Wingstop posted solid revenue growth in Q1 2025, although same-store sales and rising costs present cautionary notes.
Wingstop (WING 4.56%), a leader in the fast-casual dining segment, released its Q1 FY2025 earnings on April 30, 2025, revealing robust sales growth with a 17.4% increase from the previous year.
Net income skyrocketed by 221% in Q1 FY2025 to $92.3 million, equivalent to $3.24 per diluted share (GAAP), signaling robust operational performance.
However, same-store sales increased by only 0.5% in Q1 FY2025, and rising costs raised concerns about future profitability.
| Metric | Q1 2025 | Q1 Estimate | Q1 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.99 | N/A | $0.98 | 1.0% |
| Revenue | $171.1 million | N/A | $145.8 million | 17.4% |
| Adjusted EBITDA (Non-GAAP) | $59.5 million | N/A | $50.3 million | 18.4% |
| System-Wide Sales | $1.30 billion | N/A | $1.12 billion | 15.6% |
Source: SEC filings. Analyst estimates for the quarter provided by FactSet.
Wingstop’s Business Overview
Wingstop operates using a predominantly franchised business model, where 98% of its locations are franchise-run. This model delivers high operating margins, reduces capital expenditure, and ensures consistent cash flow. The brand continues its global expansion plan, aiming for over 6,000 U.S. outlets and 4,000 internationally. Critical success factors include strong digital engagement and strategic cost management, underpinning its growth strategy.
With a focus on digital sales and customer engagement, Wingstop invests heavily in technology and advertising to sustain same-store sales growth. Its focus on digital channels has driven significant transaction growth, now making up 72% of system-wide sales in Q1 FY2025.
Quarterly Performance
Net income increased remarkably by 221% in Q1 FY2025 to $92.3 million, driven by robust sales and disciplined cost management. System-wide sales grew by 15.7% year-over-year in Q1 FY2025, illustrating the company’s successful expansion strategy.
Wingstop opened 83 new international outlets over the last four quarters, bringing the total number of international restaurants to 388 as of March 29, 2025. Domestically, same-store sales increased modestly by 0.5% in Q1 FY2025, a notable slowdown from a massive 21.6% increase the previous year, indicating potential saturation in established markets.
The financials also reflected a rise in costs, notably for bone-in chicken wings. The cost of sales rose to 76% of sales, up from 74.5% in the prior fiscal first quarter.
This quarter also saw the company’s Adjusted EBITDA grow by 18.4% to $59.5 million, exemplifying efficient operations management outside of extraordinary items.
Looking Ahead
Looking ahead, Wingstop’s management is optimistic about continued expansion, projecting a global unit growth rate of 14% to 15%. It’s aiming to achieve 6,000 domestic and 4,000 international locations. However, the company highlighted the challenging macroeconomic environment, which might affect consumer spending patterns.
No specific forward guidance was shared in terms of earnings or revenue, as management’s focus is on strategic expansion and digital transformation. The company also noted that the macroeconomic environment is difficult to predict right now. Investors are advised to watch trends in same-store sales growth and cost management closely in the coming quarters to assess the company’s ability to maintain its profitability trajectory.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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