Wingstop Inc. (NASDAQ: WING) is likely to benefit from unit expansion, franchise model and technological initiatives. The company's focus on enhancing shareholder value bodes well. However, a challenging macroeconomic environment and elevated costs are concerns.
Growth Catalysts for Wingstop Stock
Wingstop focuses on unit expansion to drive growth. Over the last 12 months, the company has opened more than 300 net new restaurants, demonstrating its ability to grow both domestically and internationally at a rapid pace. In the second quarter of 2024, WING opened 73 new restaurants. The company has revised its outlook for 2024, projecting the opening of between 285 and 300 new restaurants, up from the previous guidance of 275 to 295. These expansion efforts signal strong future revenue potential, as Wingstop continues to penetrate new markets and grow its global footprint.
Wingstop's franchise model continues to generate strong returns. The company's average unit volume has grown from $1.5 million (two years ago) to over $2 million. This growth is fueling record demand for new restaurants. Wingstop's franchisees are reporting unlevered cash-on-cash returns of over 70%, making it an attractive investment for current and potential brand partners.
Increased focus on digitalization bode well. During the second quarter, digital sales accounted for 68.3% of Wingstop's total sales, thereby showcasing strength in leveraging technology to enhance the customer experience. With over 45 million digital users, Wingstop is capitalizing on its proprietary MyWingstop platform to improve engagement ...
