Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File No. 001-37425

WINGSTOP INC.

(Exact name of registrant as specified in its charter)


Delaware						47-3494862
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)


15505 Wright Brothers Drive
Addison, Texas						75001
(Address of principal executive offices)						(Zip Code)

(972) 686-6500

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	WING	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

On October 29, 2024 there were 29,212,284 shares of common stock outstanding.

TABLE OF CONTENTS


		Page
PART I	Financial Information	4
Item 1.	Financial Statements	4
	Consolidated Balance Sheets - September 28, 2024 (Unaudited) and December 30, 2023	4
	Consolidated Statements of Comprehensive Income (Unaudited) - Thirteen and Thirty-nine Weeks Ended September 28, 2024 and September 30, 2023	5

	Consolidated Statements of Stockholders’ Deficit (Unaudited) - Thirteen and Thirty-nine Weeks Ended September 28, 2024 and September 30, 2023	6
	Consolidated Statements of Cash Flows (Unaudited) - Thirty-nine Weeks Ended September 28, 2024 and September 30, 2023	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28

PART II	Other Information	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
	Signatures	31

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(amounts in thousands, except share and par value amounts)


	September 28, 2024		December 30, 2023
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	83,958	$	90,216
Restricted cash	11,444		11,444
Accounts receivable, net	16,939		12,408
Prepaid expenses and other current assets	7,225		4,948
Advertising fund assets, restricted	46,671		25,328
Total current assets	166,237		144,344
Property and equipment, net	119,119		91,292
Operating lease assets	57,753		19,092
Goodwill	74,749		67,708
Trademarks	32,700		32,700
Customer relationships, net	6,792		7,740
Other non-current assets	27,412		14,949
Total assets	$	484,762	$	377,825
Liabilities and stockholders' deficit
Current liabilities
Accounts payable	$	10,301	$	4,725
Current portion of operating lease liabilities	3,533		2,380
Other current liabilities	58,386		38,571

Advertising fund liabilities	46,671		25,328
Total current liabilities	118,891		71,004
Long-term debt, net	713,729		712,327
Operating lease liabilities	60,414		17,807
Deferred revenues, net of current	37,007		30,145
Deferred income tax liabilities, net	2,097		3,721
Other non-current liabilities	90		187
Total liabilities	932,228		835,191
Commitments and contingencies (see Note 7)
Stockholders' deficit
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,212,082 and 29,337,920 shares issued and outstanding as of September 28, 2024 and December 30, 2023, respectively	292		293
Additional paid-in-capital	1,515		2,676

Retained deficit	(449,336)		(459,994)
Accumulated other comprehensive loss	63		(341)
Total stockholders' deficit	(447,466)		(457,366)
Total liabilities and stockholders' deficit	$	484,762	$	377,825

See accompanying notes to consolidated financial statements.

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(amounts in thousands, except per share data)

(Unaudited)


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Revenue:
Royalty revenue, franchise fees and other	$	74,395	$	53,200	$	212,652	$	149,372
Advertising fees	56,764		39,951		161,567		114,010
Company-owned restaurant sales	31,339		23,953		89,767		69,616
Total revenue	162,498		117,104		463,986		332,998
Costs and expenses:
Cost of sales (1)	24,367		17,622		68,311		50,959
Advertising expenses	60,965		42,381		172,705		120,753
Selling, general and administrative	32,294		23,047		85,569		68,820
Depreciation and amortization	5,054		3,384		13,625		9,591
Loss on disposal of assets	—		18		—		95
Total costs and expenses	122,680		86,452		340,210		250,218
Operating income	39,818		30,652		123,776		82,780
Interest expense, net	5,130		4,520		14,874		13,337

Other (income) expense	(800)		(19)		(1,574)		123
Income before income tax expense	35,488		26,151		110,476		69,320
Income tax expense	9,756		6,640		28,512		17,959
Net income	$	25,732	$	19,511	$	81,964	$	51,361

Earnings per share
Basic	$	0.88	$	0.66	$	2.80	$	1.72
Diluted	$	0.88	$	0.65	$	2.78	$	1.71

Weighted average shares outstanding
Basic	29,265		29,750		29,319		29,889
Diluted	29,383		29,818		29,441		29,969

Dividends per share	$	0.27	$	0.22	$	0.71	$	0.60

Other comprehensive income (loss)
Currency translation adjustment	$	440	$	(199)	$	404	$	76
Other comprehensive income (loss)	440		(199)		404		76
Comprehensive income	$	26,172	$	19,312	$	82,368	$	51,437

(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.

See accompanying notes to consolidated financial statements.

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

For the Thirty-Nine Weeks Ended September 30, 2023

(amounts in thousands, except share data)

(Unaudited)


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
Balance at December 31, 2022	29,932,668	$	300	$	2,797	$	(393,321)	$	(637)	$	(390,861)
Net income	—	—		—		15,669		—		15,669
Shares issued under stock plans	49,817	—		111		—		—		111
Tax payments for restricted stock upon vesting	(13,613)	—		—		(2,292)		—		(2,292)
Stock-based compensation expense, net of forfeitures	—	—		3,345		—		—		3,345
Dividends declared on common stock and equivalents	—	—		(5,444)		(465)		—		(5,909)
Currency translation adjustment	—	—		—		—		147		147
Balance at April 1, 2023	29,968,872	300		809		(380,409)		(490)		(379,790)
Net income	—	—		—		16,181		—		16,181
Shares issued under stock plans	9,084	—		362		—		—		362
Tax payments for restricted stock upon vesting	(342)	—		—		(69)		—		(69)
Stock-based compensation expense, net of forfeitures	—	—		3,546		—		—		3,546
Dividends declared on common stock and equivalents	—	—		(2,679)		(3,030)		—		(5,709)
Currency translation adjustment	—	—		—		—		128		128
Balance at July 1, 2023	29,977,614	$	300	$	2,038	$	(367,327)	$	(362)	$	(365,351)
Net income	—	—		—		19,511		—		19,511
Shares issued under stock plans	4,857	—		270		—		—		270
Purchases of common stock	(567,151)	(6)		(241)		(125,878)		—		(126,125)
Tax payments for restricted stock upon vesting	(400)	—		—		(66)		—		(66)
Stock-based compensation expense, net of forfeitures	—	—		3,128		—		—		3,128
Dividends declared on common stock and equivalents	—	—		(3,957)		(2,653)		—		(6,610)
Currency translation adjustment	—	$	—	$	—	$	—	$	(199)	$	(199)
Balance at September 30, 2023	29,414,920	$	294	$	1,238	$	(476,413)	$	(561)	$	(475,442)

See accompanying notes to consolidated financial statements.

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

For the Thirty-Nine Weeks Ended September 28, 2024

(amounts in thousands, except share data)

(Unaudited)


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
Balance at December 30, 2023	29,337,920	$	293	$	2,676	$	(459,994)	$	(341)	$	(457,366)
Net income	—	—		—		28,747		—		28,747
Shares issued under stock plans	42,918	1		707		—		—		708
Tax payments for restricted stock upon vesting	(10,860)	—		—		(3,717)		—		(3,717)
Stock-based compensation expense, net of forfeitures	—	—		3,812		—		—		3,812
Dividends declared on common stock and equivalents	—	—		(6,277)		(262)		—		(6,539)
Currency translation adjustment	—	—		—		—		(24)		(24)
Balance at March 30, 2024	29,369,978	294		918		(435,226)		(365)		(434,379)
Net income	—	—		—		27,485		—		27,485
Shares issued under stock plans	11,323	—		546		—		—		546
Purchases of common stock	(75,862)	(1)		(4,304)		(24,915)		—		(29,220)
Tax payments for restricted stock upon vesting	(1,038)	—		—		(401)		—		(401)
Stock-based compensation expense, net of forfeitures	—	—		4,926		—		—		4,926
Dividends declared on common stock and equivalents	—	—		(217)		(6,269)		—		(6,486)
Currency translation adjustment	—	—		—		—		(12)		(12)
Balance at June 29, 2024	29,304,401	$	293	$	1,869	$	(439,326)	$	(377)	$	(437,541)
Net income	—	—		—		25,732		—		25,732
Shares issued under stock plans	1,850	—		—		—		—		—
Purchases of common stock	(93,617)	(1)		(7,307)		(27,887)		—		(35,195)
Tax payments for restricted stock upon vesting	(552)	—		—		(230)		—		(230)
Stock-based compensation expense, net of forfeitures	—	—		7,273		—		—		7,273
Dividends declared on common stock and equivalents	—	—		(320)		(7,625)		—		(7,945)
Currency translation adjustment	—	—		—		—		440		440
Balance at September 28, 2024	29,212,082	$	292	$	1,515	$	(449,336)	$	63	$	(447,466)

See accompanying notes to consolidated financial statements.

WINGSTOP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(amounts in thousands)

(Unaudited)


	Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023

Operating activities
Net income	$	81,964	$	51,361
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	13,625		9,591
Deferred income taxes	(1,624)		(1,200)
Stock-based compensation expense	16,011		10,019
Loss on disposal of assets	—		95
Amortization of debt issuance costs	1,561		1,530

Changes in operating assets and liabilities:
Accounts receivable	(4,531)		(2,490)
Prepaid expenses and other assets	(9,159)		(20)
Advertising fund assets and liabilities, net	17,718		9,596
Accounts payable and other current liabilities	22,097		2,992
Deferred revenue	7,227		2,054
Other non-current liabilities	4,979		219
Cash provided by operating activities	149,868		83,747

Investing activities
Purchases of property and equipment	(35,575)		(28,295)
Acquisition of restaurants from franchisee	(14,048)		(4,396)

Payments for investments	(500)		(808)
Cash used in investing activities	(50,123)		(33,499)

Financing activities


Proceeds from exercise of stock options	1,254		743
Repayments of long-term debt	—		(3,650)

Purchases of common stock	(64,210)		(125,250)
Tax payments for restricted stock upon vesting	(4,348)		(2,427)
Dividends paid	(20,981)		(18,433)
Cash used in financing activities	(88,285)		(149,017)

Net increase in cash, cash equivalents, and restricted cash	11,460		(98,769)
Cash, cash equivalents, and restricted cash at beginning of period	119,676		205,715
Cash, cash equivalents, and restricted cash at end of period	$	131,136	$	106,946

Supplemental information:
Accrued capital expenditures	$	5,196	$	4,622

See accompanying notes to consolidated financial statements.

WINGSTOP INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(1) Basis of Presentation and Update to Significant Accounting Policies

Nature of operations. Wingstop Inc., together with its consolidated subsidiaries (collectively, “Wingstop” or the “Company”), is in the business of franchising and operating Wingstop restaurants. As of September 28, 2024, the Company had a total of 2,458 restaurants system-wide. The Company’s restaurant base is approximately 98% franchised, with 2,402 franchised locations (including 338 restaurants in international locations and U.S. territories) and 56 company-owned restaurants as of September 28, 2024.

