How Much Is a Wingstop Franchise? Wingstop Franchise Cost Detailed (2023)
Written by: Parth Parth
Last Updated by
Rocio Somoza: March 3, 2023
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Wingstop is an American multinational fast-food chain that focuses on chicken wings. Their restaurants and locations are aviation-themed following a 1930s and 1940s pre-jet aviation theme. It serves cooked-to-order, hand-sauced, and tossed chicken wings, boneless wings, tenders, fresh-cut, seasoned fries, and beverages.
The chain was founded in 1994 in Garland, TX by Anthony Swad. Begging to offer franchises in 1997, it sold its billionth chicken wing in 2002. Since then, the chain has grown to over 1,400 restaurants. It is headquartered in Addison, TX.
It was acquired by Gemini Investors in 2003, sold to Roark Capital Group in 2010, and went public in 2015. It partnered with Doordash for national delivery and celebrated its 25th year in business in 2019.
Wingstop’s first international location was in Mexico in 2011. It has since grown to 21 restaurants in that country since then. As of today, Wingstop operates in the United States, United Kingdom, Australia, Saudi Arabia, Indonesia, Malaysia, Mexico, Panama, Russia, Singapore, Colombia, France, and United Arab Emirates. It is the largest fast-casual chicken wings-focused restaurant chain in the world.
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How Is Wingstop Franchise Positioned in the Food and Beverage Industry?
The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people are employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x.
Wingstop competes in the chicken market against big brand companies such as KFC, Bojangles, and Zaxby’s. Wingstop franchisees also compete against other nearby Wingstop locations.
How Much Is a Wingstop Franchise?
The initial Wingstop Franchise Fee is $30,000. You have to pay this upfront fee when opening a Wingstop franchise. This includes a $10,000 Development Fee payable when signing the Development agreement, and an additional $20,000 Initial Franchise Fee payable when signing the Franchise Agreement.
Wingstop Franchise Cost
The estimated total investment necessary to begin the operation of a Wingstop Franchise ranges from $315,310 to $948,080. The following costs are part of the upfront costs included in the initial investment for a Wingstop. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Wingstop franchise in 2022.
Estimated Initial Investment
| Type of Expenditure | Amount | To Whom Payment Is to Be Made |
|---|---|---|
| Initial Fees Development Fee Franchise Fee | $10,000 $20,000 | Us |
| Security Deposits | $0 – $10,000 | Landlord/Utilities Insurance Companies |
| Architectural/Engineering Fees | $5,800 – $35,500 | Architectural Professional |
| Professional Fees | $2,500 – $7,500 | Your attorney, accountant, and other professionals |
| Leasehold Improvements | $155,000 – $570,000 | General Contractor |
| Business and Operating Permits | $4,500 – $8,500 | Licensing Authorities |
| Decor Package | $6,300 – $32,480 | Approved Independent Supplier |
| Furniture, Fixtures, Audio/Visual System, Equipment and Small-wares | $55,850 – $138,100 | Approved Independent Suppliers |
| Point-of-Sale, Back Office, Software and Hardware and Related Items | $12,000 – $13,000 | Suppliers |
| Signs | $3,360 – $32,000 | Approved Independent Suppliers |
| Opening Inventory | $10,000 – $16,000 | Approved Independent Suppliers |
| Opening Publicity and Promotions | $5,000 – $15,000 | Independent Suppliers |
| Additional Funds – 3 months | $25,000 – $40,000 | Various |
| TOTALS (excluding real estate purchase and lease costs) | $315,310 – $948,080 |
Compared to KFC, one of Wingstop’s main competitors, this is a much lower investment cost. KFC’s midpoint investment is $2,302,075, while Wingstop’s is only $631,695. This is almost a quarter of KFC’s initial investment.
