What changed in this filing

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Item 1A. Risk Factors

2024-02-21 compared with 2023-02-22 · 150 added, 131 removed, 282 unchanged (50% of the section changed)

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We and our franchisees face many challenges in opening new restaurants, including:

• availability of financing;

• selection and availability of and competition for suitable restaurant locations;

• availability of financing;

• negotiation of acceptable lease and financing terms;

• securing required governmental permits and approvals, including zoning approvals;

• availability and training of, and wage rates for, qualified personnel;

• availability and training of, and compensation for, qualified personnel;

• availability of required restaurant equipment;

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To the extent our franchisees are unable to open new restaurants at the level that we anticipate, our revenue growth would come primarily from growth in same store sales.

Our failure to add a significant number of new restaurants or grow domestic same store sales would adversely affect our ability to increase our revenue and operating income and could materially adversely affect our operating results.

Our failure to add a significant number of new restaurants or grow same store sales would adversely affect our ability to increase our revenue and operating income and could materially adversely affect our business, financial condition, and operating results.

As we continue to grow, our existing systems and processes and personnel may not be adequate to support our continued growth.

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Accordingly, we are reliant on the performance of our franchisees in successfully operating their restaurants and paying royalties to us on a timely basis.

Our franchise system subjects us to a number of risks, any one of which may impact our ability to collect royalty payments from our franchisees, may harm the goodwill associated with our franchise, and may materially adversely affect our business and results of operations.

Our franchise system subjects us to a number of risks, any one of which may impact our ability to collect royalty payments from our franchisees, harm the goodwill associated with our franchise, and materially adversely affect our business and results of operations.

Our franchisees are an integral part of our business.

We may be unable to successfully implement our growth strategy without the participation of our franchisees and the adherence by our franchisees to our restaurant operation guidelines.

Because our ability to control our franchisees is limited, our franchisees may fail to focus on the fundamentals of restaurant operations, such as quality, service, and cleanliness, which would have a negative impact on our success.

In addition, our franchisees may fail to participate in our marketing initiatives, which could materially adversely affect their sales trends, average weekly sales, and results of operations.

In addition, our franchisees may fail to renovate their existing restaurants or support our marketing initiatives, which could materially adversely affect their sales trends, average weekly sales, and results of operations, thereby impacting royalty revenue.

Although we provide frequent training opportunities to our franchisees to ensure consistency among our operations, there may be differences in the quality of operations at our franchised restaurants that impact the profitability of those restaurants.

In addition, if our franchisees fail to renew their franchise agreements, our royalty revenue may decrease, which in turn could materially adversely affect our business and operating results.

In addition, if our franchisees fail to renew their franchise agreements, our royalty revenue may decrease, which in turn could materially adversely affect our business, financial condition, and operating results.

The failure of our franchisees to comply with applicable laws could negatively impact our reputation or results of operations.

For example, our franchisees are solely responsible for making their own hiring, firing and disciplinary decisions, scheduling hours and establishing wages.

For example, our franchisees are solely responsible for making their own hiring, firing and disciplinary decisions, scheduling hours and establishing compensation.

Any failure by our franchisees to comply with applicable employment laws could negatively impact our reputation and our ability to hire and/or retain employees.

Furthermore, a bankruptcy of any multi-unit franchisee could negatively impact our ability to collect payments due under such franchisee’s franchise agreements.

In a franchisee bankruptcy, the bankruptcy trustee may reject its franchise agreements under the applicable bankruptcy code, in which case

there would be no further royalty payments from such franchisee.

Furthermore, if one of our key franchisees

were to become insolvent or otherwise were unable or unwilling to pay us royalties, Ad Fund contributions, or other amounts owed, our business, financial condition, and results of operations could be adversely affected.

In a franchisee bankruptcy, the bankruptcy trustee may reject its franchise agreements under the applicable bankruptcy code, in which case there would be no further royalty payments from such franchisee.

