Wingstop Franchises: Revenue, Costs & Profits (2023)

Wingstop is an attractive franchise opportunity for entrepreneurs who want to get into the fast-food industry. Indeed, with an investment of (only) $631,695 in comparison with average annual sales of $1,460,459, Wingstop franchises can be very profitable businesses.

In this article we’ll look a little bit deeper into the financials of Wingstop franchises to see whether it really is the good investment it sure sounds like.

We’ll see how much it costs to start a Wingstop franchise and what’s the average turnover you can expect. Finally, we’ll see how profitable this franchise venture really is. Let’s dive in!

Key stats

Franchise fee	$20,000
Royalty fee	6.0%
Marketing fee	5.0%
Investment (mid-point)	$632,000
Average sales	$1,460,000
Sales to investment ratio	2.3x
Payback period*	3 years
Minimum net worth	$1,200,000
Minimum liquid capital	$600,000

Wingstop franchise: a brief introduction

Wingstop is a leading casual fast-food chain store with over 1,700 locations worldwide, including the United States and 13 other countries.

The chain is an aviation-themed restaurant founded by Antonio Swad in Garland, Texas, in 1994.

It serves cooked-to-order, hand-sauced, and tossed chicken wings, sides, chicken tenders, French fries, and soft drinks.

The Wingstop franchise journey began in 1997 under Wingstop Restaurant LLC, headquartered in Addison, Texas. Its first international restaurant was in Mexico, and by 2002, it had already sold a billion chicken wings..!

In 2003, Gemini investors bought the chain store and sold it to Roark Capital Group in 2010. It went public in 2015.

Today, Wingstop is the largest fast-casual restaurant in the world that specializes in chicken wings.

Wingstop franchise: pros and cons

The pros

The Wingstop franchise is one of the most lucrative and fast-growing, and it offers franchisees some amazing advantages. These are:

• Low start-up costs: The application fee and royalty fee for the Wingstop franchise are relatively low compared to those of other franchise options. This encourages new franchisees to invest in multi-unit stores
• Great support: Wingstop offers extensive training to would-be franchisees to identify real estate, restaurant construction, and management. This equips new and inexperienced franchisees with the knowledge to run their franchises
• Opportunity for growth: The Wingstop franchise has experienced steady growth for the past few years. This has been reflected in the number of new stores recorded between 2019 and 2021. You should not be surprised if a location close to you is earmarked for Wingstop market expansion. This offers new franchisees a great opportunity to add more stores
• Territory protection: Wingstop grants franchisees competitive protection in a trade area around the restaurant. As such, it will not permit the establishment of another franchise in the same location. This gives would-be franchisees a conducive market to thrive and an incentive for potential expansion
• Online ordering: Wingstop has adopted modern technology that allows customers to order online. This technique is not only fun but also convenient to customers and promotes growth. It also leads to franchisees requiring fewer employees, thereby reducing employee costs
• Brand popularity: The Wingstop franchise is well known for its brand of flavored and great-value Buffalo chicken wings. This gives would-be franchisees the purchasing power and marketing clout that only established brands can offer

The cons

Even though it has the above amazing benefits for aspiring franchisees, Wingstop still has its pitfalls. These includes:

• Relatively high ongoing costs: New franchisees have to meet advertising and marketing fees. As compared to other franchisors, these charges are a bit on the high side, which may put off interested franchisees
• Full-time commitment: The Wingstop franchise is not a good fit for those interested in just a financial investment. The reason is that it requires franchisees or their designated principal to assume full responsibility for the day-to-day running of the franchise.
• Limited Varieties: Wingstop has a relatively specific and limited menu for its fast foods. This may act as a limitation in attracting more customers
• No financing: Wingstop doesn’t offer direct or indirect financing to potential franchisees. Either way, it does not guarantee a franchisee’s note, lease, or obligation.
• Not suited for inexperienced franchisees: The chain’s requirement of a three-store minimum and previous multi-store owners’ preferences do not favor those new to franchising

How much does it cost to open a Wingstop franchise?

To become a Wingstop franchisee you need to invest on average $631,695 including the initial franchise fee of $20,000 as well as a development fee of $10,000.

Of course, the figure mentioned above is just an estimated average to give you some idea of your initial investment. This number can vary depending on your location. According to the latest FDD, the investment ranges between $315,310 to $948,080.

In addition to the initial fees, the investment amount also includes other costs like security deposits to the landlord, engineering fees, leasehold improvements, permits, decor, furniture, equipment, software, opening inventory, opening publicity and promotions, and additional funds for 3 months for smooth operations of the business, etc.

Here’s a summary of the different costs you should pay for:

Type of Cost	Investment amount
Initial Fees	$30,000
Formation costs	$245,310 – $847,080
Operating expenses	$40,000 – $71,000
Total	$315,310 – $948,080

What is the turnover of a Wingstop franchise?

A Wingstop franchise makes $1,460,459 in sales per year on average. This number represents the median annual net sales for the 1,144 franchised Wingstop Restaurants operated in 2021.

How profitable is a Wingstop franchise?

Wingstop doesn’t provide much financial information in its FDD, let alone profitability ratios and costs. That being said, as per our analysis we found out Wingstop franchises have an adjusted EBITDA margin of 27% on average.

This is a profit margin including COGS, labor, rent and royalty fees. Yet this doesn’t include any other expenses like depreciation, other overheads, debt interest expenses and taxes.

See below a simplified profit-and-loss down to adjusted EBITDA. For COGS, labor and rent expenses we used industry average percentages (as % of sales) instead:

Profit-and-loss	Amount ($)	As % of sales
Sales	$1,460,459	100%
COGS	$(365,115)	25%*
Labor	$(423,533)	29%*
Rent	$(116,837)	8%*
Royalty + marketing fees	$(160,650)	11%
Adjusted EBITDA	$394,324	~27%

Is a Wingstop franchise a good investment?

Wingstop may have profit margins in line with industry averages for quick-service restaurants, yet this doesn’t tell us much about whether this is actually a good investment for franchisees.

In order to answer that question, we need to look at the payback period: how long does it take for a franchisee to recoup her/his investment.

Payback period = investment / net profit

We know it costs on average $631,695 to open a Wingstop franchise, but how much profits (as in net profits) can you realistically earn per year?

We assess the net profit margin for Wingstop at 15% of sales, in line with similar fast food restaurant franchises. That means that Wingstop franchisees earn on average $209,000 in net profits per year.

This also means that Wingstop franchises have a payback period of 2.9 years: this is a very good payback (anything below 4 years is an excellent payback in general). Therefore, we can argue that Wingstop franchises are good investments as the payback period to recoup your original investment is under 3 years.

How does Wingstop compare vs. other franchises?

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