What changed in this filing

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Item 1. Business

2024-02-21 compared with 2023-02-22 · 43 added, 39 removed, 132 unchanged (38% of the section changed)

12 unchanged sentences

Our 11 flavor offerings, along with limited time offerings of special flavors, create a differentiated experience that drives demand across multiple day parts and occasions.

Paired with our numerous order options (eat-in (to the extent available) / to go / delivery;

individual / combo meals / family packs) that allow guests to eat Wingstop during any occasion, whether it is a quick carry-out snack, a party size order for their favorite group occasion, or delivery for a family meal, we believe this customizable unique experience drives repeat business and brand loyalty.

Paired with our numerous order options (dine-in / carryout / delivery;

individual / combo meals / family packs) that allow guests to enjoy Wingstop during any occasion, whether it is a quick carry-out snack, a party size order for their favorite group occasion, or delivery for a family meal, we believe this customizable unique experience drives repeat business and brand loyalty.

Our vision is to become a Top 10 Global Restaurant Brand.

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– expanding our global footprint.

The foundation of this approach is our culture, which we define as The Wingstop Way, and our investment in people as a competitive advantage necessary to build our organization for the next level.

The Wingstop Way includes a core value system of being Authentic, Entrepreneurial, Service-minded, and Fun.

The Wingstop Way extends to the brand’s environmental, social and governance platform as Wingstop seeks to provide value to all stakeholders.

The foundation of this approach is our culture, which we define as The Wingstop Way, our investment in people as a competitive advantage necessary to continue to scale our organization for the next phase of growth, and our cultivation of a global mindset.

The Wingstop Way includes core values centered around being Authentic, Entrepreneurial, Service-minded, and Fun.

The Wingstop Way extends to the brand’s environmental, social and governance platform as Wingstop seeks to provide value to all guests.

Sustaining Long-Term Same Store Sales Growth

We believe in sustaining long-term same store sales growth through a combination of brand awareness, menu innovation, expansion of our delivery channels, data-driven marketing and maximizing our digital leadership position.

We believe in sustaining long-term same store sales growth through a combination of brand awareness, menu innovation, delivery, data-driven marketing and maximizing our digital leadership position.

Our national advertising program is funded through the Wingstop Restaurants Advertising Fund (the “Ad Fund”), a consolidated not-for-profit advertising fund for which a percentage of gross sales is collected from Wingstop restaurant domestic franchisees and company-owned restaurants to be used for various forms of advertising for the Wingstop brand.

Domestic franchisees are required to contribute 5% of gross sales to the Ad Fund.

The continued growth of our national advertising program since its inception in 2017 supports elevated marketing spend and premium placements through an extensive range of social media and digital marketing channels, including search engine, digital video, and social media advertising, to allow us to target core customers and create top of mind consideration with relevant, impactful messaging.

We are making focused investments in customer relationship management (“CRM”) and our digital platform, which will allow us to transition from the traditional promotion-based marketing approach to a digital platform-based strategy.

The national advertising program supports elevated marketing spend and premium placements through an extensive range of social media and digital marketing channels, including search engine, digital video, and social media advertising, to allow us to target core customers and create top of mind consideration with relevant, impactful messaging.

The national advertising program also supports our digital initiatives and related strategies, including our focused investments in customer relationship management (“CRM”) and our digital platform, which allows us to deploy a digital platform-based marketing strategy.

As a result of these investments, we continue to sustain digital sales above 60%.

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Existing franchisees accounted for more than 90% of franchised restaurants opened in each of 2022 and 2023, which we believe further underscores our restaurant model’s financial appeal.

Upon opening, our restaurant volume generally builds year after year.

Upon the opening of a new restaurant, its sales volume generally builds year after year.

Our domestic average unit volume (“AUV”) has grown consistently, approximating $1.8 million during fiscal year 2023.

Our domestic operating model targets a low average estimated initial investment of approximately $440,000, excluding real estate purchase or lease costs and pre-opening expenses.

In year two of operation, we target a franchisee unlevered cash-on-cash return of approximately 50%+.

Our domestic operating model provides for a low average initial investment of approximately $480,000, excluding real estate purchase or lease costs and pre-opening expenses.

In year two of operation of a new restaurant, we target a franchisee unlevered cash-on-cash return of approximately 70%+.

We believe low entry costs and high returns provide a compelling investment opportunity for our franchisees that has helped drive the continued growth of our system.

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We also believe that there is a significant opportunity to grow our business internationally.

As of December 31, 2022, we had 238 international restaurants located in eight countries, all of which were franchised.

In fiscal year 2022, we opened 45 international restaurants.

In fiscal year 2023, we opened 50 net new international restaurants, and as of December 30, 2023, we had 288 international restaurants located in 10 countries and U.S.

territories, all of which were franchised.