The amount of the proceeds, if any, that may ultimately be recovered in a bankruptcy proceeding of such franchisee may not be sufficient to satisfy a damage claim resulting from such rejection.

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We may not be able to identify, recruit or contract with suitable franchisees in our target markets on a timely basis or at all.

Although we have developed criteria to evaluate and screen prospective franchisees, our franchisees may not ultimately have the business acumen or be able to access the financial or management resources that they need to open and successfully operate the restaurants contemplated by their agreements with us, or they may elect to cease restaurant development for other reasons and state franchise laws may limit our ability to terminate or modify these license agreements.

Existing franchisees may elect to cease restaurant development for other reasons and state franchise laws may limit our ability to terminate or modify these license agreements.

If any of these situations occur, our growth may be slower than anticipated, which could materially adversely affect our ability to increase our revenue and materially adversely affect our business, financial condition and results of operations.

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Our industry has also long been subject to the threat of food tampering by suppliers, employees, and others such as the addition of foreign objects in the food that we sell.

Reports, whether or not true, of injuries caused by food tampering have in the past severely injured the reputations and brands of restaurant chains in the quick service restaurant segment and could affect us in the future as well.

If our customers become ill from food-borne illnesses or injured from food tampering, we could also be forced to temporarily close some restaurants.

Moreover, any instances of food contamination, whether or not at our restaurants, could subject our restaurants or our suppliers to a food recall pursuant to the Food and Drug Administration Food Safety Modernization Act.

Changes in food and supply costs could materially adversely affect our results of operations.

Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs.

There are no established fixed price markets for bone-in chicken wings.

As a result, we are subject to prevailing market conditions and remain susceptible to volatility in food costs.

The cost of chicken can be volatile.

Although we enter into arrangements in an effort to mitigate the volatility of food costs, any increase in the prices of the ingredients most critical to our menu, particularly chicken, could materially adversely affect our operating results.

In fiscal year 2021, we saw substantial inflation in the cost of bone-in wings, which caused our expenses to rise;

however, we are now experiencing significant deflation in the cost of bone-in wings.

Food costs may also increase as a result of factors beyond our control, such as inflation, general economic conditions, seasonal fluctuations, weather conditions, energy costs, feed prices, industry demand, food safety concerns, product recalls and government regulations.

Increased weather volatility or other long-term changes in weather patterns, including related to climate change, could have a significant impact on the price of availability of some of our ingredients.

Additionally, avian influenza, or similar poultry-related diseases, may negatively affect the supply chain by increasing costs and limiting availability of chicken.

As a result, we may not be able to anticipate or successfully react to changing food costs, including the price of bone-in chicken wings, by adjusting our purchasing practices, increasing our menu prices to pass along commodity price increases to our customers or making other operational adjustments, which could materially adversely affect our operating results.

Our expansion into new and existing markets may present increased risks.

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Our success depends on our ability to compete with many other restaurants.

The restaurant industry in general, and the fast casual category in particular, are intensely competitive, and we compete with many well-established restaurant companies on the basis of food taste and quality, price, service, value, location, convenience, digital engagement and overall customer experience.

Our competitors include individual restaurants and restaurant chains that range from independent local operators to well-capitalized national and regional restaurant companies, including restaurants offering chicken wings, tenders, and chicken sandwiches, as well as dine-in, carry-out, and delivery services offering other types of food.

As our competitors expand their operations or as new competitors enter the industry, we expect competition to continue to intensify.

Should our competitors increase their spending on advertising and promotions or if their advertising and promotions are more effective, we could experience a loss of customer traffic to our competitors and a material adverse effect on our results of operations.

We compete with other restaurant chains and other retail businesses for quality site locations, management, hourly employees, and qualified franchisees.

We and our franchisees compete with other restaurant chains and other retail businesses for quality site locations, management, hourly employees, and we also compete for qualified franchisees.

We also face the risk that new or existing competitors will copy our business model, menu options, presentation, or ambiance, among other things.

