Wingstop’s astonishing growth is unprecedented in the restaurant industry


Company Profile


Wingstop (ticker: WING) was founded in 1994 by Antonio Swad in Garland, Texas. Serving a variety of chicken-based meals, there are 12 signature flavors to choose from.

It began franchising in 1997, with the first franchise opening in 1997, and by 2002, the brand claimed to have served 2 million wings.

Wingstop began serving lunch in 2005 and began selling boneless products in 2009. Wingstop opened its first international restaurant in Mexico in 2010.

Wingstop was the third-fastest growing restaurant chain in the United States between 2014 and 2016 in terms of system-wide sales and unit growth, according to Nation’s Restaurant News.


In 2015, Wingstop went public with an initial public offering price of $19 per share. That year, their profits more than doubled.

Main business

Why was no one notice it when IPO?

I still remember that when this company went public, it did not arouse much interest from investors. The main reason is that the catering industry is not easy to operate, and consumer tastes are changing and it is difficult to sustain. There is nothing novel or special about the chicken wings that Wingstop focuses on.

Start delivery

In 2019, Wingstop began using the slogan “Where Flavor Gets Its Wings”. In the second year, Wingstop can deliver in Dallas, Texas through DoorDash (ticker: DASH).

Why business break out?

Successful positioning

The company’s explosive growth in recent years can be attributed to the following possible internal strategic positioning successes:

  • Increased brand awareness
  • The growth of the menu
  • Wingstop’s pricing strategy
  • Profitability and franchisee linkage

Help by pandemic

It happened to be this year that changed the company’s destiny, because the new coronavirus pneumonia that followed made people at home frantically order food, causing the company’s performance to skyrocket.

Marketing budget keep increasing

One of the key drivers of Wingstop’s growth is an increase in its marketing budget. Wingstop is increasing the allocation of advertising dollars paid by franchisees by approximately 100 basis points in fiscal 2023, which represents an approximately 20% increase in its national media spend.

Competitors and market size


It helps that Wingstop has few competitors in the chicken wings market. It’s not like Chick-fil-A, Popeyes, and Zaxby’s are all vying for chicken sandwich supremacy.

As far as domestic brand-level wings are concerned, Wingstop is indeed in a category of its own, a category of home-made food restaurants. Wings remain the main product sold at Wingstop, while chicken sandwiches are a staple menu item at Chick-fil-A and Popeyes.

Applebee’s is trying to launch a virtual wings brand during the pandemic, while Brinker International is offering its It’s Just Wings brand. But none of that has really scaled up, he said. Popeyes has also launched some chicken wing products in the past four months, but none have been successful.


But Wingstop will tell you, the more people promote wings, the more people will think of going to Wingstop,. The company is not worried about competition entering because the size of the market is so huge.

Spot market prices for bone-in chicken wings are increasing 145% year over year, according to Benchmark research.

Operational performance

Performance index

Wingstop’s first-quarter profit surged 66% and revenue grew 34%. U.S. domestic same-store sales growth accelerated to 21.6% from 20.1% last year.

Wingstop also raised its performance forecast and now expects U.S. domestic same-store sales to achieve low double-digit growth. The company previously reported mid-single-digit same-store sales growth. The company plans to open 275 to 295 net new stores globally this year, up from its previous forecast of 270.

Store performance

Same-store sales are trending upward, and these customers keep coming back to Wingstop. In the four quarters of 2023, the company’s domestic same-store sales grew by an average of approximately 18.4%.

At the same time, according to data from industry research organization Revenue Management Solutions, customer traffic at fast food restaurants will decrease by 3.5% annually in the first quarter of 2024. Part of the decline is due to a 4% increase in average prices in the industry compared to last year.

According to a report on May 28, Cava Group’s same-store sales growth slowed for the fourth consecutive quarter, with an increase of 2.3%. However, this figure included a 3.5% increase in menu prices, which was offset by a 1.2% decline in foot traffic; Wingstop, by comparison, managed to buck the trend.

Capital Market Performance

Eye-popping share price performance

Wingstop has gained 450% over the past five years, and shares are up 51% so far in 2024. This is incredible for a chain restaurant, no matter how strong the restaurant concept.

What’s the problems there?

Growth sustainability

Wingstop is a hot growth company right now and is also involved in the chicken industry, but that may not be enough. The fast-casual chain sells tons of chicken wings and related products every year.

Wingstop’s pandemic growth has been driven by its focus on delivery rather than heavy investment in its in-house restaurants. This ended up being ideal for pandemic-era market conditions. It also positions Wingstop well for the current consumer focus on delivery and in-app ordering.

Valuation is unreasonable

There’s just one problem with the company: its current valuation doesn’t make sense for the restaurant industry in which it operates.

Since food and labor make up a large portion of total revenue, restaurant profits are often limited. Generally speaking, paying software-type valuation multiples for low-margin consumer discretionary businesses is not a smart investment strategy.

Wingstop currently trades at a forward price-to-earnings ratio of over 110 times. That’s an odd number for a chain restaurant.

Just look at some of the other high-flying companies of late, like Starbucks (ticker: SBUX ) , whose stock prices are now plummeting due to slowing growth.

Investors should be cautious

I wouldn’t dare predict that Wingstop’s growth spurt will end very soon. But at this valuation, any sort of mean reversion, slowdown in consumer spending, or changes in customer behavior or preferences could cause Wingstop shares to plummet.


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