We believe that our restaurant operating model translates well internationally based on our small real estate footprint, our simplicity of operations, the universal and broad appeal of chicken, and our ability to customize our wide variety of flavors to local tastes.

1 unchanged sentence

Franchise Overview

Our franchisees operated a total of 1,916 restaurants in 44 states and nine countries as of December 31, 2022.

Our franchisees operated a total of 2,165 restaurants in 45 states and 11 countries and U.S.

territories as of December 30, 2023.

We have rigorous qualification criteria and training programs for our franchisees and require them to adhere to strict operating standards.

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We may terminate the franchise rights of any franchisee who does not comply with our standards and requirements.

We believe that

maintaining superior food quality, an inviting and energetic atmosphere, and excellent guest service are critical to the reputation and success of our concept.

We believe that maintaining superior food quality, an inviting and energetic atmosphere, and excellent guest service are critical to the reputation and success of our concept.

Therefore, we enforce the contractual requirements of our franchise agreements.

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This increase is consistent with our strategy to grow with our existing franchisees.

As of December 31, 2022, our domestic franchise base had an average restaurant ownership of approximately seven restaurants per franchisee and an average tenure of thirteen years.

As of December 30, 2023, our domestic franchise base of 216 franchisees had an average restaurant ownership of approximately nine restaurants per franchisee and an average tenure of fourteen years.

Franchise Agreements

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These funds are managed by the Ad Fund and are primarily used to create advertising content and purchase digital and television advertising on a national level.

Beginning the second fiscal quarter 2024, the advertising fund contribution rate will increase to 5.3% to support digital and technology-related costs.

International Franchise Agreements

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We also require franchisees to use our proprietary sauces, seasonings, and spice blends and to purchase them and other proprietary products only from designated sources.

All food items and packaging goods for Wingstop restaurants are currently sourced through one distributor, Performance Food Group (“PFG”).

Currently, there are 17 geographically diverse PFG distribution centers, which carry all products required for a Wingstop restaurant and service all of Wingstop’s domestic restaurants.

PFG is contractually obligated to deliver products to our restaurants at least twice weekly.

PFG provides consolidated deliveries with a tightly controlled and monitored cold chain.

Its national distribution system has a documented recovery plan to handle any disruption.

Wingstop contracts directly with manufacturers to sell products to PFG, who in turn receives a fee for delivering these items to our restaurants.

All food items and packaging goods for Wingstop restaurants in the U.S.

are currently supplied through one distributor.

Currently, there are 17 geographically diverse distribution centers, which carry all products required for a Wingstop restaurant and service all of Wingstop’s domestic restaurants.

The distributor is contractually obligated to deliver products to our restaurants at least twice weekly, and provides consolidated deliveries with a tightly controlled and monitored cold chain for perishable items.

The distributor’s national distribution system has a documented recovery plan to handle any disruption.

Wingstop contracts directly with manufacturers to sell products to the distributor, who in turn receives a fee for delivering these items to our restaurants.

The majority of Wingstop’s highest-spend items are formula or fixed-contract priced.

Wingstop has also negotiated agreements with its soft drink suppliers to offer soft drink dispensing systems, along with associated branded products, in all Wingstop restaurants.

Wingstop has also negotiated agreements with its beverage suppliers to offer beverage dispensing systems, along with associated branded products, in all Wingstop restaurants.

Information / Technology Systems

We have core information systems in place that, together with focused investments we are making in technology, we believe are designed to scale and support our future growth plans.

We specify a POS system and restaurant management system in all domestic restaurants that helps facilitate the operation of the restaurants by recording sales, purchasing and inventory of goods, managing of labor and assessing restaurant performance.

We have core information systems in place that, together with focused investments we are making in technology (including our digital platform), we believe are designed to scale and support our future growth plans.

We specify a POS system and restaurant management system in all domestic restaurants that help facilitate the operation of the restaurants by recording sales, purchasing and inventory of goods, managing of labor and assessing restaurant performance.

Our POS system and restaurant management system is configured to record and store financial information in a manner that we specify, and we require franchisees to provide us with continual and unlimited independent access to all information on each POS system.

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None of our team members are represented by a labor union or covered by a collective bargaining agreement, and we believe that we have good relations with our team members.

Our franchise owners are independent business owners, so they and their team members are not included in our team member count and are not our team members.

Our human capital objectives include attracting, training, motivating, rewarding and retaining team members.

To support these objectives, our team member programs are designed to develop talent and prepare team members for advancement and leadership positions in the future;

Our franchise owners are independent business owners, so they and their employees are not considered our team members and are therefore not included in our team member count.