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Moreover, we may also compete with companies outside the fast casual, quick service, and casual dining segments of the restaurant industry, such as deli sections and in-store cafés of several major grocery store chains and from home delivery meal plan services, as well as from convenience stores and other dining outlets.

These competitors may have, among other things, a

more diverse menu, lower operating costs, better locations, better facilities, better management, more effective marketing, more efficient operations, stronger brand recognition, more loyal customer base and more convenient offerings than we have.

These competitors may have, among other things, a more diverse menu, lower operating costs, better locations, better facilities, better management, more effective marketing, more efficient operations, stronger brand recognition, more loyal customer bases and more convenient offerings than we have.

If we are unable to compete effectively, it could decrease our traffic, sales and profit margins, which could materially adversely affect our business, financial condition, and results of operations.

Changes in food and supply costs could materially adversely affect our results of operations.

Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs.

There are no established fixed price markets for bone-in chicken wings.

As a result, we are subject to prevailing market conditions and remain susceptible to volatility in food costs.

The cost of chicken can be volatile.

Food costs may also increase as a result of factors beyond our control, such as inflation, general economic conditions, seasonal fluctuations, weather conditions, energy costs, feed prices, labor shortages, industry demand, food safety concerns, product recalls and government regulations.

Increased weather volatility or other long-term changes in weather patterns, including those related to climate change, could have a significant impact on the price or availability of some of our ingredients.

Additionally, avian influenza, or similar poultry-related diseases, may negatively affect the supply chain by increasing costs and limiting availability of chicken.

As a result, we may not be able

to anticipate or successfully react to changing food costs, including the price of bone-in chicken wings, by adjusting our purchasing practices, increasing our menu prices to pass along commodity price increases to our customers or making other operational adjustments, which could materially adversely affect the demand for product and our operating results.

Interruptions in the supply of product to company-owned restaurants and franchisees could materially adversely affect our revenue.

In order to maintain quality-control standards and consistency among restaurants, we require through our franchise agreements that our franchisees obtain food and other supplies from preferred suppliers approved by us in advance.

In order to maintain quality-control standards and consistency among restaurants, our franchise agreements obligate our franchisees to obtain food and other supplies from preferred suppliers approved by us in advance.

All food items and packaging goods for Wingstop restaurants are currently sourced through one distributor with 17 geographically diverse distribution centers.

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Disruptions in these relationships may reduce company-owned restaurant and franchisee sales and, in the case of reduced franchisee sales, our royalty income.

Overall difficulty of suppliers meeting restaurant product demand (including with respect to new product offerings like the launch of our chicken sandwich in 2022), interruptions in the supply chain, obstacles or delays in the process of renegotiating or renewing agreements with preferred suppliers or the distributor, financial difficulties experienced by suppliers or the distributor, or the deficiency, lack, or poor quality of alternative suppliers or distributors could adversely impact company-owned restaurant and franchisee sales, which could materially adversely affect our business and operating results and, in the case of reduced franchisee sales, would reduce our royalty income and revenue.

Overall difficulty of suppliers meeting restaurant product demand, interruptions in the supply chain, obstacles or delays in the process of renegotiating or renewing agreements with preferred suppliers or the distributor, financial difficulties experienced by suppliers or the distributor, or the deficiency, lack, or poor quality of alternative suppliers or distributors could adversely impact company-owned restaurant and franchisee sales, which could materially adversely affect our business, financial condition, and operating results and, in the case of reduced franchisee sales, would reduce our royalty income and revenue.

In addition, our focus on a limited menu could make these consequences more severe.

Our business could be adversely affected by increased labor costs.

Labor is a primary component of our operating costs.

Increased labor costs due to factors such as competition for workers, labor shortages, labor market pressures, increased minimum wage requirements, paid sick leave or vacation accrual mandates, or other legal or regulatory changes, such as predictive scheduling, may adversely impact operating costs for us and our franchisees.

