In 1994, Antonio Swad and Bernadette Fiaschetti had already owned and were operating Pizza Patron for about 8 years. Then they had the idea to open up a wing restaurant in Garland, Texas. That company would become Wingstop.
The concept took off and passed hands of many different investors as it grew. In 2003, the chain was acquired by Gemini Investors, which sold to Roark Capital Group in 2010 before going public in 2015. Today, the company is a publicly traded franchise system rapidly expanding units across the United States.
The Wingstop Franchise started offering franchises in 1998 and since then has become one of the fastest growing franchise opportunities and more than 1,000 stores open or under development.
So you love wings and want to invest in a Wingstop Franchise? What type of investment can you expect? After review of the Franchise Disclosure Document, we found that the total estimated cost to start operating a Wingstop restaurant is between $374,089 to $782,442. This includes an initial franchise fee of $30,000.
The ongoing royalty fee paid to the franchisor is 6% of gross sales. If you install the Wingstop required poin-of-sale system then your royalty is 5%. The ongoing ad fund is 4% of gross sales payable weekly. The ongoing local advertising and promotional materials fee is at least 1% of quarterly gross sales.
How Much Money can a Wingstop Franchisee Make?
So you have dropped likely $600,000 or so to build a Wingstop Franchise and wondering how much money you will make now? After review of the Wingstop Franchise Disclosure Document (FDD) and based on company reports, we found that the average revenue for a Wingstop location is around $1,100,000. On that, the average EBITDA is around $135,000. Therefore, the average franchisee makes around $135,000 per location.
To see whether this is a good investment, you must look at the expected return and compare this amount to other investment opportunities. $135,000 return on a average investment of around $380,000 (company presentations and isn’t the midpoint of FDD), this equates to a 35% return on investment.
If 35% is a greater return than you are able to find elsewhere then a Wingstop Franchise may be a good investment for you.
Wingstop Estimated Initial Investment
The estimated initial investment to start a Wingstop franchise is estimated to be between $374,089 and $782,442. Like most other restaurant investments, the majority of the costs are included in leasehold improvements, furniture and other equipment. Here is how the investment breaks down:
- Initial Franchise Fee: $20,000
- Development Fee: $10,000
- Security Deposits: $0 – $10,000
- Site Survey Fees: $2,500
- Architectural/Engineering Fees: $6,660 – $25,350
- Permit Expeditor Fees: $1,200 – $2,500
- Professional Fees: $1,500 – $4,000
- Leasehold Improvements: $142,669 – $422,062
- Business and operating permits: $3,000 – $5,500
- Décor Package: $7,500 – $10,925
- Furniture, Fixture, Audio/Visual, Equipment, Small wares: $106,395-$135,790
- Point-of-Sale Register, Kitchen Display: $22,500 – $30,500
- Signs: $8,500 – $36,315
- Phone Systems: $1,725 – $2,000
- Opening Inventory: $10,000 – $15,000
- Opening Publicity and Publications: $5,000 – $15,000
- Additional Funds: $25,000 – $35,000
- Total Estimated Cost: $374,089 and $782,442
Wingstop Net Worth Requirement
Maybe you can find the money to build a new Wingstop, but along with that Wingstop is also going to check out your net worth. The current net worth requirement to become a Wingstop franchisee is a liquidity requirement of $600,000 with net worth of $1,200,000. There is also a 3 store minimum requirement for development.
The ongoing royalty fee paid to the franchisor is 6% of gross sales. However, royalty will be 5% of gross sales for franchisees renewing their franchises who previously committed to obtain, and in fact bought and installed the Wingstop system’s currently required point-of-sale system by December 31, 2016. Royalties are payable by automatic debit of account on Tuesday of each week for Gross sales during the week ended the prior Saturday. Gross Sales include all revenue from the restaurant but exclude sales taxes, coupon credits, employee discounts, and revenue from gift cards sold.
Wingstop Ad Fund:
The ongoing ad fund fee is 4% of gross sales. These ad fund contributions are payable weekly at the same time as royalties are due. The Ad Fund contribution rate may be increased if the franchisees owning majority of U.S. franchised Restaurants vote to require all U.S. franchisees to pay on a going-forward basis the then-applicable maximum Ad Fund contribution rate.
Wingstop Local Advertising and Promotional Materials
The ongoing local advertising and promotional materials fee is at least 1% of quarterly gross sales. While the Franchise Agreement allows Wingstop to set a minimum 2% of Gross sales when a local advertising co-operative forms. That said, currently Wingstop currently does not intend to require franchisees to spend more than 1% of gross sales on local marketing.
Local ad spend is due when billed by service providers. You must join a local advertising cooperative if one is formed in your market; you must participate in all system-wide promotions and advertising campaigns. If you fail to spend the required 1% of gross sales, Wingstop may require you to pay that amount at the same time you pay your royalties.
Wingstop Franchise Term
The initial franchise term begins on Franchise Agreement’s effective date and expires 10 years from either the Restaurant’s scheduled opening date or the actual date on which the Restaurant opens for business, whichever is earlier. If you are in compliance, the franchise will allow you to renew for 2 additional 10-year terms.
A Wingstop Restaurant occupies approximately 1,200 to 2,000 square feet of leased space, typically is in an in-line (strip) shopping center in an urban or suburban commercial area. Initial investment could be substantially higher if you decide to buy property or to lease space in an enclosed mall or similar high-rent facility.