• Domestic Same-Store Sales Growth: 20.9% increase in Q3, primarily driven by transaction growth.

• Average Unit Volume (AUV): Surpassed $2.1 million, up from $2 million last quarter and $1.8 million in the prior year quarter.

• Net New Restaurant Openings: 106 net new restaurants in Q3, contributing to a 17% unit growth rate.

• Systemwide Sales Growth: 39.4% increase in Q3.

• Total Revenue: Increased 38.8% to $162.5 million in Q3.

• Company-Owned Restaurant Sales: $31.3 million in Q3, a $7.4 million increase from the prior year.

• Adjusted EBITDA: $53.7 million, a 39.5% increase versus the prior year.

• Earnings Per Diluted Share: $0.88, a 35.4% increase versus the prior year.

• SG&A Expenses: Increased by $9.2 million to $32.3 million, driven by performance-based stock compensation and headcount-related expenses.

• Dividend: $0.27 per share, totaling approximately $7.9 million, to be paid on December 6, 2024.

• Share Repurchase Program: $61.1 million remaining under the current $250 million authorization.

• Warning! GuruFocus has detected 2 Warning Sign with WING.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wingstop Inc (NASDAQ:WING) reported a 20.9% increase in domestic same-store sales, primarily driven by transaction growth.

• The average unit volume (AUV) for Wingstop restaurants surpassed $2.1 million, up from $2 million last quarter and $1.8 million in the prior year.

• Wingstop Inc (NASDAQ:WING) opened over 100 new restaurants in Q3, achieving a unit growth rate of 17%, marking a record for the company.

• The company has a strong development pipeline, expecting to open between 320 to 330 net new restaurants in 2024.

• Wingstop Inc (NASDAQ:WING) has successfully implemented a supply chain strategy that mitigates volatility in food costs, maintaining food costs within the targeted mid-30% range.

Negative Points

• The company anticipates a potential slowdown in same-store sales growth in Q4, with implied guidance suggesting a deceleration.

• SG&A expenses increased by $9.2 million, driven by performance-based stock compensation and headcount-related expenses.

• Company-owned restaurant food costs were reported at 37%, higher than the system average due to a higher bone-in wing mix.

• The company is facing a competitive industry value environment, with many large QSRs pushing meal deals.

• There is a noted gap in brand awareness compared to more mature QSR brands, despite strong sales growth.

Q & A Highlights

Q: Can you explain the expected deceleration in same-store sales growth for Q4 compared to the previous quarters? A: Michael Skipworth, President and CEO, explained that the company is not managing its strategies to solve for a single quarter but is focused on long-term growth. He noted that Q4 will mark the first of four consecutive quarters where Wingstop will be lapping same-store sales growth of over 20%. Despite the deceleration, the company is experiencing healthy transaction growth and strong cash flows, which are fueling development and expansion efforts.