Wingstop is a chain of aviation-themed restaurants specializing in chicken wings with a variety of highly-seasoned flavors and sauces. Wingstop also serves french fries, soda, and alcohol such as beer and wine (where permitted). While Wingstop plays in fast-food, they offer a different menu and experience than other fast-food restaurants that’s served as the catalyst for 20.7% same store growth in Q1 of 2021.
How much does a Wingstop cost to open?
Expect to invest between $346,775 – $733,249 for a single location. You’ll also need liquid capital of $600,000 and a net-worth of $1,200,000 to qualify. Wingstop may have caught your attention due to strong same-store sales numbers and unique menu in the fast-food category. But is this right for you? I dig into the pros and cons of this concept below that you need to understand before investing… including how much you can expect to profit each year with a store.
Financial Requirements and Fees
Here is a table of the brief financial requirements to start a franchise with Wingstop. The first amount is the minimum liquid capital you need, which refers to the money you need on hand for short-term financial obligations.
Net worth is all your financial assets including property and investments. Note that these numbers are merely a base amount and added fees or costs may be added depending on a number of factors like the location you plan to open.
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|Fees/ Expenses||Financial Amount|
|Total Investment||$346,775 – $733,249|
Here is a further breakdown of the initial fees and costs you’d encounter for the start-up of the franchise.
|Name of Fee||Low||High|
|Business and Operating Permits||$3,000||$5,500|
|Furniture, Fixtures, Audio/Visual System, Equipment and Smallwares||$113,400||$137,000|
|Point-of-Sale Register, Kitchen Display, Hardware and Software||$15,000||$27,100|
|Opening Publicity and Promotions||$5,000||$15,000|
|Additional Funds – 3 months||$25,000||$35,000|
|ESTIMATED TOTAL (excludes real estate purchase and lease costs)||$376,300||$724,200|
Here is a list of other fees you’d encounter while running a franchise with Wingstop.
|Type of Fee||Amount|
|Royalty||6% of gross sales.|
|Ad Fund||4% of gross sales.|
|Ad Customization Fee||Reasonable charge.|
|Local Advertising and Promotional Materials||Franchisees must spend 1.5% of their restaurants’ quarterly gross sales on local advertising during 2020 and 2% thereafter.|
|Insurance||As provided in the operations manual.|
|National Gift Card Program Charges||Approximately 10% of value of Wingstop gift cards issued/sold by third-party retailers (i.e., not by Wingstop restaurants) for eventual redemption at Wingstop restaurants; amount may change in future based on charges by third-party gift card program administrator.|
|Indemnification||Unlimited (but depends on nature of claim).|
|Audit Fees||Cost of audit, including auditor’s travel, meals, and lodging expenses (depends on extent of the franchisee’s noncompliance and cooperation with the franchisor).|
|Interest/Late Charges||Interest on past-due obligations to the franchisor and its affiliates at the highest commercial contract interest rate the law permits.|
|Renewal Fee||25% of the sum of the then current development fee and franchise fee (that currently would equal $7,500); If franchisees renew their franchise for a 2nd 10-year renewal term (after the first 10-year renewal term ends), they must pay 50% of the sum of the current development fee and franchise fee (that currently would equal $15,000).|
|Website Maintenance Fee||$25 initial set up cost/up to $50 per month.|
|Intranet Maintenance and Development Fee||Up to $50 per month.|
|Operations Manual(s) Training Materials Replacement Charge||$35 for recipe guide, $5 for spec sheets plus shipping costs.|
|Annual Convention Attendance Charge||Currently $500 per attendee.|
|Product and Service Purchases||Varies depending on products and services franchisees buy from the franchisor or its affiliates.|
|Attorneys’ Fees and Costs||Will vary under circumstances and depend on nature of the franchisee’s non-compliance.|
|Liquidated Damages||See FDD.|
|Supplemental Training/Assistance||Up to $1,000 per trainer, plus out-of-pocket costs.|
|Tax Reimbursement||Out-of-pocket cost reimbursement.|
|Transfer Marketing Expenditure||$2,500 – $7,500|
Average Sales / Revenue per Year
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Being a part of Wingstop, each franchise store can averages $1.25 million dollars in sales per year. The company boasts annual systemwide revenue of more than $53 million dollars.
