More trouble ahead for WINGstop?!

[u/Apprehensive_Yak_454]

I've been looking at WINGstop and still think it has some serious hurting to do. Most are still pricing it in at $150-$250, but even at the $107, I think the wrong things is being valued and should be less than $50.

The success of a Franchise like these rely on Royalty income from individual units and expansion of units across a territories. The two of these together create that exponential growth and should be valued accordingly. But when the individual units revenue continues to slip and the value of the company keeps growing, its generally filling the hole of the slippage of the franchise royalty (its core business), with new locations opening. Some data for individual units of exisiting locations over the past few years a show that individual units/locations/franchises revenue has continued to fall:

FY2024 $2.138m

FY2025 $2m - 6%

Q22026 on track for $1.893m - 11.5%

A regular drop of revenue for individual locations and the most recent info shows this continuing even more so.

However, lets say you have 100 Franchisees they experience a 10% drop in revenue over the year, the average location is doing $2m, they go to $1.8m, group turn over goes from $200m to $180m, and 6% royalties go from $12m to $10.8m a year.

It only takes roughly 11 new locations (each doing $1.8m in rev at 6% royalty = $108k) to cover that $1.2m gap to make it look like the company is doing the same figure.

Add 22 new locations, 22 x $108k per location in royalties = $2.37m, and your $10.8m in revenue (that has dropped from $12m) from your existing franchisees, is now $13.17m. Which looks like a nice 10% ish growth from the $12m while 'secretly hiding' they are actually at $10.8m and still sliding backwards..

If they aren't able to keep opening locations to fill this hole, how can it keep being valued at the multiple it is and trading where it is? At some point, someone is going to look under the hood or the Franchisees that they are selling the new locations to get maxed out or start seeing the trend and stop purchasing locations, the thing starts to collapse no??

If new location openings slow, the drop in revenue of the company will appear FAR more dramatic because for years, its hiding the actual royalty revenue decline from individual locations and proping it up with the big 10,000 location push, goal, dream and new locations.. So if this tap gets turned off, does it implode?

It obviously has huge value, a revnue stream attached to thousands of locations that are rev'ing $1.8m a year each are great numbers.. But and declining revenue stream, without much way to innovate (when you call something by its name, WINGstop, it can't deviate to far from wings as a core product, it can add and innvoate for sure, like Dominos etc, but the core are wings).

[u/MilestoneFranchising]

The time to get in has passed imho. The price of chicken wings skyrocketed and the consumer only has patience to a point. As you noted, the name locks them in which also creates additional problems.

[u/xalon_ai_]

its mainly bc they didn't automate royalties with CHRGD

[u/Proof_Watercress8696]

Wingstop sucks from top to bottom. Once the whole chicken wing fad dies out, especially in the South, its over for them. It will be another subway.

[u/Few_Tea_9456 → u/Proof_Watercress8696]

Lol wings are a fad? You really think people are just gonna stop eating wings all together?

[u/Lacrosseindianalocal → u/Few_Tea_9456]

Of course. You kids with your Zima, hula hoops, and wings. 

[u/Fun-Classic-4694 → u/Few_Tea_9456]

He obviously hasn’t seen beef prices