Wingstop expands its restaurant network as same-store sales fall
Wingstop grew system-wide sales and company revenue in its third quarter, while domestic same-store sales declined as transactions and consumer spending weakened. New restaurant openings helped offset the pressure on existing locations. The chain finished the quarter with more than three thousand restaurants and expects 440–450 net openings for the year. Company revenue and system-wide sales cover different operations.
Economics & Markets··Evening
New locations grow network sales
Wingstop, the chicken-wing restaurant chain, increased system-wide sales by 6 per cent in the third quarter ended September 26. Sales across its network reached 1.437 billion dollars, compared with 1.356 billion dollars a year earlier. Domestic same-store sales declined 5.4 per cent, which the company attributed to lower transactions and consumer spending. Digital channels accounted for 73.7 per cent of system sales. The network-wide measure includes franchise restaurants, while revenue recognized by Wingstop itself increased 5.3 per cent to 185.1 million dollars from 175.7 million dollars.[1]
Restaurant count reaches 3,331
The chain added 76 net restaurants in the quarter and ended the period with 3,331 locations. There were 2,787 domestic restaurants and 544 international locations. The domestic network comprised 2,716 franchised restaurants and 71 company-operated locations. New restaurant development contributed 8.6 million dollars to growth in royalties, franchise fees and other revenue. Lower same-store sales offset 3.6 million dollars of that contribution. Sales at company-operated restaurants increased by 2.2 million dollars, reflecting 16 additional locations, including 13 acquired during the quarter. Their cost of sales rose to 27.2 million dollars, equivalent to 78.2 per cent of company-operated sales, from 74.8 per cent.[1]
Adjusted earnings ease as openings continue
Wingstop reported adjusted diluted earnings per share of 1.08 dollars for the quarter. Net income increased 2.2 per cent to 29.1 million dollars, or 1.07 dollars per diluted share. Adjusted net income declined 3.5 per cent to 29.34 million dollars. Adjusted earnings before interest, taxes, depreciation and amortization were approximately unchanged at 64 million dollars. General and administrative expenses amounted to 30.5 million dollars and depreciation and amortization were 9 million dollars. Management expects full-year domestic same-store sales to decline 6.5–7 per cent. Its expansion outlook calls for between 440 and 450 net restaurant openings during the year. Wingstop repurchased 190,688 shares during the quarter at an average price of 131.12 dollars. Its remaining share repurchase authorization totaled 288.4 million dollars.[1], [2]