Revenue will vary depending on the location of the store. Some stores will bring in more revenue and some will bring in less than the average. It’s important to analyze the differences between high-performing stores and low-performing units to identify the characteristics of a store with top performance.
Wingstop Franchise Facts
|Incorporated Name:||Wingstop Franchising LLC|
|Industry||Quick Food Services|
Founded in Garland, Texas in 1994, Wingstop is now headquartered in Addison, Texas. The franchise now has more than 1,500 locations worldwide.
In 2003, Wingstop was acquired by a group called Gemini Investors. A few years later the concept was sold to Roark Capital Group in 2010. Finally, Wingstop went public in 2015 where you can find them at NASDAQ under the ticker symbol WING.
Expected Profits of Wingstop for Owners
Wingstop franchisees can anticipate a profit of $200,000 per store. Not all franchises have this great of a performance every year though. Here are the key factors that will have a big impact end of year profit. One such profit center is adding a drive-thru window to bolster sales.
The location has got to be the biggest factor for how well a franchise performs. It’s a good thing that Wingstop provides territory protection, so you’re almost ensured that there’s no other competition within a certain square mile radius.
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However, you may not get a guarantee since there are so many businesses and plazas right now that you may run into some sort of competition that may affect your profits. Even though Wingstop provides territory protection there may be other fast-food wing places in the area that serve as competition for your store.
Also, you have to keep in mind that there are some places that may have better accessibility than Wingstop. Wingstop is generally a pick-up and go or you dine in with their aviation-themed restaurant. On the other hand, other places have drive-thrus that give customers a faster and more convenient option so they don’t have to get out of their car. This may deter people from coming to Wingstop since it’s not as suitable as places with drive-thrus.
The staff will definitely affect how much money your restaurant will make. If they’re not trained efficiently or they’re just not motivated to do well, the performance of sales won’t be great. Even though Wingstop offers training programs for employees, different locations will have different kinds of people with different backgrounds.
Finding ambitious people who are ready to invest in the restaurant like franchisees is quite difficult, but that’s how you’re able to perform really well and have great profit margins.
Advantages of Wingstop
Wingstop franchises definitely have an upper hand in comparison to other brands.
One of the main reasons why Wingstop may be the franchise to get into because they provide territory protection. This almost guarantees that you’ll have a good flow of customers or a good amount of loyal consumers because there won’t be any or much competition around within a certain area with territory protection.
Wingstop will help new franchisees secure a location where there won’t be any other fried chicken restaurants that will damper your profit margins. Especially as a fast-food option, having territory protection within the brand can ensure success and popularity of your store.
Being a part of the successful Wingstop Brand, they have over 1500 stores located across the globe. This means that they have a lot of resources to help out the franchises. They offer support for real estate, design of the store, reconstruction, and any other daily support services Wingstop can offer, such as opening agents to help your staff if you’re new or opening your first restaurant. For beginners, this is a huge advantage as the company has many additional resources that help to support you.
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This also connects with their international presence, which helps with branding and marketing. Much of the work is done for the franchises as this is the benefit of working with big brands.
Another great advantage that Wingstop has is its menu of flavors for their fried chicken. They’re not really flavors you see everywhere at restaurants that offer fried chicken, but they’re great flavors that can stand out and attract attention. They also have seasonal flavors and changing menu options that adapt to the current trends. This helps to keep variety in their menu as well as keep customers interested and coming back.
With Wingstop, you have the option to manage the franchise by designating someone as the principal and general manager to supervise and manage the store, while you can benefit from the ownership from a distance away!
