Wingstop Lifts Profit as Chicken Costs Ease
Domestic same-store sales fell 7.5% as lower traffic and consumer pressure weighed on demand.
Wingstop Inc. (WING), the chicken-wing restaurant chain, increased second-quarter profit as lower food and corporate costs offset slowing sales growth.
The quarter extended a split between weakening restaurant demand and improving profitability. Domestic same-store sales remained under pressure, while adjusted EBITDA growth accelerated and operating margin widened.
Revenue rose 6.4% from a year earlier to $185.6 million, slowing from 7.4% growth in the first quarter and 8.6% in the fourth quarter. Net income increased 16.9% to $31.3 million, and diluted earnings rose to $1.15 a share from 96 cents. Adjusted earnings increased to $1.18 a share from $1.00.
System-wide sales increased 5.3% to $1.411 billion, even as the growth rate eased from 5.9% in the prior quarter. Domestic average unit volume fell to $1.893 million from $1.956 million in the first quarter and $2 million in the fourth quarter. Digital sales also accounted for a smaller share of the system-wide total for a second consecutive quarter.
Continued restaurant development supported sales despite softer existing-store demand. Wingstop opened 102 net new restaurants, up from 97 in the first quarter, while unit growth moderated to 16%. International openings rose to 30 from 21 a year earlier, and domestic franchised openings declined to 76 from 110.
Lower bone-in chicken-wing costs reduced company-owned restaurant cost of sales to 73.3% of sales from 75.2% a year earlier. Selling, general and administrative expense fell to $30.2 million from $32.9 million, helped by lower stock compensation and payroll costs. Operating income increased 20.8% to $54.6 million, lifting operating margin to about 29.4%, while adjusted EBITDA rose 12.5% to $66.6 million.
Wingstop now expects domestic same-store sales to decline 4% to 6% in 2026 and continues to project global unit growth of 15% to 16%. Its updated full-year SG&A forecast is $140 million to $143 million, including $3 million of restructuring charges, while expected net interest expense remains about $43 million.