Additional taxes or requirements to incur additional employee benefit costs, including the requirements of the Patient Protection and Affordable Care Act or any new or replacement healthcare requirements, could also adversely impact our operating costs.

From time to time, legislative proposals are made to increase the minimum wage at the federal, state and local level, or create a council that could, among other things, increase minimum wages and impose additional minimum working or operating standards.

The establishment of such laws in one state may have a ripple effect in other states, substantially increase labor costs and negatively impact our operating costs.

Our operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to certain factors, some of which are beyond our control, resulting in a decline in our stock price.

Our operating results may fluctuate significantly because of a number of factors, including:

• the timing of new restaurant openings;

• profitability of our restaurants, especially in new markets;

• changes in interest rates;

• increases and decreases in average weekly sales and same store sales, including due to the timing and popularity of sporting and other events;

• macroeconomic conditions, globally, nationally and locally;

• changes in consumer preferences and competitive conditions;

• legal and regulatory changes;

• costs associated with litigation;

• increases in infrastructure costs;

• fluctuations in commodity prices.

Accordingly, results for any one fiscal quarter or year are not necessarily indicative of results to be expected for any other fiscal quarter or year and our results for any particular future period may decrease compared to the prior period.

In the future, operating results may fall below the expectations of securities analysts and investors.

In that event, the price of our common stock would likely decrease.

Cyber incidents or deficiencies in cybersecurity could negatively impact our business by causing data loss, a disruption to our operations, a compromise or corruption of confidential or personal information, damage to our employee and business relationships and reputation, and/or litigation and liability, all of which could subject us to loss and harm our brand.

As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced.

As our brand profile and our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced.

Additionally, there has been an increase in data integration and complexity of our technology systems, particularly in our international markets.

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Third parties may have the technology or know-how to breach the security of confidential or personal information collected, stored or transmitted by us or our franchisees, and our and their security measures and those of third parties with whom we do business, including technology vendors, solution providers, software manufacturers and supply chain vendors, may not effectively prohibit others from obtaining improper access to this information.

Third parties also may be able to develop and deploy viruses, worms and other malicious software programs, such as ransomware, that attack our, our franchisees’ and third parties with whom we do business’s systems or otherwise exploit any security vulnerabilities.

Third parties have been and will likely be able to continue to develop and deploy viruses, worms and other malicious software programs, such as ransomware, that attack our, our franchisees’ and third parties with whom we do business’s systems or otherwise exploit any security vulnerabilities.

The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect for long periods of time, which may cause a breach to go undetected for an extensive period of time.

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In addition, our franchisees, contractors or third parties with whom we do business or to whom we outsource business operations may attempt to circumvent our security measures in order to misappropriate confidential information and may purposefully or inadvertently cause a breach involving such information.

The costs to us to eliminate any of the foregoing cybersecurity vulnerabilities or to address a cyber incident could be significant and have material adverse impact on our financial condition, results of operations and cash flows.

The costs to us to eliminate any of the foregoing cybersecurity vulnerabilities or to address a cyber incident could be significant and have material adverse impact on our business, financial condition, and results of operations.

The rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks.

If we, our employees, franchisees, or vendors fail to comply with applicable laws, regulations, or contract terms, and covered information is obtained by unauthorized persons, used inappropriately, or destroyed, it could adversely affect our reputation, disrupt our operations and result in costly litigation, judgments, or penalties resulting from violation of laws and payment card industry regulations.

Any such claim or proceeding could cause us to incur significant unplanned expenses and significantly harm our reputation, which could have a material adverse impact on our financial condition, results of operations and cash flows.

A cyber incident could also require us to provide notifications, result in adverse publicity, loss of sales and profits, increase fees payable to third parties, and result in penalties or remediation and other costs that could materially adversely affect the operation of our business and results of operations.

Any such claim or proceeding could cause us to incur significant unplanned expenses and significantly harm our reputation, which could have a material adverse impact on our business, financial condition, and results of operations.

