Wingstop (WING -3.95%), the fast-casual chain specializing in chicken wings, reported earnings for its fiscal second quarter on July 30, 2025. The release brought attention to several important issues. Adjusted (non-GAAP) earnings per share for Q2 FY2025 was $1.00, exceeding the analyst consensus estimate of $0.87, while GAAP revenue for Q2 FY2025 reached $174.3 million, just ahead of the $173.71 million expectation. While the company notched strong results in adjusted earnings and continued rapid expansion, it also reported a 1.9% decline in domestic same store sales -- the first negative print in over 20 years. The company raised its quarterly dividend, but also revealed new challenges in maintaining momentum among certain consumer segments.
| Metric | Q2 2025 | Q2 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.00 | $0.87 | $0.93 | 7.5% |
| Revenue (GAAP) | $174.3 million | $173.71 million | $155.7 million | 11.9% |
| Adjusted EBITDA | $59.2 million | $51.8 million | 14.3% | |
| System-wide Sales | $1.34 billion | $1.18 billion | 13.9% | |
| Domestic Same Store Sales Growth | (1.9%) | 28.7% | -30.6% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Wingstop: Business Model, Focus, and Success Factors
Wingstop runs a highly franchised, asset-light business model, with almost all locations operated by independent franchisees. Its core offering centers on cooked-to-order chicken wings, available in 12 flavors, along with chicken sandwiches and crispy tenders. Brand differentiation comes from a focused menu, customizable flavors, and omnichannel ordering, including dine-in, carryout, and delivery.
The company’s approach allows rapid expansion with limited capital needs, generating revenue primarily from royalties and franchise fees. Recent corporate priorities include global footprint growth, investment in digital ordering and customer engagement tools, and maintaining attractive economics for franchisees. Critical drivers of ongoing success are best-in-class franchisee returns, high digital engagement, and continuous menu innovation to boost first-time visits and repeat business.
Quarter in Review: Growth, Margin, and Consumer Trends
The quarter marked a new high in net new restaurant openings, with 129 units added system-wide. Total system locations reached 2,818 at quarter end, growing 19.8% from the prior year period. Nearly 98% of restaurants remained franchised as of FY2024, underscoring the company's asset-light structure. Record global development reflects broad franchisee interest and confidence in store-level returns.
GAAP revenue rose 12.0% year over year, supported by a 13.9% jump in system-wide sales. Net new unit development was the largest component of revenue growth, as both royalty streams and advertising fund contributions grew in line with system expansion. Digital sales accounted for 72.2% of system sales, illustrating the company's persistent push into digital-first engagement. Adjusted EBITDA, a non-GAAP measure, increased 14.3% to $59.2 million. However, GAAP net income dipped 2.6% as higher selling, general, and administrative (SG&A) expenses, interest costs, and technology investments weighed on margins.
A notable feature on the sales side was a 1.9% decrease in domestic same store sales—the first such decline in over two decades. Management cited isolated pullbacks among lower-income and Hispanic consumer cohorts, referencing specific regional patterns rather than a broad-based slowdown. By contrast, company-owned stores posted 3.6% positive same store growth, suggesting franchisees bore the brunt of the softness this period. The negative impact from mix was linked to growth in individual ordering occasions, driven by new menu items like tenders and chicken sandwiches, which typically have a lower average check than group orders, as discussed in Q1 FY2025.
International operations continued to accelerate, with a record 21 new openings abroad, bringing the international store count to 407. New markets, especially Kuwait and Puerto Rico, posted above-average opening sales and contributed to robust global unit growth. Management continues to view international development as a key lever for its “Top 10 Global Restaurant Brand” ambition.
Products and Operational Initiatives
Wingstop’s core products are bone-in and boneless chicken wings, complemented by chicken sandwiches and crispy tenders. The recent relaunch of its "Crispy Tenders" generated a mix higher than its chicken sandwich introduction, attracting more new first-time guests. Initial data suggested that these new visitors were “individual eaters” who may later progress to higher-ticket, group ordering occasions, according to management’s commentary.
On the technology front, the “Wingstop Smart Kitchen” project—a proprietary operational platform integrating artificial intelligence-driven demand forecasting, a gamified kitchen display system, and guest status tracking—continued its rollout. Management noted an early 5% uptick in conversion rates at Dallas pilot stores, though no uplift is embedded in FY2025 financial guidance. The system aims to reduce order wait times by half and deliver greater consistency in guest experience, potentially unlocking future upside as it scales.
Financial Outlook and Investor Considerations
For fiscal year 2025, management raised its guidance for global unit growth rate to a range of 17–18%, above prior targets. However, same store sales growth guidance for the U.S. remains essentially flat at around 1% for FY2025, matching earlier expectations and signaling only modest contribution from existing restaurant volumes. The outlook for FY2025 assumes that sales headwinds seen early in the year will subside as the company laps periods of outsized prior-year growth. Interest expense guidance was trimmed to $39 million for FY2025, due to balance sheet adjustments,
The quarterly dividend was raised 11% to $0.30 per share, up from $0.27 in the prior period for Q3 FY2025, marking an ongoing trend of returning capital to shareholders even as margin pressures persist. No additional one-time items or materially new updates on the pace of loyalty program rollout, or other strategic changes, were noted. Investors and observers are watching ongoing same store sales trends, franchisee sentiment, as well as the performance of digital and operational investments for signals about future growth sustainability.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
