Wingstop Franchise in 2024: Costs, Fee & FDD
Discover the costs, fees, and financial insights of investing in a Wingstop franchise. Learn about the brand’s impressive growth, digital sales success, and comprehensive support system to help you decide if Wingstop is the right investment for you.
Table of Contents:
Wingstop was founded in 1994 by Antonio Swad in Garland, Texas. The concept began with a single location and a simple menu focused on delicious, high-quality chicken wings. Swad’s vision was to create a niche in the fast-casual dining segment that celebrated the iconic American chicken wing, and Wingstop quickly gained a loyal following. Over the years, the brand has grown exponentially, becoming a significant player in the food and beverage industry, particularly in the quick service restaurant (QSR) sector. The franchise’s focus on wings, fries, and a distinct array of flavors has set it apart from the competition.
Wingstop’s core product is its flavorful chicken wings, available in various styles such as classic, boneless, and crispy tenders. They are renowned for their wide range of sauces and seasonings, from classic Buffalo to exotic options like Mango Habanero and Louisiana Rub. Complementing the wings are their fresh-cut seasoned fries, and house-made ranch and blue cheese dips, which have become customer favorites. Wingstop primarily targets a demographic of young adults, families, and sports enthusiasts, thriving in suburban and urban markets where there’s a high demand for quick, tasty, and affordable meals.
As of now, Wingstop has expanded its presence to over 1,500 locations worldwide, operating in countries including the United States, Mexico, Singapore, the United Kingdom, and Australia. The brand serves millions of customers daily, known for its robust dine-in, takeout, and delivery services. This global footprint underscores Wingstop’s successful strategy and adaptability in various markets, making it one of the fastest-growing wing-centric franchises. The brand’s continuous expansion is a testament to its popular and resilient business model.
Wingstop offers a comprehensive support system for its franchisees, ensuring they have the tools and knowledge to succeed. The franchise provides extensive training programs covering operations, marketing, customer service, and management. New franchisees undergo rigorous initial training, followed by ongoing support including site selection, construction assistance, and local store marketing strategies. Wingstop’s commitment to its franchisees is evident in its structured approach, providing them with a playbook for success. Additionally, the brand’s strong corporate culture and community engagement initiatives further solidify its position as a leader in the QSR wing market.
Wingstop Franchise Insights
- Wingstop’s digital sales represent over 60% of total sales, highlighting its robust online ordering and delivery infrastructure.
- The franchise boasts a 95% success rate for franchisees renewing their agreements, indicating high satisfaction and profitability among current owners.
- The brand has won numerous awards, including being ranked #1 in the “Best Franchise Deals” list by QSR Magazine in 2018, reflecting its value and appeal as a franchise investment.
- Wingstop’s loyalty program, “The Club,” has over 10 million members, driving repeat business and customer retention.
Wingstop Franchise Key indicators
3-year Growth (%)
43%
vs industry 4%
Total U.S. Franchised Units
1,877
3-Year Failure Rate
1%
vs industry 11%
Sales-to-Investment ratio
1.2:1
How much does it cost to open a Wingstop franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Wingstop franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Wingstop franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Wingstop below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Development Fee | $10,000 | $10,000 |
| Franchise Fee | $20,000 | $20,000 |
| Security Deposits | $0 | $10,000 |
| Architectural/Engineering Fees | $7,300 | $30,000 |
| Professional Fees | $2,500 | $7,500 |
| Leasehold Improvements | $100,000 | $510,000 |
| Business and Operating Permits | $4,500 | $8,500 |
| Décor Package | $10,000 | $35,000 |
| Furniture, Fixtures, Audio/Visual System, Equipment and Smallwares | $50,400 | $153,800 |
| Point-of-Sale, Back Office, Software and Hardware and Related Items | $11,100 | $23,900 |
| Signs | $3,600 | $32,400 |
| Opening Inventory | $10,000 | $16,000 |
| Opening Publicity and Promotions | $5,000 | $15,000 |
| Additional Funds - 3 months | $25,000 | $40,000 |
| Total | $259,400 | $912,100 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
For Wingstop, here are the financial requirements to open a franchise, based on available data:
- Initial Investment The total initial investment required to open a Wingstop franchise ranges from approximately $259,000 to $912,000. This includes expenses such as the franchise fee, real estate, equipment, and initial inventory. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Prospective franchisees are generally required to have at least $200,000 in liquid assets. This ensures they have sufficient cash on hand to cover initial and unforeseen expenses.
