Wingstop is booming. At a time when many brands are struggling or filing for bankruptcy, Wingstop’s same-store sales soared more than 33% in April.
On March 16, the brand closed all 1,413 of its dining rooms. So with all its dining rooms closed, how did sales jump so high for Wingstop? Wingstop, a tech company dressed as a quick service restaurant, shifted its attention to takeout and delivery only.
The company has been laser-focused on transitioning to digital sales. Wingstop’s CEO, Charlie Morrison, said the brand’s goal is convert 100% of Wingstop’s transactions to digital. Currently, 65% of sales are made via the chain’s digital channels, and 75% of orders are for off-premise consumption. According to Wingstop, digital transactions both require less labor and carry a $5 higher check average for the brand.
Morrison emphasizes digital’s importance in obtaining customer data. The brand uses digital orders to suggest new flavors and personalize customer experiences. The digital focus has certainly aided the brand’s rapid expansion. Wingstop now has more than 1,400 restaurants open across the United States, Mexico, Singapore, Indonesia, UK, and the United Arab Emirates. So how do you get in on this tech-driven, pandemic proof behemoth? And what is the TRUE Wingstop franchise cost? Let’s break it down.
How Much Does a Wingstop Franchise Cost?
A Wingstop franchise is not cheap, but not expensive to start. The average franchisee can expect to pay out between $374,089 and $782,442 to open a new Wingstop restaurant. By comparison, a McDonald’s restaurant requires $1 million to $2.2 million in startup costs.
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The below table provides a complete breakdown of the initial investment Wingstop franchise costs for 2019.
Initial Wingstop Franchise Cost
Estimated Initial Investment
Expenditure
Low
High
Development Fee
$10,000
$10,000
Franchise Fee
$20,000
$20,000
Rent
Varies
Security Deposits
$0
$10,000
Site Survey Fees
$2,500
$2,500
Architectural/Engineering Fees
$6,600
$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, Fixtures, Audio/Visual System, Equipment and Smallwares
$106,395
$135,790
Point-of-Sale Register, Hardware and Software
$22,500
$30,500
Signs
$8,500
$36,315
Phone System
$1,725
$2,000
Opening Inventory
$10,000
$15,000
Opening Publicity and Promotions
$5,000
$15,000
Additional Funds – 3 months
$25,000
$35,000
ESTIMATED TOTAL (excludes real estate purchase and lease costs)
$374,089
$782,442
Ongoing Wingstop Franchise Cost Breakdown
In addition to the above initial investment costs, it’s important to know what else will ultimately play into Wingstop’s franchise cost. Perhaps most significantly, you’ll be required to pay a royalty of 6% of gross sales. You’ll also be responsible to contribute up to 4% of gross sales to Wingstop’s advertising fund.
In addition, over a dozen contingent fees may, at some point, be required. The below table breaks down and explains all of Wingstop’s ongoing fees.
Type of Fee
Amount
Royalty
6% of Gross Sales.
Ad Fund
4% of Gross Sales.
Ad Customization Fee
Reasonable charge.
Local Advertising and Promotional Materials
At least 1% of quarterly Gross Sales.
Insurance
As provided in the Operations Manual.
National Gift Card Program Charges
Approximately 10% of value of Wingstop gift cards issued/sold by third-party retailers (i.e., not by Wingstop Restaurants) for eventual redemption at Wingstop Restaurants; amount may change in future based on charges by third-party gift card program administrator.
Indemnification
Unlimited (but depends on nature of claim).
Audit Fees
Cost of audit, including auditor’s travel, meals, and lodging expenses (depends on extent of the franchisee’s noncompliance and cooperation with the franchisor).
Non-Reporting Fee
$250
Interest/Late Charges
Interest on past-due obligations to the franchisor and its affiliates at the highest commercial contract interest rate the law permits.
Transfer Fees
$10,000
Renewal Fee
25% of the sum of the then current development fee and franchise fee (that currently would equal $7,500); If franchisees renew their franchise for a 2nd 10-year renewal term (after the first 10-year renewal term ends), they must pay 50% of the sum of the then current development fee and franchise fee (that currently would equal $15,000).
Website Maintenance Fee
$25 initial set up cost/up to $50 per month.
Intranet Maintenance and Development Fee
Up to $50 per month.
Operations Manual(s) Training Materials Replacement Charge
$35 for recipe guide, $5 for spec sheets plus shipping costs.
Annual Convention Attendance Charge
Currently $500 per attendee.
Product and Service Purchases
Varies depending on products and services franchisees buy from the franchisor or its affiliates.
Attorneys’ Fees and Costs
Will vary under circumstances and depend on nature of the franchisee’s non-compliance.
Liquidated Damages
See FDD.
Supplemental Training/Assistance
Up to $1,000 per trainer, plus out-of-pocket costs.
Tax Reimbursement
Out-of-pocket cost reimbursement.
Relocation
$5,000
Transfer Marketing Expenditure
$2,500 – $7,500
How Do I Start?
If you’re in for the above, the application process is simple. But before you begin confirm you have the required financial resources. Your net worth must be at least $1,200,000, $600,000 of which must be liquid.
Next, fill out the application on Wingstop’s website. Filling out the application is free and doesn’t obligate you to open a franchise with Wingstop.
Wingstop will take it from there! Now you know the true Wingstop franchise cost and how to get started.
