A great player in the restaurant industry is Wingstop Inc. (WING, Financial).
The company went public in June 2015 and since then, it has been providing positive results. Wingstop has posted preliminary unaudited sales results for the full year 2015 and fiscal fourth quarter periods. In the recent quarter, the company added 38 new systemwide restaurants in its pipeline resulting in 845 systemwide restaurants in total since the company's IPO.
Wingstop is a franchiser and operator of restaurants that specialize in hand-sauced and tossed chicken wings. The company operates its restaurants across the U.S., Mexico, Russia, Singapore, the Philippines, Indonesia and the United Arab Emirates. Its operating segments are Franchise and Company. The Wing Experts’ menu features classic and boneless wings with 11 bold, distinctive flavors, including Original Hot, Cajun, Atomic, Mild, Teriyaki, Lemon Pepper, Hawaiian, Garlic Parmesan, Hickory Smoked BBQ, Louisiana Rub and Mango Habanero.
Strong fourth-quarter results
On Jan. 11, this fast-casual restaurateur reported preliminary unaudited sales results for the full-year 2015 and fiscal fourth quarter periods ended Dec. 26, 2015. The company’s systemwide restaurant sales increased 19.6% to approximately $218 million. Company-owned restaurant store sales increased 9.9% to approximately $8.24 million compared to $7.5 million in the year-ago quarter. Further, Wingstop’s domestic same-store sales increased 5.9%.
For the fiscal 2015, Wingstop's systemwide restaurant count increased 18.7%, driven by 133 net unit openings. Compared to fiscal 2014, domestic same-store sales and company-owned restaurant same-store sales increased 7.9% and 9.4%. Further, the company’s systemwide sales increased 21.0% to approximately $821 million.
For fiscal 2016, Wingstop expects its total revenue in the range of $77.6 million to $77.9 million, compared to its prior guidance of between $76.8 million and $77.2 million.
Positive outlook
Wingstop expects the following for its long-term growth:
- More than 10% annual unit growth.
- Adjusted EBITDA growth in the range of 13% to 15%.
- Net income/ EPS growth in the range of 18% to 20%.
- Strong free cash flow.
- Low single digit annual growth and consistent new store ramp.
Growth
Wingstop has a unique business model with simple concepts and coveted consumer. Nearly half (49%) of Wingstop's guests are Millennials. It has a broad, loyal and diverse guest base attracted by the unique flavor experience, product quality, brand personality and convivial nature of eating wings. Further, the company has been fueling demand through technology; 15% of the total sales in the recent quarter represent online sales.
From 2012 to September 2015, average unit volume and restaurant profit grew at a CAGR of 13.9% and 21.0%. Further, from 2011 to 2015, Wingstop’s gross new unit openings grew at a CAGR of 41.9%. In addition, the company has a track record of 12 consecutive years of same store sales growth.
Recently, Wingstop partnered with Sizzling Platter, a Utah-based restaurant management company for a 35-unit development. This agreement will help Wingstop expand its national footprint along the East Coast, with new restaurants planned for Washington, D.C., and Virginia as well as Salt Lake City.
Management
On July 14, 2015, Wingstop appointed Larry D. Kruguer as its new president of International. Kruguer's global experience across consumer companies over 25 years, extensive background in international markets, and franchise leadership will help Wingstop to grow its global presence.
(Source: Company website)
On a concluding note
Overall Wingstop is a rock-solid company with strong fundamentals. The company’s strengths can be seen in multiple areas such as highly attractive franchise system, experienced management team, revenue growth and strong operating margin.
Restaurant stocks are booming and with the recent quarterly release, the company is aiming for a better future and is all set to deliver a healthy menu to its investors. It is expected to create greater shareholder returns.
Disclosure: I do not hold any position in the company.