Wingstop Franchise Requirements
To qualify to start a franchised location for Wingstop, the franchisor requires a minimum net worth of $1,200,000, of which $600,000 must be liquid assets. They also impose a minimum development requirement of 3 stores that you must commit to starting. Wingstop notes that some markets might require a higher initial investment due to their nature, and, as such, the requirements for opening locations in those markets are higher. Lastly, the franchisor, Wingstop, requires multi-unit restaurant management/development experience.
Owning a Wingstop Franchise Requires Ongoing Fees
Royalty: 6% of Gross Sales. However, under the 2020 Incentive Program, the Royalty will be 2% of Gross Sales during the Restaurant’s first full year of operation, 4% of Gross Sales during the Restaurant’s second full year of operation, and 6% of Gross Sales during the remaining franchise term beginning with the first day of the Restaurant’s third year of operation.
Ad Fund: 5% of Gross Sales
Ongoing technology fees: Up to $100 a month
In comparison, KFC only charges 5% Royalty and 4.5% for their advertising national co-op.
How Much Do Wingstop Franchise Owners Make?
2021 Wingstop Median Franchise Sales: $1,485,793
| Initial Investment (midpoint) | %Profit Margin of Average Franchise Sales | Estimated profits | Time to Recoup Investment |
|---|---|---|---|
| $631,695 | 10% | $148,579 | 6.75 years |
| 15% | $222,868 | 5.5 years | |
| 20% | $297,158 | 4.5 years |
Based on the median sales for Wingstop’s franchise locations, at an average of a 15% profit margin, it will take around 5.5 years to recoup your investment. This is much shorter than other competing franchise opportunities. KFC, for example, takes 13.5 years for the investment to be recouped. You may not get a 15% profit margin which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Chicken Wings stores; the extent of market penetration and brand awareness that Wingstop stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Wingstop Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Wingstop franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales – 0.31
$1 Million – $5 Million Net Sales
- Estimated Selling Price = Net Sales – 0.34
Over $5 Million Net Sales
- Estimated Selling Price = Net Sales – 0.86
When you go to sell a Wingstop franchise based on the median multiple of .31 and median sales estimate in 2021 of $1,485,793, it would sell for $505,169. This is slightly lower than the midpoint investment of $631,695.
However, as an owner of multiple Wingstop franchises, you do have the ability to make a profit. Restaurant owners with over $5 million in sales have a median multiple of 0.86. So, if you had 5 Wingstop franchises this would be approximately $7,428,965 in sales.
Therefore, selling your multiunit franchise system would amount to $6,388,909. The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Wingstop (Franchisor) Income Statement Key Insights:
Statement of Income
| Fiscal Year Ended | |||
|---|---|---|---|
| December 25, 2021 | December 26, 2020 | December 28, 2019 | |
| Revenue: | |||
| Royalty revenue | $123,587 | $102,765 | $78,611 |
| Franchise fees | 4,020 | 3,656 | 4,087 |
| Other revenues | 8,263 | 7,430 | 8,463 |
| Total revenue | 135,870 | 113,851 | 91,161 |
| Costs and expenses: | |||
| Selling, general and administrative expense | (612) | 1,472 | 117 |
| Amortization | 1,298 | 1,310 | 1,322 |
| Total costs and expenses | 686 | 2,782 | 1,439 |
| Income before taxes | 135,184 | 111,069 | 89,722 |
| Income tax expense | 1,147 | 791 | 550 |
| Net income | $134,037 | 110,278 | $89,172 |
Wingstop is a very profitable business for the franchisor with retained earnings of $134 million in 2021. Compared to $89 million in 2019, they saw an increase of 50% from 2019 to 2021. This is a good indication of high growth as a company overall.
