Chicken–wing connoisseurs continue to flock at Wingstop for their fix as the company posted strong financial results Wednesday, signaling its double-down on product variety and reach is working.
Wingstop in the third quarter reported $117.1 million in revenue, an increase of 26% from the same period last year. This beat out analysts’ estimate of $109.1 million.
Profits also grew, with Wingstop earning $19.5 million, a 46% increase from last year. Earnings per share were 65 cents, higher than analysts’ estimated 52 cents.
The company’s overall brand growth relies on introducing new menu offerings, like its chicken sandwich, and using delivery partners like UberEats and DoorDash to reach customers when they aren’t visiting stores. The results have paid off.
Overall, its total sales was $885 million, a 26.5% increase from last year’s third quarter, while domestic same-store sales close to doubled at 15.3%.
“This company has seen its sales up about 60% since 2019, which is pretty amazing,” said Chris O’Cull, managing director for franchised restaurants at Stifel Institutional.
This increased sales growth – attributed to new restaurant openings both stateside and abroad – allows for the company to increase its national advertising fund, providing more money for TV spots, particularly during football season, according to O’Cull. Eighty-five percent of Wingstop’s over 2,000 locations are operated by franchisees who contribute fees to the company, helping fuel its growth.
“The brand is not as well known and top of mind for consumers as more mature businesses. As more people become aware of the brand and it gets into their decision set, then (Wingstop’s) performance is better,” O’Cull said.
Michael J. Skipworth, Wingstop’s president and chief executive, gave a taste of what’s in store for the company next year during an earnings call.
“The visibility we have into 2024 and beyond give us confidence to deliver against our strategy of sustaining same-store sales growth, maintaining best-in class returns and accelerating growth,” he said.
John Gordon of Pacific Management Consulting Group offered a more measured take on Wingstop.
Given the plethora of restaurants fighting for customers’ wallets, the company’s offering of both its products and its advertising “can’t be third-rate. … it’s gotta be exciting,” said Gordon, a restaurant industry analyst.
“The cool factor is extremely important right now,” he added.
When it comes to the coolest restaurants in the quick service sector, Chipotle, Cava and Shake Shack all come up before Wingstop, according to Gordon.
“Wingstop is not really cool,” he said, detailing that the restaurant is surfing on top of a chicken-wing consumption wave.
But, like all waves, that consumption wave may eventually ebb. In this case, the price of chicken wings – which have been low – could skyrocket back up, creating various development problems for the company, according to Gordon.
On Wednesday, Wingstop’s stock price opened up at $189.72, reaching a low of $182.08 and a high of $200.52. It closed at $196.50, up 43% through this year.