In addition, our cyber liability coverage may be inadequate or may not be available in the future on acceptable terms, or at all, and defending a suit, regardless of its merit, could be costly and divert management’s attention.

Our increasing reliance on credit or debit cards for payment increases the risk of regulatory compliance and security breaches or intrusions, which could materially adversely impact our business or results of operations.

The majority of our restaurant sales are paid by credit or debit cards.

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We and our franchisees must abide by the PCI DSS in order to accept electronic payment transactions.

If we or our franchisees fail to abide by the PCI DSS, we or our franchisees could be subject to fines, penalties or litigation, which could adversely impact our results of operations.

Furthermore, the payment card industry is requiring vendors to become compatible with smart chip technology for payment cards, or EMV-Compliant, or else bear full responsibility for certain fraud

losses, referred to as the EMV Liability Shift.

To become EMV-Compliant, merchants often utilize EMV-Compliant payment card terminals at the POS and obtain a variety of certifications.

At present, a number of our franchised restaurants have not upgraded their POS systems to include such EMV-Compliant payment card terminals and as a result, may be at increased risk for breaches, which could materially adversely affect our business and operating results.

We may become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents.

If we or our franchisees fail to abide by the PCI DSS, we or our franchisees could be subject to fines, penalties or litigation, which could materially adversely impact our business, financial condition, or results of operations.

In addition, we or our franchisees may become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and we or our franchisees may also be subject to lawsuits or other proceedings relating to these types of incidents.

Changing regulations relating to privacy, information security, and data protection could increase our costs and affect or limit how we collect and use personal information.

The United States, the European Union, and other countries in which we operate are increasingly adopting or revising privacy, information security, and data protection laws and regulations that could have a significant impact on our current and planned privacy, data protection, and information security-related practices, our collection, use, sharing, retention, and safeguarding of consumer and/or employee information, and some of our current or planned business activities.

In the United States, these include rules and regulations promulgated under the authority of the FTC, the Health Insurance Portability and Accountability Act of 1996, federal and state labor and employment laws, state data breach notification laws, and state privacy laws such as the California Consumer Privacy Act of 2018 and the California Privacy Rights Act.

The CPRA expanded the CCPA’s requirements, restricted the use of certain categories of personal information that we handle, and established a new regulatory agency to implement and enforce the law.

A number of other states have enacted similar data privacy laws, and other states and countries are considering passing or expanding privacy laws in the near term.

Many of these laws and regulations provide consumers and employees with a private right of action if a covered company suffers a data breach related to a failure to implement reasonable data security measures.

For example, the CCPA and CPRA provide a private right of action for certain data breaches coupled with statutory damages under certain circumstances.

Compliance with the CCPA, CPRA and other laws relating to the protection of personal information involve significant costs and could result in significant liability in the event we allow an unauthorized disclosure of personal information.

In the European Union, this includes the General Data Protection Regulation.

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Compliance with privacy, data protection, and information security laws to which we are subject could result in additional costs, and our failure to comply with such laws could result in potentially significant regulatory investigations or government actions, penalties or remediation, and other costs, as well as adverse publicity, loss of sales and profits, and an increase in fees payable to third parties.

Each of these implications could materially adversely affect our revenues, results of operations, business, and financial condition.

We and our franchisees rely on computer systems to process transactions and manage our business, and a disruption or a failure of such systems or technology could harm our ability to effectively manage our business.

Network and information technology systems are integral to our business.

We utilize various computer systems, including our franchisee reporting system, by which our franchisees report their weekly sales and pay their corresponding royalty fees and required Ad Fund contributions.

Each of these implications could materially adversely affect our business, financial condition, and results of operations.

Additionally, the rapid evolution and

increased adoption of artificial intelligence technologies and our obligations to comply with emerging laws and regulations may require us to develop additional artificial intelligence-specific governance programs.