In addition, Wingstop does a good amount of their business online. People would go through their website and place their order and pick up in-store. This means you may not need too many employees staffed on-site since you’ll be focused on receiving online orders, making them, and then waiting for people to come to pick their food up. With more of business moving to online applications, having this technologically advanced ordering system allow customers a faster way to get their food. Especially since Wingstop does not offer drive-thru options, this is an important factor to note.
- Territory protection when opening a franchise
- Backed with plentiful of resources to manage your franchise
- Able to passively achieve income if you’re able to appoint someone as manager
Challenges of Wingstop
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Every brand comes with some challenges for their franchises, otherwise, there’d be a perfect franchise everyone would flock to.
One of the difficulties is that there’s mandatory training for the two administrators to be in training in the Wingstop regime for 25 days since they’ll have to be working on a full-time basis at the store. While for some this could be a great learning experience, for other more experienced owners, this may feel like a burden.
Wingstop also requires all the franchises to stock everything that Wingstop requests them to and they cannot use any other flavors besides the ones on their standard menu. Franchises are unable to sell or provide anything else that’s not on the menu without prior consent from Wingstop. However sometimes, Wingstop doesn’t specify a brand for some items, so that may leave some leeway for owners. This can be a limiting factor for those that like to have a hands-on approach to their store.
There is also no direct financial assistance from Wingstop for new franchise owners that need some help getting through the initial fees and investment. However, there are third-party organizations that can help people, but it will come with a price as it normally does if it’s not directly with the brand franchisor.
The royalty fee for Wingstop is also quite on the higher end at 6%. Usually, the range for franchises is 4% to 6%, so it’s definitely on the more pricey side. It’s quite a steep investment that’s needed as well, as the total investment can go over $700,000 with a franchise fee of $20,000.
There is also entrenched competition for Wingstop. Popeyes, KFC, and Churches are just a few of the other restaurants with a chicken focused menu. Their fried chicken isn’t heavily seasoned, so they focus more on the pure taste of what a fried chicken should be along with side dishes like mashed potatoes and coleslaw. Since Wingstop only sells chicken, some may find this factor a bit limiting and restrict the flow and influx of customers.
There are also other fried chicken restaurants like Buffalo Wild Wings, Korean fried chicken like Bonchon, who also sell seasoned fried chicken, so it’s definitely a bit more difficult to stand out.
Finally, there are concerns with the increasing price of chicken wings. Chicken wings that have historically cost $1.50 per pound are now $3.00 or more. If these food costs remain inflated, the higher cost will need to be passed on to customers. Higher costs could push some customers to lower-cost, alternative fast food options.
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- A higher royalty fee than other franchises.
- No direct financial assistance.
- Lots of competition from other fast-food options.
- Chicken wing commodity costs are on the rise.
Is the Wingstop Franchise Right For You?
The Wingstop franchise isn’t the right fit for everyone. For instance, when you apply to be a part of their franchise, they need you to be at least committed to a minimum of 3 restaurants for development, you’ll need to have a proven track record of successfully managing multiple businesses and experience in working with restaurants and branding.
For beginners, this may be daunting and feel like too much of a commitment. For the ambitious, this is an advantage because you have a direct path to growing the number of franchises you own.
Any food franchise concept requires a lot of effort to get off the ground. However, your effort can really pay dividends after a few years. Wingstop has been on the rise the last few years and didn’t slow down at all due to the recent pandemic. The number of stores increased by 30% from 2016 to 2019. As a franchise, if owners are profiting $200,000 annually it’s bound to attract the attention of seasoned entrepreneurs.
If you’re a veteran and are interested in Wingstop, your experience is valued and rewarded by the company. Veterans receive a discount of $15,000 dollars for the initial franchise fee for each store. This is a fantastic opportunity for veterans. Learn more about the steps you need to take to become a Wingstop franchisee at the official corporate website.