Fast-food chain Wingstop (NASDAQ:WING) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 17.4% year on year to $171.1 million. Its non-GAAP profit of $0.99 per share was 14.7% above analysts’ consensus estimates.
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Revenue: $171.1 million vs analyst estimates of $170.8 million (17.4% year-on-year growth, in line)
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Adjusted EPS: $0.99 vs analyst estimates of $0.87 (14.7% beat)
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Adjusted EBITDA: $54.19 million vs analyst estimates of $57 million (31.7% margin, 4.9% miss)
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Operating Margin: 22.4%, down from 29.3% in the same quarter last year
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Free Cash Flow Margin: 10.1%, down from 23% in the same quarter last year
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Locations: 2,689 at quarter end, up from 2,279 in the same quarter last year
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Same-Store Sales were flat year on year (21.6% in the same quarter last year)
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Market Capitalization: $7.25 billion
Wingstop’s first quarter results reflected steady revenue growth, driven by accelerated restaurant openings and progress in digital initiatives, as described by CEO Michael Skipworth. Management attributed performance to strong new guest acquisition, the successful relaunch of chicken tenders, and ongoing investments in the Wingstop Smart Kitchen. The company also highlighted the impact of difficult prior-year sales comparisons and regional consumer pullbacks, especially in lower-income and Hispanic markets, which management characterized as temporary.
Looking ahead, management expects the macroeconomic environment to remain uncertain, shaping a cautious outlook for same-store sales in 2025. Skipworth and CFO Alex Kaleida emphasized continued focus on expanding unit count, brand awareness, and the upcoming loyalty program as levers for long-term growth. Kaleida noted that the Smart Kitchen rollout and digital personalization strategies are designed to improve guest experience and transaction frequency, supporting the company’s goal of reaching $3 million average unit volumes (AUVs) and over 10,000 global locations.
Management’s remarks focused on the company’s ability to deliver revenue growth through accelerated unit development and digital transformation, while navigating margin headwinds and shifts in guest behavior.
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Accelerated Unit Openings: Wingstop opened a record 126 new restaurants in the quarter, with franchisees’ demand for growth supported by strong unit-level economics and predictable food costs. Management stated that new restaurant volumes are trending at $1.8 million, up from $1.2 million three years ago.
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Digital and Technology Investments: The rollout of the proprietary Wingstop Smart Kitchen platform, now in over 200 restaurants, has cut order times in half and improved consistency. Early results show higher sales and guest satisfaction versus control locations, and the company expects a full rollout by year end.
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Menu Innovation and Guest Acquisition: The relaunch of chicken tenders drove record new guest acquisition in March, with management noting that new tender guests exhibit behavior similar to those from the chicken sandwich launch—starting with individual visits and migrating to group occasions over time.
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International Expansion Momentum: Management highlighted strong results in international markets, including record-opening sales in Kuwait and rapid expansion in Puerto Rico. Plans are underway to launch in Australia and up to five new international markets in 2025.
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Brand Awareness Initiatives: Increased advertising spend, including a partnership with the NBA and targeted campaigns through digital channels, was cited as a key driver for brand health metrics and guest acquisition. Management noted a persistent 20-point gap in brand awareness versus competitors, underscoring ongoing marketing efforts.
Management’s outlook for 2025 centers on cautious expectations for same-store sales growth, with a greater emphasis on new unit development, digital engagement, and menu innovation to support future performance.
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Smart Kitchen Rollout Impact: The full deployment of the Smart Kitchen is expected to improve service speed and consistency, potentially unlocking new sales occasions and driving higher transaction frequency, though management has not explicitly factored its impact into second-half guidance.
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Loyalty Program Launch: A new loyalty program, leveraging the company’s 50 million-user database, is planned for pilot in late 2025. Management expects this initiative to drive repeat visits and enhance personalized marketing.
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International and Franchise Expansion: Ongoing commitment to opening new markets and accelerating franchise growth, including in Australia and other international regions, is viewed as a critical long-term growth engine. Management cited strong franchisee demand and improved returns as key enablers.
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Jeffrey Bernstein (Barclays): Asked about the rationale behind the cautious 1% same-store sales outlook. Management attributed this to difficult prior-year comparisons and localized consumer pullbacks, emphasizing confidence in long-term strategies.
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David Tarantino (Baird): Inquired about the measured sales impact from the Smart Kitchen rollout. Management pointed to early positive sales divergence and improved guest satisfaction, but did not quantify the expected benefit for the remainder of 2025.
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Danilo Gargiulo (Bernstein): Queried on international expansion plans, specifically the timing and strategic importance of China and India. Management stated that China remains a long-term opportunity but is not prioritized currently due to the geopolitical environment; India was also cited as a significant future market.
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Andrew Charles (TD Cowen): Asked about the effect of development on existing store sales and the decision to move from CRM efforts to a formal loyalty program. Management indicated minimal sales transfer impact and highlighted the importance of loyalty for driving repeat behavior.
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Chris O’Cull (Stifel): Sought details on how Wingstop is addressing softness among Hispanic and lower-income consumers, and strategies to communicate improved service times. Management described targeted, value-driven marketing and reliance on organic guest experience improvements rather than explicit messaging about faster service.
In the coming quarters, the StockStory team will monitor (1) the pace and sales impact of the Smart Kitchen rollout, (2) the pilot and development of the new loyalty program as a driver of guest retention, and (3) continued international expansion, including new market entries and franchisee momentum. We will also pay close attention to whether menu innovation sustains new guest acquisition and if marketing investments narrow the brand awareness gap.
Wingstop currently trades at a forward P/E ratio of 65.4×. Should you load up, cash out, or stay put? See for yourself in our free research report.
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