Basis of presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. Balance sheet amounts are as of September 28, 2024 and December 30, 2023, and operating results are for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023.

Certain prior period information on the Consolidated Balance Sheets have been reclassified to conform to the current presentation.

In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (the “Annual Report”).

Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2024 and 2023 each have 52 weeks.

Cash, Cash Equivalents, and Restricted Cash. Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of September 28, 2024 and December 30, 2023 were as follows (in thousands):


	September 28, 2024		December 30, 2023
Cash and cash equivalents	$	83,958	$	90,216
Restricted cash	11,444		11,444
Restricted cash, included in Advertising fund assets, restricted	35,734		18,016
Total cash, cash equivalents, and restricted cash	$	131,136	$	119,676

Recently issued accounting pronouncements. We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements. There have been no changes to the recently issued accounting pronouncements not yet adopted disclosed in the Annual Report.

(2) Earnings per Share

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities convertible into, or other contracts to issue, common stock were exercised or converted into common stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of the exercise and vesting of stock options and service-based and performance-based restricted stock units, respectively, as determined using the treasury stock method.

WINGSTOP INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):


	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	September 28, 2024	September 30, 2023	September 28, 2024	September 30, 2023
Basic weighted average shares outstanding	29,265	29,750	29,319	29,889
Dilutive shares	118	68	122	80
Diluted weighted average shares outstanding	29,383	29,818	29,441	29,969

No equity awards were excluded from the dilutive earnings per share calculation for the thirteen and thirty-nine weeks ended September 28, 2024. For the thirteen and thirty-nine weeks ended September 30, 2023, equity awards representing approximately 9,000 and 5,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.

(3) Stockholders’ Deficit

Dividends

In connection with the Company’s regular dividend program, our Board of Directors declared a quarterly dividend of $0.22 per share of common stock in each of the first two quarters of 2024, and a quarterly dividend of $0.27 per share of common stock in the third quarter of 2024, resulting in aggregate declared dividends of $20.8 million, or $0.71 per share of common stock, during the thirty-nine weeks ended September 28, 2024.

Subsequent to the third quarter, on October 29, 2024, our Board of Directors declared a regular quarterly dividend of $0.27 per share of common stock for stockholders of record as of November 15, 2024. The regular quarterly dividend is to be paid on December 6, 2024, totaling approximately $7.9 million.

Share Repurchase Program

On August 17, 2023, the Company announced a share repurchase program with authorization to purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase Program”). During the thirty-nine weeks ended September 28, 2024, the Company repurchased and retired 169,479 shares of its common stock at an average price of $377.09 per share. As of September 28, 2024, $61.1 million remained available under the Share Repurchase Program.

(4) Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:

Level 1 — Unadjusted quoted prices for identical instruments traded in active markets.

Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data.

Level 3 — Unobservable inputs reflecting management’s estimates and assumptions.

WINGSTOP INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short-term nature. Fair value of debt and the investment in bonds issued by the Company’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd. (“LPH”), are determined on a non-recurring basis, which results are summarized as follows (in thousands):


	Fair Value Hierarchy	September 28, 2024				December 30, 2023
		Carrying Value		Fair Value		Carrying Value		Fair Value
Securitized Financing Facility:
2020-1 Class A-2 Senior Secured Notes (1)	Level 2	$	472,800	$	445,945	$	472,800	$	423,823
2022-1 Class A-2 Senior Secured Notes (1)	Level 2	$	248,125	$	235,421	$	248,125	$	222,370
Investments in bonds of LPH (2)	Level 3	$	3,884	$	4,669	$	3,557	$	4,306

(1) The fair value of the 2020-1 and 2022-1 Class A-2 Senior Secured Notes was estimated using available market information.

(2) The fair value approximates discounted cash flows using current market rates for debt investments with similar maturities and credit risk.

The Company also measures certain non-financial assets (primarily long-lived assets, intangible assets, and goodwill) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment.

(5) Income Taxes

Income tax expense and the effective tax rate were $9.8 million and 27.5%, respectively, for the thirteen weeks ended September 28, 2024, and $6.6 million and 25.4%, respectively, for the thirteen weeks ended September 30, 2023. The increase in the effective tax rate is primarily related to the impact of nondeductible expenses for executive compensation in the current fiscal year period. Income tax expense and the effective tax rate were $28.5 million and 25.8%, respectively, for the thirty-nine weeks ended September 28, 2024, and $18.0 million and 25.9%, respectively, for the thirty-nine weeks ended September 30, 2023.

(6) Debt Obligations

Long-term debt consisted of the following components (in thousands):


	September 28, 2024		December 30, 2023
2020-1 Class A-2 Senior Secured Notes	$	472,800	$	472,800
2022-1 Class A-2 Senior Secured Notes	248,125		248,125
Debt issuance costs, net of amortization	(7,196)		(8,598)
Total debt	713,729		712,327

The Company’s outstanding debt was issued by Wingstop Funding LLC, a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of Wingstop Inc. and consists of (i) Series 2020-1 2.84% Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Class A-2 Notes”), (ii) Series 2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2 Notes”), and (iii) a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits borrowings of up to a maximum principal amount of $200 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit.

No borrowings were outstanding under the 2022 Variable Funding Notes as of September 28, 2024 and December 30, 2023.

As of September 28, 2024, the Company’s leverage ratio under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes was less than 5.0x. Per the terms of the Company’s debt agreements, principal payments can be suspended at the borrower’s election until the repayment date, as long as the Company maintains a leverage ratio of less than 5.0x. Accordingly, the Company elected to suspend payments following the principal payment made in the second quarter of 2023, and the entire outstanding balance of $720.9 million of the 2020 Class A-2 Notes and the 2022 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026.

WINGSTOP INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

The 2020 Class A-2 Notes and 2022 Notes were issued in securitization transactions, and are guaranteed by certain limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company and secured by a security interest in substantially all of their assets, including certain domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements, intellectual property, and vendor rebate contracts.

(7) Commitments and Contingencies

The Company is subject to legal proceedings, claims, and liabilities, including claims and actions resulting from employment-related and franchise-related matters, which arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of ultimate liability with respect to such actions is not likely to have a material adverse impact on the Company’s financial position, results of operations, or cash flows.

(8) Leases

The Company has operating leases for retail store locations, office space, and equipment. The Company determines whether an arrangement is a lease at inception. The Company's leases have remaining terms of 0.2 years to 13.3 years, some of which include options to extend the lease term for up to ten years. The years remaining on the Company’s lease terms may include years that may be added to the lease terms by the exercise of options to renew when it is reasonably certain that the Company will exercise such options.

During the first fiscal quarter 2024, the Company executed a lease for an office building, which commenced in May 2024. The operating lease has an initial lease term of 13.8 years with undiscounted fixed payments of $66.9 million over the initial term.

Components of lease expense were as follows (in thousands):


	Thirty-Nine Weeks Ended
	September 28, 2024	September 30, 2023
Operating lease cost (1)	4,728	2,623
Variable lease cost (2)	570	447
Total lease cost	5,298	3,070

(1) Includes short-term leases, which are immaterial.

(2) Primarily related to adjustments for inflation, common area maintenance, and property tax.

Supplemental cash flow information related to leases is as follows (in thousands):


	Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023
Cash paid (received) for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	(4,849)	$	2,518
Right-of-use assets obtained in exchange for new operating lease liabilities	$	41,260	$	3,947

(1) Includes tenant improvement reimbursements received.

(9) Stock-Based Compensation

During the thirty-nine weeks ended September 28, 2024, the Company granted 25,257 restricted stock units (“RSUs”) to certain employees. The RSUs granted to certain employees generally vest ratably over a three-year period subsequent to the grant date and had a weighted-average grant-date fair value of $372.52 per unit.

In addition, the Company granted 24,015 performance stock units (“PSUs”) to certain employees during the thirty-nine weeks ended September 28, 2024. Of the total PSUs granted, 20,593 PSUs are subject to a service condition and a performance vesting condition based on return on incremental invested capital (“ROI PSUs”). The ROI PSUs are generally eligible to cliff-vest approximately three years from the grant date, and the maximum vesting percentage that could be realized for each of the ROI PSUs is 250% based on the level of performance achieved for the awards. The remaining 3,422 PSUs granted are subject to a service condition and a performance vesting condition based on the number of net new restaurants opened over the

WINGSTOP INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

performance period (“NNR PSUs”). The NNR PSUs vest ratably over a three-year period, and the maximum vesting percentage that could be realized for each of the NNR PSUs is 100% based on the level of performance achieved for the awards. The PSUs had a weighted-average grant-date fair value of $371.03 per unit. Total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest based on the outcome.

Total compensation expense related to all share-based awards, net of forfeitures recognized, was $16.0 million and $10.0 million for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income.

(10) Revenue from Contracts with Customers

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Royalty revenue	$	66,952	$	47,546	$	192,344	$	134,330
Advertising fees and related income	56,764		39,951		161,567		114,010
Franchise fees	1,419		1,660		4,101		3,828

Franchise fee, development fee, and international territory fee payments received by the Company are recorded as deferred revenue on the Consolidated Balance Sheets, which represents a contract liability. Deferred revenue is reduced as fees are recognized in revenue over the term of the franchise license for the respective restaurant. As the term of the franchise license is typically ten years, substantially all of the franchise fee revenue recognized in the thirteen and thirty-nine weeks ended September 28, 2024 was included in the deferred revenue balance as of December 30, 2023. Approximately $12.5 million and $9.3 million of deferred revenue as of September 28, 2024 and December 30, 2023, respectively, relates to restaurants that have not yet opened, so the fees are not yet being amortized. The weighted average remaining amortization period for deferred franchise and renewal fees related to open restaurants is 7.3 years. The Company did not have any material contract assets as of September 28, 2024.

(11) Acquisitions of Company-owned Restaurants

The Company acquired four existing restaurants from franchisees during the thirty-nine weeks ended September 28, 2024. The aggregate purchase price was $14.0 million and was funded by cash flow from operations. The following table summarizes the allocations of the purchase price to the estimated fair value of assets acquired and liabilities assumed at the date of the acquisition (in thousands):


	Purchase Price Allocation
Working capital	$	44
Property and equipment	253
Reacquired franchise rights	6,710
Goodwill	7,041


Total purchase price	$	14,048

The excess of the purchase price over the aggregate fair value of assets acquired was allocated to goodwill and is attributable to the benefits expected as a result of the acquisition, including sales and unit growth opportunities. All of the goodwill from the acquisition is expected to be deductible for federal income tax purposes.