Our human capital objectives include attracting, retaining, and accelerating the growth of our team members.

Our team member programs are designed to develop talent and prepare team members for advancement and leadership positions in the future;

provide market-competitive pay and benefits;

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We maintain a strong focus on team member well-being, health and safety.

Another area of focus for us is investing in people and infrastructure to build the organization for the next level.

We invest in people and infrastructure to build the organization for the next level.

In addition to seeking to acquire new talent in the marketplace that share our values and goals, we recognize and support the growth and development of our team members and offer opportunities to participate in regular talent and development planning reviews to assist us with growing our internal restaurant teams.

3 unchanged sentences

Fair Labor Standards Act, the U.S.

Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act, and various other federal and state laws governing matters such as minimum wage

requirements, overtime, fringe benefits, workplace safety and other working conditions and citizenship requirements.

Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act, and various other federal and state laws governing matters such as minimum wage requirements, overtime, fringe benefits, workplace safety and other working conditions and citizenship requirements.

A significant number of our and our franchisees’ food service personnel are paid at rates related to the applicable minimum wage, and past increases in the minimum wage have increased our and our franchisees’ labor costs, as would future increases.

1 unchanged sentence

We are subject to extensive and varied state and local government regulation affecting the operation of our business, as are our franchisees, including regulations relating to public and occupational health and safety, sanitation, fire prevention, and franchise operation.

Each restaurant is subject to licensing and regulation by a number of governmental authorities, including with respect to zoning, health, safety, sanitation, nutritional information disclosure, environmental, and building and fire safety, in the jurisdiction in which the restaurant is located.

Each Wingstop restaurant is subject to licensing and regulation by a number of governmental authorities, including with respect to zoning, health, safety, the preparation and sale of food, sanitation, food safety, nutritional information disclosure, environmental, and building and fire safety, in the jurisdiction in which the restaurant is located.

Our and our franchisees’ licenses to sell alcoholic beverages must be renewed annually and may be suspended or revoked at any time for cause, including violation by us or our employees, or our franchisees or their employees, of any law or regulation pertaining to alcoholic beverage control, such as those regulating the minimum age of patrons or employees, advertising, wholesale purchasing, and inventory control.

6 unchanged sentences

We believe that we have established procedures at our international franchised restaurants that provide reasonable assurance that our international franchised restaurants comply in all material respects with the laws of the applicable foreign jurisdiction.

Other factors pertaining to our competitive position in the industry are addressed under the section entitled “Risks Related to Our Business and Our Industry” and listed in “Item 1A.

Risk Factors” of this report.

We have many registered trademarks and believe that the Wingstop mark and Wingstop names and logos, in particular, have significant value and are important to our business.

3 unchanged sentences

We are not aware of any federal, state or local environmental laws or regulations that we would expect to materially affect our earnings or competitive position or result in material capital expenditures.

However, we cannot predict the effect of possible future environmental legislation or regulations.

However, increased focus on environmental matters by legislative, governmental or other authorities may lead to new regulatory initiatives, particularly in the area of climate change.

We cannot predict the effect of possible future environmental legislation or regulations (including those related to climate change).

During the 2023 fiscal year, we had no material environmental compliance-related capital expenditures.

Community Involvement

In 2016, we created Wingstop Charities, a non-profit organization dedicated to enhancing and elevating the community work of our franchisees to make a difference in the lives of our youth.

We are committed to strengthening the communities we serve by being strong, active, corporate citizens and good neighbors.

In fiscal year 2022, more than 82 community organizations received grant funding from Wingstop Charities, and we also launched the Morrison Family Scholarship Program which provides scholarship opportunities for team members who are first-generation college students.

In fiscal year 2020, we donated $1 million to the National Restaurant Association, Educational Foundation’s Restaurant Employee Relief Fund, and in partnership with our franchisees, donated more than one million meals to frontline workers and COVID-19 first responders.

In addition, Wingstop Charities has donated over $1.5 million through local grants, team member assistance and scholarships since its inception.

In 2016, we created Wingstop Charities, a non-profit organization dedicated to enhancing and elevating the community work of our franchisees to make a difference in the communities we serve.

We are committed to strengthening those communities through the Wingstop Charities Community Grant Program, which supports nonprofit organizations focused on education, sports, entrepreneurship, the environment, and food.

In fiscal year 2023, more than 100 community organizations received grant

funding totaling over $1.3 million from Wingstop Charities, including our first national partnership with No Kid Hungry.

Since its inception, Wingstop Charities has awarded over 300 grants and contributed more than $3 million across three key programs:

Community Grants, Team Member Assistance, and the Morrison Family Scholarship Program.

To learn more about how Wingstop Charities is making an impact in our local communities, visit www.wingstopcharities.org.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business