How Many Wingstop Units Have Opened and Closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 1095 | 1199 | +104 |
| 2020 | 1199 | 1320 | +121 | |
| 2021 | 1320 | 1485 | +165 | |
| Company-Owned | 2019 | 29 | 31 | +2 |
| 2020 | 31 | 32 | +1 | |
| 2021 | 32 | 36 | +4 | |
| Total Outlets | 2019 | 1124 | 1230 | +106 |
| 2020 | 1230 | 1352 | +122 | |
| 2021 | 1352 | 1521 | +169 |
Over the last three years, the company has been expanding rapidly. The period between 2019 and 2021 saw Wingstop acquire 104 new franchises in 2019, 121 new ones in 2020, and 165 in 2021. That increased Wingstop’s total franchise numbers from 1095 at the start of 2019 to 1485 at the end of 2021. That is a growth rate of 35.6% which is unambiguously high for this industry. This is a good indication of Wingstop’s massive expansion and market penetration.
However, this might also be a sign of Wingstop’s franchises opening in the same geographic area, splitting revenue, and not generating more. We recommend doing your own market research for the locations you want to start doing business in before formalizing your relationship with Wingstop.
Menu Offerings
Wingstop’s menu features chicken wings, boneless wings, and chicken tenders with various dips and sides. The flavors available in the US include Hawaiian, Garlic Parmesan, Lemon Pepper, Mild, Original Hot, Hickory Smoked BBQ, Atomic, Mango Habanero, Cajun, Louisiana Rub, and Spicy Korean Q.
Former U.S. limited time offer flavors include Brazilian Citrus Pepper, Harissa Lemon Pepper, Ancho Honey Glaze, and “flavor mashups” of a mix of two existing flavors during the brand’s 25 Days of Flavor campaign in 2019, including Hot Lemon, Dragon’s Breath, etc. In 2021, Wingstop brought back Hot Lemon, Lemon Garlic, and Bayou BBQ for a limited time.
In 2021, WingStop announced a digital-only restaurant called ThighStop, which includes the same menu items as WingStop, but sells thighs instead of wings. This was done, in some part, because of soaring wing prices in the USA.
Wingstop in the News (2022)
- Wingstop has recently been hinting at raising its own chicken because of chicken supply issues and soaring chicken wing prices in the USA.
- They have also recently announced a branded sneaker called the Lemon Pepper 1’s.
- Recently, the company has also been looking at expanding its offerings and recently tested its new chicken sandwich in 60 restaurants.
- Looking at expanding further out internationally, Wingstop also just signed an agreement to start 60 locations in South Korea.
WING Stock Market Performance
Wingstop (WING) stock has been consistently performing very well in the stock market ever since its IPO came out in 2015. The performance graph above compares the change in the incremental stockholder return on Wingstop stock with the returns of the NASDAQ Composite Index and the S&P 600 Restaurants Index. The graph assumes a $100 initial investment in Wingstop’s common stock and in each of the indices and assumes the reinvestment of dividends if any.
On February 15, 2022, Wingstop’s board of directors declared a quarterly dividend of $0.17 per share of common stock, totaling approximately $5.1 million.
Alternative Wing Concepts: Wing It On!
Wing It On! is another chicken wing chain that focuses on bringing a “Buffalo-inspired wing experience” to the USA. It currently offers 24 flavors of wings, both saucy and dry. Alongside chicken wings, Wing It On! offers “hand-crafted chicken sandwiches, customizable fries, epic sides, and sweets.” WIO is in the $87,000 – $398,000 investment range with an Initial Franchise Fee of $25,000 – $32,500. It is headquartered in Raleigh, NC, and has been offering franchises since 2011. As of today, it has around 12 locations.
Conclusion
Wingstop offers people the opportunity to be a part of a business that is firmly established in the industry. The aviation theme offers customers a unique experience. If starting a Wingstop franchise sounds like a good idea to you, you can submit an application on their website. If approved, you will be invited to their Discover Day, which will help you get a sense of whether or not you want to own a franchise. We recommend talking to at least 3 to 5 existing owners to figure out Wingstop’s model and their franchisee-franchisor relationship.
While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in the Food and Beverage Industry.