Pro-forma financial information of the combined entities is not presented due to the immaterial impact of the financial results of the acquisition on our consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of Wingstop Inc. (collectively with its direct and indirect subsidiaries on a consolidated basis, “Wingstop,” the “Company,” “we,” “our,” or “us”) should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (our “Annual Report”). The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Special Note Regarding Forward-Looking Statements,” below and “Risk Factors” beginning on page 11 of our Annual Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

We operate on a 52- or 53-week fiscal year ending on the last Saturday of each calendar year. Our fiscal quarters are comprised of 13 weeks, with the exception of the fourth quarter of a 53-week year, which contains 14 weeks. Fiscal years 2024 and 2023 each contain 52 weeks.

Overview

Wingstop is the largest fast casual chicken wings-focused restaurant chain in the world, with over 2,450 locations worldwide. We are dedicated to serving the world flavor through an unparalleled guest experience and offering of classic wings, boneless wings, tenders, and chicken sandwiches, always cooked to order and hand-sauced-and-tossed in 12 bold, distinctive flavors.

The Company is primarily a franchisor, with approximately 98% of Wingstop’s restaurants currently owned and operated by independent franchisees. We believe our asset-light, highly-franchised business model generates strong operating margins and requires low capital expenditures, creating stockholder value through strong and consistent free cash flow and capital-efficient growth.

Third Quarter of 2024 Highlights

•System-wide sales increased 39.4% over the prior fiscal third quarter to $1.2 billion;

•106 net new openings in the fiscal third quarter 2024 for a total of 2,458 worldwide locations;

•Domestic same store sales increased 20.9% over the prior fiscal third quarter;

•Company-owned restaurant same store sales increased 7.3% over the prior fiscal third quarter;

•Digital sales increased to 69.0% of system-wide sales, as compared to 66.9% in the prior fiscal third quarter;

•Domestic AUV increased to $2.1 million;

•Total revenue increased 38.8% over the prior fiscal third quarter to $162.5 million;

•Net income increased 31.9% to $25.7 million, or $0.88 per diluted share, compared to net income of $19.5 million, or $0.65 per diluted share, in the prior fiscal third quarter; and

•Adjusted EBITDA, a non-GAAP measure, increased 39.5% to $53.7 million, compared to adjusted EBITDA of $38.5 million in the prior fiscal third quarter.

Year-to-Date Third Quarter of 2024 Highlights

•System-wide sales increased 40.4% to $3.5 billion;

•244 net new openings in the year-to-date third quarter of 2024;

•Domestic same store sales increased 23.6% over the prior fiscal year-to-date period;

•Total revenue increased 39.3% to $464.0 million over the prior fiscal year-to-date period;

•Net income increased 59.6% to $82.0 million, or $2.78 per diluted share, compared to net income of $51.4 million, or $1.71 per diluted share, in the prior fiscal year-to-date period; and

•Adjusted EBITDA, a non-GAAP measure, increased 45.0% to $155.7 million, compared to adjusted EBITDA of $107.4 million in the prior fiscal year-to-date period.

Key Performance Indicators

Key measures that we use in evaluating our restaurants and assessing our business include the following:

Number of restaurants. Management reviews the number of new restaurants, the number of closed restaurants, and the number of acquisitions and divestitures of restaurants to assess net new restaurant growth.


	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	September 28, 2024	September 30, 2023	September 28, 2024	September 30, 2023
Domestic Franchised Activity:
Beginning of period	1,988	1,749	1,877	1,678
Openings	79	42	191	116
Closures	—	—	—	(1)
Acquired by Company	(3)	—	(4)	(2)

Restaurants end of period	2,064	1,791	2,064	1,791

Domestic Company-Owned Activity:
Beginning of period	52	45	49	43
Openings	1	1	3	1
Closures	—	—	—	—
Acquired by Company	3	—	4	2

Restaurants end of period	56	46	56	46

Total Domestic Restaurants	2,120	1,837	2,120	1,837

International Franchised Activity(1):
Beginning of period	312	252	288	238
Openings	28	13	55	30
Closures	(2)	(3)	(5)	(6)

Restaurants end of period	338	262	338	262

Total System-wide Restaurants	2,458	2,099	2,458	2,099

(1) Including U.S. territories.

System-wide sales. System-wide sales represents net sales for all of our company-owned and franchised restaurants, as reported by franchisees. This measure allows management to better assess changes in our royalty revenue, our overall store performance, the health of our brand, and the strength of our market position relative to competitors. Our system-wide sales growth is driven by new restaurant openings as well as increases in same store sales.

Domestic average unit volume (“AUV”). Domestic AUV consists of the average annual sales of all restaurants that have been open for a trailing 52-week period or longer. This measure is calculated by dividing sales during the applicable period for all restaurants being measured by the number of restaurants being measured. Domestic AUV includes revenue from both company-owned and franchised restaurants. Domestic AUV allows management to assess our domestic company-owned and franchised restaurant economics. Changes in domestic AUV growth are primarily driven by increases in same store sales and are also influenced by opening new restaurants.

Domestic same store sales. Domestic same store sales reflects the change in year-over-year sales for the same store restaurant base. We define the same store restaurant base to include those restaurants open for at least 52 full weeks. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and permanent closures. We review same store sales for domestic company-owned restaurants as well as system-wide domestic restaurants. Domestic same store sales growth is driven by increases in transactions and average transaction size. Transaction size increases are driven by price increases or favorable mix shift from either an increase in items purchased or shifts into higher priced items.

EBITDA and Adjusted EBITDA. We define EBITDA as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization. We define Adjusted EBITDA as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization, with further adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, system implementation costs, and stock-based compensation expense. Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in methods of calculation. For a reconciliation of net income to EBITDA and Adjusted EBITDA and for further discussion of EBITDA and Adjusted EBITDA as non-GAAP measures and how we utilize them, see footnote 2 below.

The following table sets forth our key performance indicators for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands, except unit data):


	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Number of system-wide restaurants open at end of period	2,458			2,099			2,458			2,099
System-wide sales (1)	$	1,233,373		$	885,045		$	3,532,891		$	2,516,427
Domestic restaurant AUV	$	2,116		$	1,755		$	2,116		$	1,755
Domestic same store sales growth	20.9		%	15.3		%	23.6		%	17.3		%
Company-owned domestic same store sales growth	7.3		%	6.0		%	9.1		%	7.2		%
Total revenue	$	162,498		$	117,104		$	463,986		$	332,998
Net income	$	25,732		$	19,511		$	81,964		$	51,361
Adjusted EBITDA (2)	$	53,672		$	38,483		$	155,713		$	107,417

(1) The percentage of system-wide sales attributable to company-owned restaurants was 2.5% and 2.7% for the thirteen weeks ended September 28, 2024 and September 30, 2023, respectively, and was 2.5% and 2.8% for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively. The remainder was generated by franchised restaurants, as reported by our franchisees.

(2) EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity.

We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA and Adjusted EBITDA in the same manner. We present EBITDA and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations on a period-over-period basis and would ordinarily add back non-cash expenses such as depreciation and amortization, as well as items that are not part of normal day-to-day operations of our business.

Management uses EBITDA and Adjusted EBITDA:

•as a measurement of operating performance because we believe they assist us in comparing the operating performance of our restaurants on a consistent basis, as they remove the impact of items not directly resulting from our core operations;

•for planning purposes, including the preparation of our internal annual operating budget and financial projections;

•to evaluate the performance and effectiveness of our operational strategies;

•to evaluate our capacity to fund capital expenditures and expand our business; and

•to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan.

By providing these non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation, or as an alternative to, or a substitute for net income or other financial statement data presented in our consolidated financial statements as indicators of financial performance. Some of the limitations are:

•such measures do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

•such measures do not reflect changes in, or cash requirements for, our working capital needs;

•such measures do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;

•such measures do not reflect our tax expense or the cash requirements to pay our taxes;

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and

•other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures.

Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only as performance measures and supplementally. As noted in the table below, Adjusted EBITDA includes adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, system implementation costs, and stock-based compensation expense. We believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our restaurants, and complicate comparisons of our internal operating results and operating results of other restaurant companies over time. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below help management measure our core operating performance over time by removing items that are not related to day-to-day operations.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income	$	25,732	$	19,511	$	81,964	$	51,361
Interest expense, net	5,130		4,520		14,874		13,337
Income tax expense	9,756		6,640		28,512		17,959
Depreciation and amortization	5,054		3,384		13,625		9,591
EBITDA	$	45,672	$	34,055	$	138,975	$	92,248
Additional adjustments:


Consulting fees (a)	—		1,300		—		5,150
System implementation costs (b)	727		—		727		—
Stock-based compensation expense (c)	7,273		3,128		16,011		10,019
Adjusted EBITDA	$	53,672	$	38,483	$	155,713	$	107,417

(a) Represents non-recurring consulting fees that are not part of our ongoing operations and are incurred to execute discrete, project-based strategic initiatives, which are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income. The costs incurred in the thirteen and thirty-nine weeks ended September 30, 2023 include consulting fees relating to a comprehensive review of our long-term growth strategy for our domestic business to explore potential future initiatives, which review was completed in fiscal year 2023. Given the magnitude and scope of

this strategic review that is not expected to recur in the foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiative not reflective of the ongoing costs to operate its business.

(b) System implementation costs represent non-recurring expenses incurred related to the development and implementation of new enterprise resource planning and human capital management technology, which are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

Results of Operations

Thirteen Weeks Ended September 28, 2024 compared to Thirteen Weeks Ended September 30, 2023

The following table sets forth our results of operations for the thirteen weeks ended September 28, 2024 and September 30, 2023 (dollars in thousands):


	Thirteen Weeks Ended				Increase / (Decrease)
	September 28, 2024		September 30, 2023		$		%
Revenue:
Royalty revenue, franchise fees and other	$	74,395	$	53,200	$	21,195	39.8	%
Advertising fees	56,764		39,951		16,813		42.1	%
Company-owned restaurant sales	31,339		23,953		7,386		30.8	%
Total revenue	162,498		117,104		45,394		38.8	%
Costs and expenses:
Cost of sales (1)	24,367		17,622		6,745		38.3	%
Advertising expenses	60,965		42,381		18,584		43.8	%
Selling, general and administrative	32,294		23,047		9,247		40.1	%
Depreciation and amortization	5,054		3,384		1,670		49.3	%
Loss on disposal of assets	—		18		(18)		(100.0)	%
Total costs and expenses	122,680		86,452		36,228		41.9	%
Operating income	39,818		30,652		9,166		29.9	%
Interest expense, net	5,130		4,520		610		13.5	%

Other (income) expense	(800)		(19)		(781)		4,110.5	%
Income before income tax expense	35,488		26,151		9,337		35.7	%
Income tax expense	9,756		6,640		3,116		46.9	%
Net income	$	25,732	$	19,511	$	6,221	31.9	%

(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, but excludes depreciation and amortization, which are presented separately.

