Wingstop S-1 Analysis (NASDAQ:WING)

Exchange: NASDAQ

Proposed Symbol: WING

Employees: 372

CEO: Charles R. Morrison

Offer Amount: $99 mm

No. of Shares to be sold in IPO: 5.8 mm

Price Range: $16-18

Fully Diluted Market Value at Midpoint of Proposed range: $513 mm

Description from S-1: “Wingstop is a high-growth franchisor and operator of restaurants that specialize in cooked-to-order, hand-sauced and tossed chicken wings. Founded in 1994 in Garland, Texas, we believe we pioneered the concept of wings as a “center-of-the-plate” item for all of our meal occasions. We offer our guests 11 bold, distinctive and craveable flavors on our bone-in and boneless chicken wings paired with hand-cut, seasoned fries and sides made fresh daily. Our menu is highly customizable for different dining occasions, and we believe it delivers a compelling value proposition for groups, families, and individuals. Our concept has received numerous accolades, including recognition in 2014 as the “Best Chicken Wings” in the U.S. by Food and Wine, the “#3 Fastest-Growing Chain” by Nation’s Restaurant News, and the “Best Franchise Deal in North America” by QSR Magazine.”

From the S-1

Underwriters:

  • Lead Underwriter: Morgan Stanley, Jefferies, Baird
  • Co-Managers: Goldman Sachs, Barclays, Wells Fargo Securities

Competitors: Buffalo Wild Wings (BWLD), Popeye’s Louisiana Kitchen (PLKI), El Pollo Loco (LOCO), Cluck-U, Wendy’s (WEN), McDonald’s (MCD), Chick-fil-a, Zaxby’s, Chipotle’s (CMG), Zoe’s Kitchen (ZOES), Panera (PNRA), Shake Shack (SHAK), and other fast casual/fast food restaurants.

  • Total number of stores has a compound annual growth rate of 12.6% YoY since 2011
  • Restaurant Expansion & Growth:
    • 2011 = 499 locations
      • Domestic: 488
      • International: 11
    • 2012 = 546
      • D: 533
      • I: 13
    • 2013 = 614
      • D: 593
      • I: 21
    • 2014 = 712
      • D: 671
      • I: 41
  • Sales by Year since 2011 (in millions):
    • 2011 = $387
    • 2012 = $457
    • 2013 = $550
    • 2014 = $679
  • 97% of all stores are franchised
    • 1st time Wingstop franchisees pay a $20K franchise fee
      • returning franchisees pay $10K/franchise
  • Principal Stockholder is Roark Capital Partners LP, an Atlanta-based rivate equity firm with over $6 billion in assets
    • Roark will still be the majority shareholder of WING stock after the IPO

Other Notes

  • Based in Dallas, TX
  • Founded in July 1994
    • began offering franchises in May 1997
    • first franchise open in April 1998
  • 712 total locations in 36 states and 6 countries
  • 11 different wing flavors
  • the most similar recent IPOs are SHAK, which is up 220% from its IPO price, and BOJA, which is up 30% from its IPO price.
  • Recent Awards:
    • “Best Chicken Wings in the U.S.” Food and Wine (2014)
    • “Best Menu Variety and Best Craveability” Nation’s Restaurant News (2014)
  • Rapper Rick Ro$$ owns 25 Wingstop franchises
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