We and our franchisees rely on information technology to process transactions and manage our business, and a disruption or a failure of such systems or issues with our key technology providers or technology could harm our ability to effectively manage our business and/or result in the loss of guests.

Network and information technology systems, including point-of-sale and payment processing systems, technologies supporting our digital and delivery business, technologies that manage our supply chain, and technologies that facilitate collection of cash, payment of obligations, marketing initiatives, employee engagement and payroll processing, and various other processes and procedures, are integral to our business.

Our ability to effectively manage our business and coordinate the procurement, distribution and sale of our products depends significantly on the availability, reliability, and security of these systems.

Many of these critical systems are provided and managed by third parties, and we are reliant on those third-party providers to implement protective measures that ensure the security and availability of their systems.

While we have systems in place to attempt to manage third-party cybersecurity risks, such procedures may not be sufficient to address all potential failures of third-party systems.

In addition, we utilize various computer systems, including our franchisee reporting system, by which our franchisees report their weekly sales and pay their corresponding royalty fees and required Ad Fund contributions.

This system is critical to our ability to accurately track sales and compute and receive royalties and Ad Fund contributions due from our franchisees.

We also rely on computer systems and network infrastructure across other areas of our operations, including marketing programs, employee engagement, management of our supply chain and POS processing in our restaurants.

Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, computer, network and telecommunications failure, or other catastrophic events, as well as from internal and external security breaches or intrusions, viruses and other disruptive software, worms, improper usage by employees, and other disruptive problems.

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In addition, such events could result in a need for a costly repair, upgrade or replacement of systems, or a decrease in, or in the collection of, royalties and Ad Fund contributions paid to us by our franchisees.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability which could materially affect our results of operations.

It is also critical that we establish and maintain certain licensing and software agreements for the software we use in our day-to-day operations.

A failure to procure or maintain these licenses could have a material adverse effect on our business operations.

We are dependent to a significant extent on our ongoing relationship with key technology providers, including their personnel, resources, technological expertise, systems and technology and their ability to help execute our digital, restaurant technology and enterprise technology initiatives and support our technology innovation and growth initiatives.

The inability of us or our providers to execute those initiatives, or a breakdown in the relationship with those providers, could have an adverse impact on our business, results of operations, and financial condition.

There are risks associated with our increasing dependence on digital commerce platforms to maintain and grow sales, and limitations, disruptions or unavailability of our digital commerce platforms, or our ability to distribute our apps, could harm our ability to compete and conduct our business.

Customers are increasingly using e-commerce websites and apps, both domestically and internationally, like www.wingstop.com, our mobile ordering application, and third-party delivery apps, to order and pay for our products and select optional delivery and curbside services.

In the fourth quarter of 2023, digital sales accounted for 67.0% of our domestic sales.

As a result, we and our franchisees are increasingly reliant on digital ordering and payment for such sales, and portions of our digital commerce platforms depend on third-party services, including cloud-based technologies and platforms.

Our apps and other digital ordering and payment platforms could be damaged or interrupted by power loss, technological failures, cyber-attacks, other forms of sabotage or acts of God.

In addition, the availability,

distribution and functionality of our apps and updates to our apps are dependent on mobile app stores and their related policies, terms and conditions.

Because we and our franchisees rely on digital orders for a significant portion of our sales, any limitations in functionality, interruptions or unavailability of any of our digital ordering or payment platforms could limit or delay customers’ ability to order through such platforms.

Further, if our digital ordering and payment platforms do not meet customers’ expectations in terms of security, speed, attractiveness, or ease of use, customers may be less inclined to return to such platforms.

Any such limitation, damage, interruption or unavailability of our digital commerce platforms or failure of those platforms to meet customers’ expectations could materially adversely affect our and our franchisees' sales and our results of operations and financial condition.

Our ability to effectively manage and grow our business depends significantly on the reliability and capacity of these systems, and we continue to invest in technology innovations, such as our digital platform, as part of our growth strategy.