Revenue

During the thirteen weeks ended September 28, 2024, total revenue was $162.5 million, an increase of $45.4 million, or 38.8%, compared to $117.1 million in the comparable period in 2023.

Royalty revenue, franchise fees and other increased $21.2 million, of which $9.6 million was due to domestic same store sales growth of 20.9%, and $9.3 million was due to net new franchise restaurant development. Other revenue increased by $2.1 million primarily due to an increase in vendor rebates.

Advertising fees increased $16.8 million primarily due to a 39.4% increase in system-wide sales during the fiscal third quarter 2024. $3.2 million of the increase was due to an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024.

Company-owned restaurant sales increased $7.4 million, due to an increase of $4.9 million related to the addition of ten net new company-owned restaurants since the prior fiscal third quarter. The remainder of the increase was due to company-owned same store sales growth of 7.3%, which was driven primarily by an increase in transactions.

Cost of sales

The table below presents the major components of cost of sales (dollars in thousands):


	Thirteen Weeks Ended
	September 28, 2024				September 30, 2023
	In dollars		As a % of company-owned restaurant sales		In dollars		As a % of company-owned restaurant sales

Food, beverage and packaging costs	$	11,590	37.0	%	$	7,910	33.0	%
Labor costs	7,355		23.5	%	5,646		23.6	%
Other restaurant operating expenses	6,270		20.0	%	4,645		19.4	%
Vendor rebates	(848)		(2.7)	%	(579)		(2.4)	%


Total cost of sales	$	24,367	77.8	%	$	17,622	73.6	%

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 37.0% in the thirteen weeks ended September 28, 2024, compared to 33.0% in the comparable period in 2023. This increase was primarily due to a 42.9% increase in the cost of bone-in chicken wings as compared to the prior year period. Our purchases in the prior fiscal third quarter were tied primarily to the spot market, which benefited from significant deflation in the cost of bone-in chicken wings.

Labor costs as a percentage of company-owned restaurant sales were 23.5% for the thirteen weeks ended September 28, 2024, which was comparable to 23.6% for the thirteen weeks ended September 30, 2023.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 20.0% for the thirteen weeks ended September 28, 2024, compared to 19.4% for the thirteen weeks ended September 30, 2023. The increase as a percentage of company-owned restaurant sales was primarily due to an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024, as well as an increase in pre-opening expenses as compared to the prior year period.

Advertising expenses

During the thirteen weeks ended September 28, 2024, advertising expenses were $61.0 million, an increase of $18.6 million compared to $42.4 million in the comparable period in 2023. Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend.

Selling, general and administrative (“SG&A”)

During the thirteen weeks ended September 28, 2024, SG&A expense was $32.3 million, an increase of $9.2 million compared to $23.0 million in the comparable period in 2023. The increase in SG&A expense was driven by an increase in performance-based stock compensation and incentive compensation expense of $4.9 million primarily related to the Company’s performance, an increase in headcount related expenses of $2.8 million to support the growth in our business, and an increase in consulting and other professional fees of $1.3 million associated with our strategic initiatives, including system implementation costs.

Depreciation and amortization

During the thirteen weeks ended September 28, 2024, depreciation and amortization was $5.1 million, an increase of $1.7 million compared to $3.4 million in the comparable period in 2023. The increase in depreciation and amortization was primarily due to depreciation expense for the software assets placed in service during the second fiscal quarter 2024 related to our MyWingstop technology platform.

Interest expense, net

During the thirteen weeks ended September 28, 2024, interest expense, net was $5.1 million, an increase of $0.6 million compared to $4.5 million of interest expense, net in the comparable period in 2023. The increase was primarily driven by additional interest income earned on our cash balances during the thirteen weeks ended September 30, 2023.

Income tax expense

During the thirteen weeks ended September 28, 2024, we recognized income tax expense of $9.8 million, yielding an effective tax rate of 27.5%, compared to an effective tax rate of 25.4% in the prior year period. The increase in the effective tax rate is primarily related to the impact of nondeductible expenses for executive compensation during the thirteen weeks ended September 28, 2024.

Thirty-Nine Weeks Ended September 28, 2024 compared to Thirty-Nine Weeks Ended September 30, 2023

The following table sets forth our results of operations for the thirty-nine weeks ended September 28, 2024 and September 30, 2023 (dollars in thousands):


	Thirty-Nine Weeks Ended				Increase / (Decrease)
	September 28, 2024		September 30, 2023		$		%
Revenue:
Royalty revenue, franchise fees and other	$	212,652	$	149,372	$	63,280	42.4	%
Advertising fees	161,567		114,010		47,557		41.7	%
Company-owned restaurant sales	89,767		69,616		20,151		28.9	%
Total revenue	463,986		332,998		130,988		39.3	%
Costs and expenses:
Cost of sales (1)	68,311		50,959		17,352		34.1	%
Advertising expenses	172,705		120,753		51,952		43.0	%
Selling, general and administrative	85,569		68,820		16,749		24.3	%
Depreciation and amortization	13,625		9,591		4,034		42.1	%
Loss on disposal of assets	—		95		(95)		(100.0)	%
Total costs and expenses	340,210		250,218		89,992		36.0	%
Operating income	123,776		82,780		40,996		49.5	%
Interest expense, net	14,874		13,337		1,537		11.5	%

Other (income) expense	(1,574)		123		(1,697)		(1,379.7)	%
Income before income tax expense	110,476		69,320		41,156		59.4	%
Income tax expense	28,512		17,959		10,553		58.8	%
Net income	$	81,964	$	51,361	$	30,603	59.6	%

(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.

Revenue

During the thirty-nine weeks ended September 28, 2024, total revenue was $464.0 million, an increase of $131.0 million, or 39.3%, compared to $333.0 million in the comparable period in 2023.

Royalty revenue, franchise fees and other increased $63.3 million, of which $31.1 million was due to domestic same store sales growth of 23.6%, and $20.2 million was due to net new franchise development. Other revenue increased by $5.0 million primarily due to an increase in vendor rebates.

Advertising fees increased $47.6 million due to a 40.4% increase in system-wide sales during the thirty-nine weeks ended September 28, 2024, and $6.3 million was due to an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024.

Company-owned restaurant sales increased $20.2 million, primarily due to an increase of $10.0 million related to the addition of ten net new company-owned restaurants since the prior year comparable period. The remainder of the increase was due to company-owned same store sales growth of 9.1%, which was driven primarily by an increase in transactions.

Cost of sales

The table below presents the major components of cost of sales (dollars in thousands):


	Thirty-Nine Weeks Ended
	September 28, 2024				September 30, 2023
	In dollars		As a % of company-owned restaurant sales		In dollars		As a % of company-owned restaurant sales
Food, beverage and packaging costs	$	32,186	35.9	%	$	22,661	32.6	%
Labor costs	21,017		23.4	%	16,683		24.0	%
Other restaurant operating expenses	17,438		19.4	%	13,278		19.1	%
Vendor rebates	(2,330)		(2.6)	%	(1,663)		(2.4)	%
Total cost of sales	$	68,311	76.1	%	$	50,959	73.2	%

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 35.9% in the thirty-nine weeks ended September 28, 2024, compared to 32.6% in the comparable period in 2023. The increase was primarily due to a 41.5% increase in the cost of bone-in chicken wings as compared to the prior year period. Our purchases in the prior fiscal year period were tied primarily to the spot market, which benefited from significant deflation in the cost of bone-in chicken wings.

Labor costs as a percentage of company-owned restaurant sales were 23.4% for the thirty-nine weeks ended September 28, 2024, compared to 24.0% in the comparable period in 2023. The decrease in company-owned restaurant wages as a percentage of sales was primarily due to leverage as a result of company-owned domestic same store sales growth of 9.1%.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 19.4% for the thirty-nine weeks ended September 28, 2024, comparable to 19.1% in the prior fiscal year period in 2023. The increase as a percentage of company-owned restaurant sales was primarily due to an increase in the national advertising fund contribution rate to 5.3% from 5.0%, effective the first day of the fiscal second quarter 2024, as well as an increase in pre-opening expenses as compared to the prior year period.

Advertising expenses

During the thirty-nine weeks ended September 28, 2024, advertising expenses were $172.7 million, an increase of $52.0 million compared to $120.8 million in the comparable period in 2023. Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend.

Selling, general and administrative (SG&A)

During the thirty-nine weeks ended September 28, 2024, SG&A expense was $85.6 million, an increase of $16.7 million compared to $68.8 million in the comparable period in 2023. The increase in SG&A expense was driven by an increase in performance-based stock compensation and incentive compensation expense of $7.3 million primarily related to the Company’s performance, an increase in headcount related expenses of $6.8 million to support the growth in our business, and an increase in consulting and other professional fees of $1.6 million associated with our strategic initiatives, including system implementation costs.

Depreciation and amortization

During the thirty-nine weeks ended September 28, 2024, depreciation and amortization was $13.6 million, an increase of $4.0 million compared to $9.6 million in the comparable period in 2023. The increase in depreciation and amortization was primarily due to depreciation expense for software assets placed in service related to our MyWingstop technology platform during the thirty-nine weeks ended September 28, 2024.

Interest expense, net

During the thirty-nine weeks ended September 28, 2024, interest expense, net was $14.9 million, an increase of $1.5 million compared to $13.3 million of interest expense, net in the comparable period in 2023. The increase was primarily driven by additional interest income earned on our cash balances during the thirty-nine weeks ended September 30, 2023.

Income tax expense

During the thirty-nine weeks ended September 28, 2024, we recognized income tax expense of $28.5 million yielding an effective tax rate of 25.8%, which is comparable to an effective tax rate of 25.9% in the prior year period.

Liquidity and Capital Resources

General. Our primary sources of liquidity and capital resources are cash provided from operating activities, cash and cash equivalents on hand, and borrowings available under our securitized financing facility. Our primary requirements for liquidity and capital are working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements, dividend payments, and the repurchase of shares of our common stock (if any). Historically, we have operated with minimal positive working capital or with negative working capital. We generally utilize available cash flows from operations to invest in our business, service our debt obligations, pay dividends, and repurchase shares of our common stock (if any).

Our primary sources of short-term and long-term liquidity are expected to be cash flows from operations and available borrowings under our 2022 Variable Funding Notes (as defined below). As of September 28, 2024, the Company had $84.0 million of cash and cash equivalents on its balance sheet.

Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with our securitized financing facility, including our 2022 Variable Funding Notes, will be sufficient to meet our capital expenditure, working capital and debt service requirements for at least the next twelve months and the foreseeable future.