- Net Worth The minimum net worth requirement for Wingstop franchisees is around $400,000. This is a common requirement to ensure the financial stability of the franchisee.
These figures are based on typical industry standards and Wingstop’s disclosed requirements. If you’re considering a similar franchise in the quick service restaurant industry, these numbers are generally in line with what other franchises may require, though they can vary slightly based on the specific brand and location.
How much does a Wingstop franchise owner make?
Calculating the salary of a Wingstop franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Wingstop franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Wingstop Revenue & Gross Sales
In 2023, Wingstop franchises achieved a median gross sales of $1,669,000, reflecting a 12% increase from the previous year. This strong financial performance underscores the brand’s robust consumer demand and potential for significant revenue generation. Of course, restaurant gross sales will vary depending on the location and operations.
Which key factors impact the average revenue performance of Wingstop franchisees?
Several factors likely contributed to the growth of Wingstop’s U.S. franchisee median gross sales revenue this most recent year. First, Wingstop’s strategic focus on digital innovation and delivery services boosted online sales, which accounted for a significant portion of revenue. The introduction of new, limited-time flavors and menu items likely attracted repeat and new customers, enhancing customer engagement and driving sales. Additionally, effective marketing campaigns and partnerships with popular delivery platforms expanded their reach. The overall increase in consumer demand for convenient, high-quality food options, coupled with Wingstop’s strong brand loyalty and efficient operational model, also played a crucial role in this revenue growth.
Wingstop Franchise Operational Costs
When opening a Wingstop franchise, several key primary ongoing operational costs need to be considered:
- Rent/Lease Monthly rent or lease payments for the location, which can vary based on location and property size.
- Labor Costs Wages for employees, including managers, cooks, and front-of-house staff, plus any benefits or insurance.
- Food and Beverage Supplies Regular purchases of chicken wings, sauces, fries, beverages, and other menu items.
- Utilities Costs for electricity, gas, water, and waste disposal services.
- Maintenance and Repairs Upkeep of kitchen equipment, dining areas, and the physical store.
- Insurance Property, liability, and workers’ compensation insurance to protect the business.
- Technology Fees Costs for POS systems, software updates, and other technology-related expenses.
- Miscellaneous Costs This includes items like cleaning supplies, uniforms, and other day-to-day operational needs.
These ongoing costs are crucial to manage effectively to ensure the profitability and sustainability of your Wingstop franchise.
Wingstop Franchise Fees
Wingstop’s ongoing franchise fees include several key components:
- Royalty Fee Wingstop charges a royalty fee of 6% of gross sales. This fee covers the ongoing support and use of the Wingstop brand and systems.
- Advertising Fee Franchisees contribute 6% of their gross sales to the national advertising fund. This fee supports national marketing and advertising campaigns to promote the brand and drive customer traffic.
- Local Marketing While not a fixed percentage, franchisees are often encouraged to invest in local marketing efforts to support their individual store’s visibility and sales. The specific amount can vary based on the franchisee’s discretion and market needs.
- Additional Fees There are additional fees for training programs, technology, and other items provided by Wingstop that may be applied
These fees are standard in the industry and are designed to ensure that franchisees benefit from collective marketing efforts and brand support, contributing to the overall success of the Wingstop franchise network.
Wingstop Franchise Earnings
The earnings of a Wingstop franchise owner can vary significantly based on a variety of factors including location, sales volume, operational efficiency, and cost management. However, on average, Wingstop franchise owners can earn a significant income.
