Wingstop Rocks Q2, Inks 100-unit Saudi Arabian Deal
In a joint release, Dallas-based Wingstop announced its second quarter ‘16 financial results showing revenue up 18.2%, 69 new locations opened, same-store sales up 3.1 percent and—perhaps most significantly—the signing of a new international franchise agreement that will bring 100 new Wingstops to Saudi Arabia.
We’ve previously covered the brand in detail—see my June-July 2016 feature on President and CEO Charlie Morrison—for a more detailed look on the brand’s future.
Here are highlights for the fast-growing brand’s fiscal second quarter 2016:
- Total revenue increased 18.2% to $22.7 million
- Systemwide restaurant count increased 16.4% to 914 worldwide locations
- Domestic same-store sales increased 3.1%
- Net income increased to $4.1 million, or $0.14 per diluted share, compared to $0.6 million, or $0.02 per diluted share
- Adjusted EBITDA*, a non-GAAP measure, increased 14.7% to $8.3 million
- Adjusted net income*, a non-GAAP measure, increased 31.3% to $4.2 million
- Adjusted earnings per pro-forma diluted share*, a non-GAAP measure, increased 36.4% to $0.15 from the prior year period
Speaking about the results, Morrison said, “We had another strong quarter in Q2 characterized by strong unit development, revenue, and profitability growth. Year to date, we have opened 69 net new locations and ended the fiscal second quarter with 914 restaurants worldwide, representing 16.4% unit growth over the prior-year period. This included a record 41 net restaurant openings during the fiscal second quarter including one company-owned restaurant in the Dallas area.”
“Delivering consistently strong quarterly performance is made possible by Wingstop’s unique ‘category of one’ brand positioning and differentiated business model," Morrison said. "Our attractive franchisor cash flow attributes were certainly demonstrated by our recently completed $180 million recapitalization and meaningful return of capital to shareholders through a special dividend payment of $2.90 per share.
"As we march towards our goal of 2,500 domestic units, the Wingstop brand is also attracting heightened interest internationally. We are pleased to announce a new development agreement for Saudi Arabia which calls for building 100 restaurants over the next 10 years. We are prioritizing international markets that have Western brand appeal and high per capita chicken consumption while furthering Wingstop’s mission to serve the world flavor,” he continued.
Turning to the big deal in the desert, the company announced an international franchise agreement with Atheela Al Arabia for exclusive rights to open Wingstop restaurants throughout Saudi Arabia over the next decade. It significantly expands Wingstop’s presence in the Middle East. The first sites are planned for the capital city of Riyadh in 2017.
Atheela is a newly created entity funded and led by Fahad Bin-Hithleen and Fahad Al Muqbil. Mr. Bin-Hithleen is the chairman of the Fahad Bin-Hithleen Group, which has extensive experience in the local retail industry, including several fashion and vending businesses, as well as a portfolio of food-related franchises such as the Crêpe Café, which has several branches across the kingdom.
“We are proud to partner with Atheela for the development of these first 100 locations in Saudi Arabia, which will significantly grow our international footprint,” Morrison said. “The success of our more than 60 international Wingstop locations, including our recent opening in the UAE, has created global excitement for the brand and is driving cravings for our freshly prepared, handcrafted wings throughout the Middle East, and beyond. This new deal with Atheela is a significant next step in our plan to deliver wings across the region and in our mission to ‘serve the world flavor.’”