The following table shows summary cash flows information for the thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands):


	Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023
Net cash provided by (used in):
Operating activities	$	149,868	$	83,747
Investing activities	(50,123)		(33,499)
Financing activities	(88,285)		(149,017)
Net change in cash and cash equivalents	$	11,460	$	(98,769)

Operating activities. Our cash flows from operating activities are principally driven by sales at both franchise restaurants and company-owned restaurants, as well as franchise and development fees. We collect franchise royalties from our franchise owners on a weekly basis. Restaurant-level operating costs at our company-owned restaurants, unearned franchise and development fees, and corporate overhead costs also impact our cash flow from operating activities.

Net cash provided by operating activities was $149.9 million in the thirty-nine weeks ended September 28, 2024, an increase of $66.1 million from net cash provided by operating activities of $83.7 million in the thirty-nine weeks ended September 30, 2023. The increase is primarily due to an increase in operating income, coupled with the change in working capital due to timing of payments associated with our national advertising campaign and taxes.

Investing activities. Our net cash used in investing activities was $50.1 million in the thirty-nine weeks ended September 28, 2024, an increase of $16.6 million from net cash used in investing activities of $33.5 million in the thirty-nine weeks ended September 30, 2023. The increase is primarily due to an increase in capital expenditures related to our technology investments, as well as the impact of additional restaurants acquired from franchisees as compared to the prior fiscal year period.

Financing activities. Our net cash used in financing activities was $88.3 million in the thirty-nine weeks ended September 28, 2024, a decrease of $60.7 million from net cash used in financing activities of $149.0 million in the thirty-nine weeks ended September 30, 2023. The decrease is primarily due to a decrease in common stock repurchased under our Share Repurchase Program as compared to the prior fiscal year period, in which we initiated a $125.0 million accelerated share repurchase program, as well as principal payments made in the thirty-nine weeks ended September 30, 2023.

Securitized financing facility. On March 9, 2022, the Company completed a securitized financing transaction, pursuant to which Wingstop Funding LLC, a limited purpose, bankruptcy-remote, indirect wholly-owned subsidiary of the Company, issued $250 million of its Series 2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the "2022 Class A-2 Notes"), and entered into a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits borrowings of up to a maximum principal amount of $200 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit. The proceeds from the securitized financing transaction were used to pay related transaction fees and expenses, strengthen the Company's liquidity position and for general corporate purposes, which included a return of capital to the Company’s stockholders. No borrowings were outstanding under the 2022 Variable Funding Notes as of September 28, 2024.

In addition to the 2022 Notes, the Company’s outstanding debt consists of its existing Series 2020-1 2.84% Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Class A-2 Notes”).

During the fiscal third quarter of 2024, the Company continued to have a leverage ratio under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes of less than 5.0x. Per the terms of the Company’s debt agreements, principal payments can be suspended at the borrower’s election until the repayment date, as long as the Company maintains a leverage ratio of less than 5.0x. Accordingly, the Company elected to suspend payments following the principal payment made in the second quarter of 2023, and the entire outstanding balance of the 2020 Class A-2 Notes and the 2022 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026.

Dividends. We paid a quarterly cash dividend of $0.22 per share of common stock in each of the first two quarters of 2024, and a quarterly dividend of $0.27 per share of common stock in the third quarter of 2024, resulting in aggregate declared dividends of $20.8 million, or $0.71 per share of common stock, during the thirty-nine weeks ended September 28, 2024. On October 29, 2024 the Company’s Board of Directors declared a dividend of $0.27 per share, to be paid on December 6, 2024 to stockholders of record as of November 15, 2024, totaling approximately $7.9 million.

We do not currently expect the restrictions in our debt instruments to impact our ability to make regular quarterly dividends pursuant to our quarterly dividend program. However, any future declarations of dividends, as well as the amount and timing of such dividends, are subject to capital availability and the discretion of our Board of Directors, which must evaluate, among other things, whether cash dividends are in the best interest of the Company and our stockholders.

Share Repurchase Program. On August 17, 2023, the Company announced a share repurchase program with authorization to purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase Program”). During the thirteen weeks ended September 28, 2024, the Company repurchased and retired 93,617 shares of its common stock at an average price of $373.68 per share. As of September 28, 2024, $61.1 million remained available under the Share Repurchase Program.

Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting estimates are those that require application of management’s most difficult, subjective, or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. While we apply our judgment based on assumptions believed to be reasonable under the circumstances, actual results could vary from these assumptions. It is possible that materially different amounts would be reported using different assumptions. Our critical accounting policies and estimates are identified and described in our annual consolidated financial statements and the related notes included in our Annual Report, and there have been no material changes since the filing of our Annual Report.

Recent Accounting Pronouncements

Refer to Note 1, Basis of Presentation, of the notes to the consolidated financial statements.

Special Note Regarding Forward-Looking Statements

This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, trends, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “may,” “will,” “should,” “expect,” “intend,” “plan,” “outlook,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “predict,” “can,” “could,” “project,” “potential” or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements are accompanied by such terms. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks, and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements.

Such risks and other factors include those listed below and elsewhere in this report and our Annual Report, that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements:

•our ability to effectively implement our growth strategy;

•our relationships with, and the performance of, our existing and new franchises and franchisees, as well as actions by franchisees that could harm our business;

•our ability to identify, recruit and contract with a sufficient number of qualified franchisees;

•risks associated with food safety, food-borne illness and other health concerns;

•our ability to successfully expand into new and existing markets;

•our ability to effectively compete within our industry;

•risks associated with changes in food and supply costs;

•risks associated with interruptions in our supply chain, including availability of food products;

•risks associated with data privacy, cybersecurity and the use and implementation of information technology, including heightened risks that may arise upon increased adoption of artificial intelligence technologies;

•risks associated with our increasing dependence on digital commerce platforms and third-party delivery service providers;

•uncertainty in the law with respect to the assignment or allocation of liabilities in the franchise business model;

•risks associated with litigation against us or our franchisees;

•risks associated with the availability and cost of labor;

•our ability to successfully advertise and market our business;

•risks associated with changes in customer preferences, perceptions and eating habits;

•risks associated with our future performance and operating results falling below the expectations of securities analysts and investors;

•risks associated with the geographic concentration of our business;

•the impact on our business from unexpected events such as international conflict or war and related sanctions, acts of terrorism, civil unrest, epidemics and pandemics and severe weather;

•our ability to comply with laws and government regulations, including those relating to food products, employment and franchising, advertising and consumer protection, or increased costs associated with new or changing regulations;

•our ability to maintain adequate insurance coverage for our business;

•risks associated with damage to our reputation or lack of acceptance of our brand in existing or new markets;

•risks associated with our expansion into international markets and foreign government restrictions on operations;

•our ability to attract and retain our executive officers and other key employees;

•our ability to protect our intellectual property, including trademarks, trade secrets and other proprietary rights;

•the impact on our business from environmental, social and corporate governance matters; and

•our ability to comply with the terms of our securitized debt financing and generate sufficient cash flows to satisfy our significant debt service obligations thereunder.

The above list of factors is not exhaustive. Some of these and other factors are discussed in more detail under “Risk Factors” in our Annual Report. When considering forward-looking statements in this report or that we make in other reports or statements, you should keep in mind the cautionary statements in this report and future reports we file with the SEC. Any forward-looking statements made in this report speak only as of the date of the report, unless specified otherwise. New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may affect us. Except as required by law, we assume no obligation to update or revise any forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk. We are exposed to market risks from changes in commodity prices. Many of the food products purchased by us are affected by weather, production, availability and other factors outside of our control, including inflation as compared to the prior year period. Although we enter into arrangements in an effort to mitigate the price volatility of food costs, there are no established fixed price markets for fresh bone-in chicken wings, so we may be subject to prevailing market conditions. Bone-in chicken wings accounted for approximately 19.5% and 16.2% of our company-owned restaurant cost of sales during the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively. A hypothetical 10% increase in the bone-in chicken wing costs would have increased costs of sales by approximately $1.3 million during the thirty-nine weeks ended September 28, 2024. We do not engage in speculative financial transactions nor do we hold or issue financial instruments for trading purposes.

Interest Rate Risk. Our long-term debt, including current portion, consisted entirely of the $720.9 million incurred under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes as of September 28, 2024 (excluding unamortized debt issuance costs). The Company’s predominantly fixed-rate debt structure has reduced its exposure to interest rate increases that could adversely affect its earnings and cash flows, but the Company remains exposed to changes in market interest rates reflected in the fair value of the debt and to the risk that the Company may need to refinance maturing debt with new debt at a higher rate. The Company is exposed to interest rate increases under the 2022 Variable Funding Notes; however, the Company had no outstanding borrowings under its 2022 Variable Funding Notes as of September 28, 2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 28, 2024, pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of September 28, 2024, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are currently involved in various claims and legal actions that arise in the ordinary course of business, including claims and actions resulting from employment-related and franchise-related matters. None of these matters, some of which are covered by insurance, has had a material effect on us, and, as of the date of this report, we are not party to any pending legal proceedings that we believe would have a material adverse effect on our business, financial condition, results of operations or cash flows. However, a significant increase in the number of these claims or an increase in amounts owing under successful claims could materially and adversely affect our business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors

A description of the risk factors associated with our business is contained in the “Risk Factors” section of our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
June 30, 2024 - July 27, 2024	—	$	—	—	$	96,070,713
July 28, 2024 - August 24, 2024	54,440	367.26		54,440	76,074,208
August 25, 2024 - September 28, 2024	39,177	382.61		39,177	61,082,928
Total	93,617	$	373.68	93,617	$	61,082,928

(1) On August 17, 2023, the Company announced a share repurchase program with authorization to purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase Program”). The authorization for the repurchase continues until all such shares have been repurchased or the repurchase plan is terminated by action of our Board of Directors. As of September 28, 2024, $61.1 million remained available under the Share Repurchase Program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the thirteen weeks ended September 28, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

Index to Exhibits


Exhibit No.			Description
3.1			Amended and Restated Certificate of Incorporation of Wingstop Inc., as amended through June 15, 2020, filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 27, 2020 (File No. 001-37425) on July 29, 2020 and incorporated by reference herein.
3.2			Amended and Restated Bylaws of Wingstop Inc., effective as of December 1, 2022, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-37425) on December 2, 2022 and incorporated by reference herein.
31.1*			Certification of Principal Executive Officer under Section 302 of the Sarbanes–Oxley Act of 2002.
31.2*			Certification of Principal Financial Officer under Section 302 of the Sarbanes–Oxley Act of 2002.
32.1**			Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.
32.2**			Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.
101 INS*			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101 SCH*			Inline XBRL Taxonomy Extension Schema Document
101 CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101 DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document
101 LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document
101 PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*			Cover Page Interactive Data File (formatted as Inline XBRL and Contained in Exhibit 101)

* Filed herewith.