Wingstop franchisees have a median gross sales of $1,669,000. Based off of the median gross sales, we can estimate a Wingstop franchisee makes $250,000 in estimated earnings (EBITDA) per year, assuming that the franchisee is an owner-operator in the location. This means that you can consider the salary of a Wingstop franchise owner to be roughly $250,000 before interest, taxes, depreciation, and amortization (EBITDA).
If the franchisee is semi-absentee, then earnings will be significantly lower based off of the costs of having a hired manager.
How to Open a Wingstop Franchise
Becoming a Wingstop franchisee involves several key steps, from the initial inquiry to starting operations. Here’s an overview of the process:
1. Initial Inquiry
a. Research and Inquiry: You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
2. Application and Initial Screening
a. Franchise Application: Fill out and submit a detailed franchise application. This form typically includes information about your financial background, experience, and interest in franchising.
b. Initial Screening: Wingstop’s franchise development team reviews the application and conducts an initial screening to assess your qualifications.
3. Franchise Disclosure Document (FDD)
a. Receive the FDD: If the initial screening is successful, you will receive the Franchise Disclosure Document (FDD), which contains detailed information about the franchise, including costs, fees, and obligations.
4. Due Diligence and Evaluation
a. Review the FDD: Take time to thoroughly review the FDD, preferably with a lawyer or financial advisor to understand all the terms and commitments.
b. Meet with Wingstop: Participate in meetings or calls with Wingstop’s franchise development team to ask questions and get more insights into the franchise.
5. Financial Verification
a. Provide Financial Information: Submit detailed financial statements and documents to verify that you meet Wingstop’s financial requirements for liquid assets and net worth.
6. Discovery Day
a. Attend Discovery Day: Visit Wingstop’s headquarters for a Discovery Day. This is an opportunity to meet the corporate team, see operations firsthand, and gain a deeper understanding of the franchise.
7. Approval and Agreement
a. Franchise Approval: If both parties are satisfied, Wingstop will approve your application.
b. Sign Franchise Agreement: Sign the franchise agreement and pay the initial franchise fee.
8. Site Selection and Lease Negotiation
a. Site Selection: Work with Wingstop’s real estate team to select a suitable location for your restaurant.
b. Lease Negotiation: Negotiate and sign a lease for the property.
9. Training and Preparation
a. Complete Training: Participate in Wingstop’s comprehensive training program covering operations, management, and marketing.
b. Prepare the Location: Oversee the build-out of your restaurant, including design, equipment installation, and inspections.
10. Grand Opening
a. Pre-Opening Activities: Conduct hiring, local marketing, and final preparations for opening.
b. Grand Opening: Open your Wingstop restaurant with the support of Wingstop’s launch team to ensure a smooth start.
By following these steps, you can successfully navigate the process of becoming a Wingstop franchisee and launch your restaurant.
Pros & Cons
Pros
Strong Brand Recognition: Wingstop is a well-known brand with a loyal customer base, which can help drive traffic and sales from day one.
Simple Menu: The focused menu on wings, fries, and sauces simplifies operations, inventory management, and training, reducing complexity for franchisees.
High Demand: Chicken wings are a popular and growing segment in the fast-casual and quick-service restaurant markets, appealing to a broad demographic.
Digital Sales: A significant portion of sales comes from online orders and delivery, which can boost revenue and provide resilience in varying market conditions.
Proven Business Model: With over 1,500 locations globally, Wingstop’s business model has been tested and proven to be successful in various markets.
Cons
Competitive Market: The fast-casual and quick-service restaurant industries are highly competitive, with numerous established brands and new entrants vying for market share.
Operational Demands: Managing a restaurant involves long hours, dealing with staffing issues, and maintaining consistent quality and service standards.
Dependence on Supply Chain: Any disruptions in the supply chain for key ingredients like chicken wings can impact operations and profitability.
Location Dependent: Success can be heavily dependent on the location chosen, requiring thorough market research and strategic site selection.
Economic Sensitivity: The restaurant industry can be sensitive to economic fluctuations, which may affect customer spending and profitability.
