was listed on Technomic’s “Top 500 Chain Restaurant Report,” QSR Magazine’s “2023 QSR 50” and Franchise Time’s “40 Smartest-Growing …