** Furnished, not filed.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Wingstop Inc.

(Registrant)

Date:

October 30, 2024

By:

/s/ Michael J. Skipworth

President and Chief Executive Officer

(Principal Executive Officer)

Date:

October 30, 2024

By:

/s/ Alex R. Kaleida

Chief Financial Officer

(Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Skipworth, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Wingstop Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:			October 30, 2024

By:			/s/ Michael J. Skipworth
			President and Chief Executive Officer
			(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alex R. Kaleida, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Wingstop Inc.;

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:			October 30, 2024

By:			/s/ Alex R. Kaleida
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended September 28, 2024 of Wingstop Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Skipworth, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date:			October 30, 2024

By:			/s/ Michael J. Skipworth
			President and Chief Executive Officer
			(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended September 28, 2024 of Wingstop Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alex R. Kaleida, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date:			October 30, 2024

By:			/s/ Alex R. Kaleida
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

Cover - shares	9 Months Ended
Cover - shares	Sep. 28, 2024	Oct. 29, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 28, 2024
Document Transition Report	false
Entity File Number	001-37425
Entity Registrant Name	WINGSTOP INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-3494862
Entity Address, Address Line One	15505 Wright Brothers Drive
Entity Address, City or Town	Addison
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75001
City Area Code	972
Local Phone Number	686-6500
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	WING
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		29,212,284
Entity Central Index Key	0001636222
Current Fiscal Year End Date	--12-28
Document Period Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023
Current assets
Cash and cash equivalents	$ 83,958	$ 90,216
Restricted cash	11,444	11,444
Accounts receivable, net	16,939	12,408
Prepaid expenses and other current assets	7,225	4,948
Advertising fund assets, restricted	46,671	25,328
Total current assets	166,237	144,344
Property and equipment, net	119,119	91,292
Operating lease assets	57,753	19,092
Goodwill	74,749	67,708
Trademarks	32,700	32,700
Other non-current assets	27,412	14,949
Total assets	484,762	377,825
Current liabilities
Accounts payable	10,301	4,725
Current portion of operating lease liabilities	3,533	2,380
Other current liabilities	58,386	38,571
Advertising fund liabilities	46,671	25,328
Total current liabilities	118,891	71,004
Long-term debt, net	713,729	712,327
Operating lease liabilities	60,414	17,807
Deferred revenues, net of current	37,007	30,145
Deferred income tax liabilities, net	2,097	3,721
Other non-current liabilities	90	187
Total liabilities	932,228	835,191
Commitments and contingencies (see Note 7)
Stockholders' deficit
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,212,082 and 29,337,920 shares issued and outstanding as of September 28, 2024 and December 30, 2023, respectively	292	293
Additional paid-in-capital	1,515	2,676
Retained deficit	(449,336)	(459,994)
Accumulated other comprehensive loss	63	(341)
Total stockholders' deficit	(447,466)	(457,366)
Total liabilities and stockholders' deficit	484,762	377,825
Customer relationships, net
Current assets
Customer relationships, net	$ 6,792	$ 7,740

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 28, 2024	Dec. 30, 2023
Statement of Financial Position [Abstract]
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	29,212,082	29,337,920
Common stock, shares outstanding (in shares)	29,212,082	29,337,920

Consolidated Statements of Comprehensive Income - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

9 Months Ended

Sep. 28, 2024

Sep. 30, 2023

Sep. 28, 2024

Sep. 30, 2023

Revenue:

Total revenue

$ 162,498

$ 117,104

$ 463,986

$ 332,998

Costs and expenses:

Cost of sales

^[1]

24,367

17,622

68,311

50,959

Advertising expenses

60,965

42,381

172,705

120,753

Selling, general and administrative

32,294

23,047

85,569

68,820

Depreciation and amortization

5,054

3,384

13,625

9,591

Loss on disposal of assets

Total costs and expenses

122,680

86,452

340,210

250,218

Operating income

39,818

30,652

123,776

82,780

Interest expense, net

5,130

4,520

14,874

13,337

Other (income) expense

(800)

(19)

(1,574)

123

Income before income tax expense

35,488

26,151

110,476

69,320

Income tax expense

9,756

6,640

28,512

17,959

Net income

$ 25,732

$ 19,511

$ 81,964

$ 51,361

Earnings per share

Basic (in USD per share)

$ 0.88

$ 0.66

$ 2.80

$ 1.72

Diluted (in USD per share)

$ 0.88

$ 0.65

$ 2.78

$ 1.71

Weighted average shares outstanding

Basic (in shares)

29,265

29,750

29,319

29,889

Diluted (in shares)

29,383

29,818

29,441

29,969

Dividends per share (in USD per share)

$ 0.27

$ 0.22

$ 0.71

$ 0.60

Other comprehensive income (loss)

Currency translation adjustment

$ 440

$ (199)

$ 404

$ 76

Other comprehensive income (loss)

440

(199)

404

Comprehensive income

26,172

19,312

82,368

51,437

Royalty revenue, franchise fees and other

Revenue:

Total revenue

74,395

53,200

212,652

149,372

Advertising fees

Revenue:

Total revenue

56,764

39,951

161,567

114,010

Company-owned restaurant sales

Revenue:

Total revenue

$ 31,339

$ 23,953

$ 89,767

$ 69,616

[1]	Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.

Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Deficit	Accumulated Other Comprehensive Loss
Balance at beginning of period (in shares) at Dec. 31, 2022		29,932,668
Balance at beginning of period at Dec. 31, 2022	$ (390,861)	$ 300	$ 2,797	$ (393,321)	$ (637)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	15,669			15,669
Shares issued under stock plans (in shares)		49,817
Shares issued under stock plans	111		111
Tax payments for restricted stock upon vesting (in shares)		(13,613)
Tax payments for restricted stock upon vesting	(2,292)			(2,292)
Stock-based compensation expense, net of forfeitures	3,345		3,345
Dividends declared on common stock and equivalents	(5,909)		(5,444)	(465)
Currency translation adjustment	147				147
Balance at end of period (in shares) at Apr. 01, 2023		29,968,872
Balance at end of period at Apr. 01, 2023	(379,790)	$ 300	809	(380,409)	(490)
Balance at beginning of period (in shares) at Dec. 31, 2022		29,932,668
Balance at beginning of period at Dec. 31, 2022	(390,861)	$ 300	2,797	(393,321)	(637)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	51,361
Currency translation adjustment	76
Balance at end of period (in shares) at Sep. 30, 2023		29,414,920
Balance at end of period at Sep. 30, 2023	(475,442)	$ 294	1,238	(476,413)	(561)
Balance at beginning of period (in shares) at Apr. 01, 2023		29,968,872
Balance at beginning of period at Apr. 01, 2023	(379,790)	$ 300	809	(380,409)	(490)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	16,181			16,181
Shares issued under stock plans (in shares)		9,084
Shares issued under stock plans	362		362
Tax payments for restricted stock upon vesting (in shares)		(342)
Tax payments for restricted stock upon vesting	(69)			(69)
Stock-based compensation expense, net of forfeitures	3,546		3,546
Dividends declared on common stock and equivalents	(5,709)		(2,679)	(3,030)
Currency translation adjustment	128				128
Balance at end of period (in shares) at Jul. 01, 2023		29,977,614
Balance at end of period at Jul. 01, 2023	(365,351)	$ 300	2,038	(367,327)	(362)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	19,511			19,511
Shares issued under stock plans (in shares)		4,857
Shares issued under stock plans	270		270
Purchases of common stock (in shares)		(567,151)
Purchases of common stock	(126,125)	$ (6)	(241)	(125,878)
Tax payments for restricted stock upon vesting (in shares)		(400)
Tax payments for restricted stock upon vesting	(66)			(66)
Stock-based compensation expense, net of forfeitures	3,128		3,128
Dividends declared on common stock and equivalents	(6,610)		(3,957)	(2,653)
Currency translation adjustment	(199)				(199)
Balance at end of period (in shares) at Sep. 30, 2023		29,414,920
Balance at end of period at Sep. 30, 2023	$ (475,442)	$ 294	1,238	(476,413)	(561)
Balance at beginning of period (in shares) at Dec. 30, 2023	29,337,920	29,337,920
Balance at beginning of period at Dec. 30, 2023	$ (457,366)	$ 293	2,676	(459,994)	(341)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	28,747			28,747
Shares issued under stock plans (in shares)		42,918
Shares issued under stock plans	708	$ 1	707
Tax payments for restricted stock upon vesting (in shares)		(10,860)
Tax payments for restricted stock upon vesting	(3,717)			(3,717)
Stock-based compensation expense, net of forfeitures	3,812		3,812
Dividends declared on common stock and equivalents	(6,539)		(6,277)	(262)
Currency translation adjustment	(24)				(24)
Balance at end of period (in shares) at Mar. 30, 2024		29,369,978
Balance at end of period at Mar. 30, 2024	$ (434,379)	$ 294	918	(435,226)	(365)
Balance at beginning of period (in shares) at Dec. 30, 2023	29,337,920	29,337,920
Balance at beginning of period at Dec. 30, 2023	$ (457,366)	$ 293	2,676	(459,994)	(341)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	81,964
Currency translation adjustment	$ 404
Balance at end of period (in shares) at Sep. 28, 2024	29,212,082	29,212,082
Balance at end of period at Sep. 28, 2024	$ (447,466)	$ 292	1,515	(449,336)	63
Balance at beginning of period (in shares) at Mar. 30, 2024		29,369,978
Balance at beginning of period at Mar. 30, 2024	(434,379)	$ 294	918	(435,226)	(365)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	27,485			27,485
Shares issued under stock plans (in shares)		11,323
Shares issued under stock plans	546		546
Purchases of common stock (in shares)		(75,862)
Purchases of common stock	(29,220)	$ (1)	(4,304)	(24,915)
Tax payments for restricted stock upon vesting (in shares)		(1,038)
Tax payments for restricted stock upon vesting	(401)			(401)
Stock-based compensation expense, net of forfeitures	4,926		4,926
Dividends declared on common stock and equivalents	(6,486)		(217)	(6,269)
Currency translation adjustment	(12)				(12)
Balance at end of period (in shares) at Jun. 29, 2024		29,304,401
Balance at end of period at Jun. 29, 2024	(437,541)	$ 293	1,869	(439,326)	(377)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	25,732			25,732
Shares issued under stock plans (in shares)		1,850
Shares issued under stock plans	0
Purchases of common stock (in shares)		(93,617)
Purchases of common stock	(35,195)	$ (1)	(7,307)	(27,887)
Tax payments for restricted stock upon vesting (in shares)		(552)
Tax payments for restricted stock upon vesting	(230)			(230)
Stock-based compensation expense, net of forfeitures	7,273		7,273
Dividends declared on common stock and equivalents	(7,945)		(320)	(7,625)
Currency translation adjustment	$ 440				440
Balance at end of period (in shares) at Sep. 28, 2024	29,212,082	29,212,082
Balance at end of period at Sep. 28, 2024	$ (447,466)	$ 292	$ 1,515	$ (449,336)	$ 63