There can be no assurance that we will realize the intended benefits of these investments or achieve expected results, nor can we be certain of our ability to adequately and/or timely implement, execute, transition between, or enhance such technologies, which could result in:

platform outages;

loss of data;

disruptions to or reduced efficiency in our operations;

delays in customer service;

dissatisfaction from our customers;

loss of sales;

or negative publicity and damage to our reputation.

Our apps and other digital ordering and payment platforms could be damaged or interrupted by power loss, technological failures, cyber-attacks or data breaches, other forms of sabotage or acts of God.

Further, we may not be successful in achieving protection of our related intellectual property, or information systems, including those necessary for implementation and management of our digital platform.

Remediation of these or related issues could result in significant, unplanned capital investments.

In addition, the

availability, distribution and functionality of our apps and updates to our apps are dependent on mobile app stores and their related policies, terms and conditions.

Because we and our franchisees rely on digital orders for a significant portion of our sales, any limitations in functionality, interruptions or unavailability of any of our or third-party digital ordering or payment platforms could limit or delay customers’ ability to order through such platforms.

Further, developing and implementing consumers’ evolving technology demands or industry trends may place a significant financial burden on us and, particularly with respect to digital commerce platforms, could result in a loss of customers and related market share.

If our digital ordering and payment platforms do not meet customers’ expectations in terms of security, speed, attractiveness, or ease of use, customers may be less inclined to return to such platforms.

Any such limitation, damage, interruption or unavailability of our digital commerce platforms or failure of those platforms to meet customers’ expectations could materially adversely affect our and our franchisees’ sales and our growth prospects, results of operations and financial condition.

Any failure by us or our third-party delivery providers to provide timely and reliable delivery services may materially adversely affect our business and reputation.

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One of the legal foundations fundamental to the franchise business model has been that, absent special circumstances, a franchisor is generally not responsible for the acts, omissions, or liabilities of its franchisees, whether with respect to the franchisees’ employees or otherwise.

In the last several years, this principle has been the subject of differing and inconsistent interpretations at the National Labor Relations Board and in the courts, and the question of whether a franchisor can be held liable for the actions or liabilities of a franchisee under a vicarious liability theory, sometimes called “joint employer,” has become highly fact dependent and generally uncertain.

In the last several years, this principle has been the subject of differing and inconsistent interpretations at the National Labor Relations Board (“NLRB”) and in the courts, and the question of whether a franchisor can be held liable for the actions or liabilities of a franchisee under a vicarious liability theory, sometimes called “joint employer,” has become highly fact dependent and generally uncertain.

The effective date of a new joint employer rule announced by the NLRB that would expand liability for franchisors has been extended to February 26, 2024.

The status of the rule remains uncertain, pending resolution of legal and legislative challenges with respect to the rule.

Further, legislation has been proposed from time to time to require franchisors to be responsible for ensuring franchisee compliance with certain laws.

A regulatory, judicial or legislative determination that we are a “joint employer” with our franchisees or that our franchisees are part of one unified system subject to joint and several liability could subject us and/or our franchisees to liability for employment-related, health and safety related and other liabilities of our franchisees and could cause us to incur other costs that have a material adverse effect on our results of operations.

Our business activities subject us and our franchisees to litigation risk that could subject us to significant money damages and other remedies or by increasing our and our franchisees’ litigation expense.

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Each of these claims may increase our and our franchisees’ costs, limit the funds of our franchisees available to make royalty payments and reduce the execution of new franchise agreements.

Litigation against a franchisee or its affiliates by third parties or regulatory agencies, whether in the ordinary course of business or otherwise, may also include claims against us by virtue of our relationship with the defendant-franchisee, whether under vicarious liability, joint employer, or other theories.

Litigation against a franchisee or its affiliates by

third parties or regulatory agencies, whether in the ordinary course of business or otherwise, may also include claims against us by virtue of our relationship with the defendant-franchisee, whether under vicarious liability, joint employer, or other theories.