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Operating activities
Net income	$ 81,964	$ 51,361
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	13,625	9,591
Deferred income taxes	(1,624)	(1,200)
Stock-based compensation expense	16,011	10,019
Loss on disposal of assets	0	95
Amortization of debt issuance costs	1,561	1,530
Changes in operating assets and liabilities:
Accounts receivable	(4,531)	(2,490)
Prepaid expenses and other assets	(9,159)	(20)
Advertising fund assets and liabilities, net	17,718	9,596
Accounts payable and other current liabilities	22,097	2,992
Deferred revenue	7,227	2,054
Other non-current liabilities	4,979	219
Cash provided by operating activities	149,868	83,747
Investing activities
Purchases of property and equipment	(35,575)	(28,295)
Acquisition of restaurants from franchisee	(14,048)	(4,396)
Payments for investments	(500)	(808)
Cash used in investing activities	(50,123)	(33,499)
Financing activities
Proceeds from exercise of stock options	1,254	743
Repayments of long-term debt	0	(3,650)
Purchases of common stock	(64,210)	(125,250)
Tax payments for restricted stock upon vesting	(4,348)	(2,427)
Dividends paid	(20,981)	(18,433)
Cash used in financing activities	(88,285)	(149,017)
Net increase in cash, cash equivalents, and restricted cash	11,460	(98,769)
Cash, cash equivalents, and restricted cash at beginning of period	119,676	205,715
Cash, cash equivalents, and restricted cash at end of period	131,136	106,946
Supplemental information:
Accrued capital expenditures	$ 5,196	$ 4,622

Basis of Presentation and Update to Significant Accounting Policies

9 Months Ended

Sep. 28, 2024

Accounting Policies [Abstract]

Basis of Presentation and Update to Significant Accounting Policies

Certain prior period information on the Consolidated Balance Sheets have been reclassified to conform to the current presentation.

Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2024 and 2023 each have 52 weeks.


	September 28, 2024		December 30, 2023
Cash and cash equivalents	$	83,958	$	90,216
Restricted cash	11,444		11,444
Restricted cash, included in Advertising fund assets, restricted	35,734		18,016
Total cash, cash equivalents, and restricted cash	$	131,136	$	119,676

Earnings per Share

9 Months Ended

Sep. 28, 2024

Earnings Per Share [Abstract]

Earnings per Share

Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):


	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	September 28, 2024	September 30, 2023	September 28, 2024	September 30, 2023
Basic weighted average shares outstanding	29,265	29,750	29,319	29,889
Dilutive shares	118	68	122	80
Diluted weighted average shares outstanding	29,383	29,818	29,441	29,969

Stockholders’ Deficit	9 Months Ended
Stockholders’ Deficit	Sep. 28, 2024
Dividends [Abstract]
Stockholders’ Deficit	Stockholders’ Deficit Dividends In connection with the Company’s regular dividend program, our Board of Directors declared a quarterly dividend of $0.22 per share of common stock in each of the first two quarters of 2024, and a quarterly dividend of $0.27 per share of common stock in the third quarter of 2024, resulting in aggregate declared dividends of $20.8 million, or $0.71 per share of common stock, during the thirty-nine weeks ended September 28, 2024. Subsequent to the third quarter, on October 29, 2024, our Board of Directors declared a regular quarterly dividend of $0.27 per share of common stock for stockholders of record as of November 15, 2024. The regular quarterly dividend is to be paid on December 6, 2024, totaling approximately $7.9 million. Share Repurchase Program On August 17, 2023, the Company announced a share repurchase program with authorization to purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase Program”). During the thirty-nine weeks ended September 28, 2024, the Company repurchased and retired 169,479 shares of its common stock at an average price of $377.09 per share. As of September 28, 2024, $61.1 million remained available under the Share Repurchase Program.

Fair Value Measurements

9 Months Ended

Sep. 28, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Level 1 — Unadjusted quoted prices for identical instruments traded in active markets.

Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data.

Level 3 — Unobservable inputs reflecting management’s estimates and assumptions.


	Fair Value Hierarchy	September 28, 2024				December 30, 2023
		Carrying Value		Fair Value		Carrying Value		Fair Value
Securitized Financing Facility:
2020-1 Class A-2 Senior Secured Notes (1)	Level 2	$	472,800	$	445,945	$	472,800	$	423,823
2022-1 Class A-2 Senior Secured Notes (1)	Level 2	$	248,125	$	235,421	$	248,125	$	222,370
Investments in bonds of LPH (2)	Level 3	$	3,884	$	4,669	$	3,557	$	4,306

(1) The fair value of the 2020-1 and 2022-1 Class A-2 Senior Secured Notes was estimated using available market information.

(2) The fair value approximates discounted cash flows using current market rates for debt investments with similar maturities and credit risk.

Income Taxes	9 Months Ended
Income Taxes	Sep. 28, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesIncome tax expense and the effective tax rate were $9.8 million and 27.5%, respectively, for the thirteen weeks ended September 28, 2024, and $6.6 million and 25.4%, respectively, for the thirteen weeks ended September 30, 2023. The increase in the effective tax rate is primarily related to the impact of nondeductible expenses for executive compensation in the current fiscal year period. Income tax expense and the effective tax rate were $28.5 million and 25.8%, respectively, for the thirty-nine weeks ended September 28, 2024, and $18.0 million and 25.9%, respectively, for the thirty-nine weeks ended September 30, 2023.

Debt Obligations

9 Months Ended

Sep. 28, 2024

Debt Disclosure [Abstract]

Debt Obligations

Long-term debt consisted of the following components (in thousands):


	September 28, 2024		December 30, 2023
2020-1 Class A-2 Senior Secured Notes	$	472,800	$	472,800
2022-1 Class A-2 Senior Secured Notes	248,125		248,125
Debt issuance costs, net of amortization	(7,196)		(8,598)
Total debt	713,729		712,327

No borrowings were outstanding under the 2022 Variable Funding Notes as of September 28, 2024 and December 30, 2023.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 28, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies The Company is subject to legal proceedings, claims, and liabilities, including claims and actions resulting from employment-related and franchise-related matters, which arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of ultimate liability with respect to such actions is not likely to have a material adverse impact on the Company’s financial position, results of operations, or cash flows.

Leases

9 Months Ended

Sep. 28, 2024

Leases [Abstract]

Leases

Components of lease expense were as follows (in thousands):


	Thirty-Nine Weeks Ended
	September 28, 2024	September 30, 2023
Operating lease cost (1)	4,728	2,623
Variable lease cost (2)	570	447
Total lease cost	5,298	3,070

(1) Includes short-term leases, which are immaterial.

(2) Primarily related to adjustments for inflation, common area maintenance, and property tax.

Supplemental cash flow information related to leases is as follows (in thousands):


	Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023
Cash paid (received) for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	(4,849)	$	2,518
Right-of-use assets obtained in exchange for new operating lease liabilities	$	41,260	$	3,947

(1) Includes tenant improvement reimbursements received.

Stock-Based Compensation	9 Months Ended
Stock-Based Compensation	Sep. 28, 2024
Share-Based Payment Arrangement [Abstract]
Stock-Based Compensation	Stock-Based Compensation During the thirty-nine weeks ended September 28, 2024, the Company granted 25,257 restricted stock units (“RSUs”) to certain employees. The RSUs granted to certain employees generally vest ratably over a three-year period subsequent to the grant date and had a weighted-average grant-date fair value of $372.52 per unit. In addition, the Company granted 24,015 performance stock units (“PSUs”) to certain employees during the thirty-nine weeks ended September 28, 2024. Of the total PSUs granted, 20,593 PSUs are subject to a service condition and a performance vesting condition based on return on incremental invested capital (“ROI PSUs”). The ROI PSUs are generally eligible to cliff-vest approximately three years from the grant date, and the maximum vesting percentage that could be realized for each of the ROI PSUs is 250% based on the level of performance achieved for the awards. The remaining 3,422 PSUs granted are subject to a service condition and a performance vesting condition based on the number of net new restaurants opened over the performance period (“NNR PSUs”). The NNR PSUs vest ratably over a three-year period, and the maximum vesting percentage that could be realized for each of the NNR PSUs is 100% based on the level of performance achieved for the awards. The PSUs had a weighted-average grant-date fair value of $371.03 per unit. Total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest based on the outcome. Total compensation expense related to all share-based awards, net of forfeitures recognized, was $16.0 million and $10.0 million for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income.

Revenue from Contracts with Customers

9 Months Ended

Sep. 28, 2024

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Royalty revenue	$	66,952	$	47,546	$	192,344	$	134,330
Advertising fees and related income	56,764		39,951		161,567		114,010
Franchise fees	1,419		1,660		4,101		3,828

Acquisitions of Company-owned Restaurants

9 Months Ended

Sep. 28, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisitions of Company-owned Restaurants


	Purchase Price Allocation
Working capital	$	44
Property and equipment	253
Reacquired franchise rights	6,710
Goodwill	7,041


Total purchase price	$	14,048

Pro-forma financial information of the combined entities is not presented due to the immaterial impact of the financial results of the acquisition on our consolidated financial statements.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 28, 2024	Jun. 29, 2024	Mar. 30, 2024	Sep. 30, 2023	Jul. 01, 2023	Apr. 01, 2023	Sep. 28, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net income	$ 25,732	$ 27,485	$ 28,747	$ 19,511	$ 16,181	$ 15,669	$ 81,964	$ 51,361

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 28, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation and Update to Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 28, 2024
Accounting Policies [Abstract]
Basis of presentation	Basis of presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. Balance sheet amounts are as of September 28, 2024 and December 30, 2023, and operating results are for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023. Certain prior period information on the Consolidated Balance Sheets have been reclassified to conform to the current presentation. In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (the “Annual Report”).
Fiscal year	Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2024 and 2023 each have 52 weeks.
Recently issued accounting pronouncements	Recently issued accounting pronouncements. We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements. There have been no changes to the recently issued accounting pronouncements not yet adopted disclosed in the Annual Report.

Basis of Presentation and Update to Significant Accounting Policies (Tables)

9 Months Ended

Sep. 28, 2024

Accounting Policies [Abstract]

Schedule of Cash, Cash Equivalents, and Restricted Cash


	September 28, 2024		December 30, 2023
Cash and cash equivalents	$	83,958	$	90,216
Restricted cash	11,444		11,444
Restricted cash, included in Advertising fund assets, restricted	35,734		18,016
Total cash, cash equivalents, and restricted cash	$	131,136	$	119,676

Earnings per Share (Tables)

9 Months Ended

Sep. 28, 2024

Earnings Per Share [Abstract]

Schedule of Reconciliation of Basic Shares Outstanding to Diluted Shares Outstanding

Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):


	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	September 28, 2024	September 30, 2023	September 28, 2024	September 30, 2023
Basic weighted average shares outstanding	29,265	29,750	29,319	29,889
Dilutive shares	118	68	122	80
Diluted weighted average shares outstanding	29,383	29,818	29,441	29,969

Fair Value Measurements (Tables)

9 Months Ended

Sep. 28, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements

Fair value of debt and the investment in bonds issued by the Company’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd. (“LPH”), are determined on a non-recurring basis, which results are summarized as follows (in thousands):


	Fair Value Hierarchy	September 28, 2024				December 30, 2023
		Carrying Value		Fair Value		Carrying Value		Fair Value
Securitized Financing Facility:
2020-1 Class A-2 Senior Secured Notes (1)	Level 2	$	472,800	$	445,945	$	472,800	$	423,823
2022-1 Class A-2 Senior Secured Notes (1)	Level 2	$	248,125	$	235,421	$	248,125	$	222,370
Investments in bonds of LPH (2)	Level 3	$	3,884	$	4,669	$	3,557	$	4,306

(1) The fair value of the 2020-1 and 2022-1 Class A-2 Senior Secured Notes was estimated using available market information.

(2) The fair value approximates discounted cash flows using current market rates for debt investments with similar maturities and credit risk.

Debt Obligations (Tables)

9 Months Ended

Sep. 28, 2024

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt consisted of the following components (in thousands):


	September 28, 2024		December 30, 2023
2020-1 Class A-2 Senior Secured Notes	$	472,800	$	472,800
2022-1 Class A-2 Senior Secured Notes	248,125		248,125
Debt issuance costs, net of amortization	(7,196)		(8,598)
Total debt	713,729		712,327

Leases (Tables)

9 Months Ended

Sep. 28, 2024

Leases [Abstract]

Schedule of Lease Expense and Supplemental Cash Flow Information

Components of lease expense were as follows (in thousands):


	Thirty-Nine Weeks Ended
	September 28, 2024	September 30, 2023
Operating lease cost (1)	4,728	2,623
Variable lease cost (2)	570	447
Total lease cost	5,298	3,070

(1) Includes short-term leases, which are immaterial.

(2) Primarily related to adjustments for inflation, common area maintenance, and property tax.

Supplemental cash flow information related to leases is as follows (in thousands):


	Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023
Cash paid (received) for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	(4,849)	$	2,518
Right-of-use assets obtained in exchange for new operating lease liabilities	$	41,260	$	3,947

(1) Includes tenant improvement reimbursements received.

Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 28, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023 (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Royalty revenue	$	66,952	$	47,546	$	192,344	$	134,330
Advertising fees and related income	56,764		39,951		161,567		114,010
Franchise fees	1,419		1,660		4,101		3,828

Acquisitions of Company-owned Restaurants (Tables)

9 Months Ended

Sep. 28, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Schedule of Purchase Price Allocation for Acquisitions

The following table summarizes the allocations of the purchase price to the estimated fair value of assets acquired and liabilities assumed at the date of the acquisition (in thousands):


	Purchase Price Allocation
Working capital	$	44
Property and equipment	253
Reacquired franchise rights	6,710
Goodwill	7,041


Total purchase price	$	14,048

Basis of Presentation and Update to Significant Accounting Policies - Additional Information (Details)	9 Months Ended
	Sep. 28, 2024 restaurant
Franchisor Disclosure [Line Items]
Number of restaurants	2,458
Franchised units
Franchisor Disclosure [Line Items]
Number of restaurants	2,402
Proportion of restaurants that are franchised (as a percent)	98.00%
Franchised units \| International and US locations
Franchisor Disclosure [Line Items]
Number of restaurants	338
Entity operated units
Franchisor Disclosure [Line Items]
Number of restaurants	56

Basis of Presentation and Update to Significant Accounting Policies -Schedule of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023	Sep. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Cash and cash equivalents	$ 83,958	$ 90,216
Restricted cash	11,444	11,444
Restricted cash, included in Advertising fund assets, restricted	35,734	18,016
Total cash, cash equivalents, and restricted cash	$ 131,136	$ 119,676	$ 106,946	$ 205,715

Earnings per Share - Schedule of Reconciliation of Basic Shares Outstanding to Diluted Shares Outstanding (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Earnings Per Share [Abstract]
Basic weighted average shares outstanding (in shares)	29,265	29,750	29,319	29,889
Dilutive shares (in shares)	118	68	122	80
Diluted weighted average shares outstanding (in shares)	29,383	29,818	29,441	29,969

Earnings per Share - Additional Information (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Earnings Per Share [Abstract]
Equity awards outstanding (in shares)	0	9	0	5

Stockholders’ Deficit (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended
	Oct. 29, 2024	Sep. 28, 2024	Jun. 29, 2024	Sep. 28, 2024	Aug. 17, 2023
Dividends Payable [Line Items]
Dividends payable per share (in USD per share)		$ 0.27	$ 0.22	$ 0.71
Common stock dividends				$ 20.8
Stock repurchased and retired average share price (in USD per share)		$ 377.09		$ 377.09
Subsequent event
Dividends Payable [Line Items]
Dividends payable per share (in USD per share)	$ 0.27
Dividends payable	$ (7.9)
Share Repurchase Authorization
Dividends Payable [Line Items]
Stock repurchase, authorized amount		$ 61.1		$ 61.1	$ 250.0
Stock repurchased and retired (in shares)				169,479

Fair Value Measurements (Details) - Nonrecurring - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023
Level 3 \| Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments at fair value	$ 3,884	$ 3,557
Level 3 \| Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments at fair value	4,669	4,306
2020-1 Class A-2 Senior Secured Notes \| Level 2 \| Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument at fair value	472,800	472,800
2020-1 Class A-2 Senior Secured Notes \| Level 2 \| Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument at fair value	445,945	423,823
2022-1 Class A-2 Senior Secured Notes \| Level 2 \| Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument at fair value	248,125	248,125
2022-1 Class A-2 Senior Secured Notes \| Level 2 \| Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument at fair value	$ 235,421	$ 222,370

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 9,756	$ 6,640	$ 28,512	$ 17,959
Effective income tax rate (as a percent)	27.50%	25.40%	25.80%	25.90%

Debt Obligations - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023
Debt Instrument [Line Items]
Debt issuance costs, net of amortization	$ (7,196)	$ (8,598)
Total debt	713,729	712,327
2020-1 Class A-2 Senior Secured Notes
Debt Instrument [Line Items]
Gross debt	472,800	472,800
2022-1 Class A-2 Senior Secured Notes
Debt Instrument [Line Items]
Gross debt	$ 248,125	$ 248,125

Debt Obligations - Additional Information (Details) - USD ($)	Sep. 28, 2024	Dec. 30, 2023
Debt Instrument [Line Items]
Maximum borrowing capacity for line of credit	$ 200,000,000
2020-1 Class A-2 Senior Secured Notes
Debt Instrument [Line Items]
Senior secured note fixed interest rate (as a percent)	2.84%
Debt outstanding	$ 472,800,000	$ 472,800,000
2020-1 Class A-2 Senior Secured Notes \| Senior notes
Debt Instrument [Line Items]
Debt outstanding	$ 720,900,000
2022-1 Class A-2 Senior Secured Notes
Debt Instrument [Line Items]
Senior secured note fixed interest rate (as a percent)	3.734%
Debt outstanding	$ 248,125,000	248,125,000
2020 Variable Funding Notes \| Line of credit
Debt Instrument [Line Items]
Line of credit	$ 0	$ 0
2020 and 2022 Class A-2 Senior Secured Notes
Debt Instrument [Line Items]
Covenant, leverage ratio	5.0

Leases - Additional Information (Details) - USD ($) $ in Millions	Sep. 28, 2024	Mar. 30, 2024
Lessee, Lease, Description [Line Items]
Lease term		13 years 9 months 18 days
Lessee, undiscounted fixed payments		$ 66.9
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	2 months 12 days
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	13 years 3 months 18 days
Extended lease term	10 years

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Leases [Abstract]
Operating lease cost	$ 4,728	$ 2,623
Variable lease cost	570	447
Total lease cost	$ 5,298	$ 3,070

Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Cash paid (received) for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ (4,849)	$ 2,518
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 41,260	$ 3,947

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 16.0	$ 10.0
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted (in shares)	25,257
Vesting period (in years)	3 years
Weighted average grant date fair value of RSUs granted (in USD per share)	$ 372.52
Performance shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted (in shares)	24,015
Performance shares \| Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted (in shares)	20,593
Performance units, service period (in years)	3 years
Performance shares \| PSUs Based On Operational Targets
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted (in shares)	3,422
Performance units, service period (in years)	3 years
Performance shares \| PSUs Based On Operational Targets \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
PSU vesting (as a percent)	250.00%
Performance shares \| Market-Based Vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value of RSUs granted (in USD per share)	$ 371.03
Performance shares \| Market-Based Vesting \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
PSU vesting (as a percent)	100.00%

Revenue from Contracts with Customers - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Total revenue	$ 162,498	$ 117,104	$ 463,986	$ 332,998
Royalty revenue
Disaggregation of Revenue [Line Items]
Total revenue	66,952	47,546	192,344	134,330
Advertising fees and related income
Disaggregation of Revenue [Line Items]
Total revenue	56,764	39,951	161,567	114,010
Franchise fees
Disaggregation of Revenue [Line Items]
Total revenue	$ 1,419	$ 1,660	$ 4,101	$ 3,828

Revenue from Contracts with Customers - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 28, 2024	Sep. 28, 2024	Dec. 30, 2023
Disaggregation of Revenue [Line Items]
Average franchise license term (in years)	10 years	10 years
Deferred revenue not yet being amortized	$ 12.5	$ 12.5	$ 9.3
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-09-29
Disaggregation of Revenue [Line Items]
Remaining amortization period for deferred revenue related to open restaurants (in years)	7 years 3 months 18 days	7 years 3 months 18 days

Acquisitions of Company-owned Restaurants - Additional Information (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 28, 2024 USD ($)	Sep. 28, 2024 restaurant
Company acquired existing restaurants from franchisees \| Entity operated units
Business Acquisition [Line Items]
Number of restaurants re-franchised \| restaurant		4
Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Combined purchase price \| $	$ 14.0

Acquisitions of Company-owned Restaurants -Schedule of Purchase Price for Acquisition (Details) - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023
Business Acquisition [Line Items]
Goodwill	$ 74,749	$ 67,708
Total purchase price	14,048
Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Working capital	44
Property and equipment	253
Reacquired franchise rights	6,710
Goodwill	$ 7,041

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