Regardless of whether any claim brought against us or a franchisee in the future is valid or whether we or they are liable, such a claim would be expensive to defend and may divert time, money and other valuable resources away from our or their operations and, thereby, hurt our business.

In addition, the ability of a defendant-franchisee to make royalty payments in the event of such

claims may be decreased and adverse publicity resulting from such allegations may materially adversely affect us and our brand, regardless of whether these allegations are valid or whether we or they are liable.

In addition, the ability of a defendant-franchisee to make royalty payments in the event of such claims may be decreased and adverse publicity resulting from such allegations may materially adversely affect us and our brand, regardless of whether these allegations are valid or whether we or they are liable.

Our international business may be subject to additional risks related to litigation, including difficulties in enforcement of contractual obligations governed by foreign law due to differing interpretations of rights and obligations, compliance with multiple and potentially conflicting laws, new and potentially untested laws and judicial systems, and reduced or diminished protection of intellectual property.

A substantial judgment against us could materially adversely affect our business and operating results.

A substantial judgment against us could materially adversely affect our business, financial condition, and operating results.

Insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to any of these or other matters.

A substantial judgment, or judgment or other liability in excess of our or our franchisees’ available insurance coverage, resulting from claims could materially adversely affect our business and results of operations.

We may engage in litigation or arbitration with our franchisees.

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Furthermore, existing and future franchise-related legislation could subject us to additional litigation risk in the event we terminate or fail to renew a franchise relationship.

Our business could be adversely affected by increased labor costs.

Labor is a primary component of our operating costs.

From time to time, legislation increases the minimum wage at the federal, state and local level, or creates a council that could, among other things, increase minimum wages and impose additional minimum working or operating standards.

The establishment of such laws in one state may have a ripple effect in other states, substantially increase labor costs and negatively impact our operating costs.

Our success depends in part upon effective advertising and marketing campaigns, which may not be successful, and franchisee support of such advertising and marketing campaigns.

We believe the Wingstop brand is critical to our business and expend resources in our marketing efforts using a variety of media outlets.

We expect to continue to conduct brand awareness programs and customer initiatives to attract and retain customers.

We expect to continue to conduct brand awareness programs and customer initiatives, including product promotions, to attract and retain customers.

Additionally, new social media platforms and other digital marketing initiatives are developing rapidly, and we need to continuously innovate, evolve, and invest in our social media strategies to maintain broad appeal with guests and brand relevance.

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Our franchisees are currently required to contribute specified percentages of their gross sales to certain advertising funds and programs.

There can be no assurances that these funds will be sufficient to meet our marketing needs or that additional funds will be provided by our franchisees in the future.

The lack of continued financial support for our advertising activities could hinder our marketing efforts, which may adversely affect our business and operating results.

There can be no assurances that these funds will be sufficient to meet our marketing needs or that additional funds

will be provided by our franchisees in the future.

The lack of continued financial support for our advertising activities could hinder our marketing efforts, which may materially adversely affect our business, financial condition, and operating results.

While we maintain control over advertising and marketing materials and can mandate certain strategic initiatives pursuant to our franchise agreements, we need the active support of our franchisees if the implementation of these initiatives is to be successful.

If our initiatives are not successful, resulting in expenses incurred without the benefit of higher revenue, our business, financial condition and results of operations could be materially adversely affected.

We are vulnerable to changes in consumer preferences and regulation of consumer eating habits that could harm our business, financial condition, results of operations and cash flow.

Consumer preferences and eating habits often change rapidly and without warning, moving from one trend to another among many product or retail concepts.

We are vulnerable to changes in consumer preferences and regulation of consumer eating habits that could harm our business, financial condition, and results of operations.

Consumer preferences and eating habits often change rapidly and without warning, moving from one trend to another among many products or concepts.

We depend on some of these trends, including the trend regarding away-from-home or take-out dining.

Consumer preferences towards away-from-home and take-out dining or certain food products might shift as a result of, among other things, new information, attitudes regarding diet and health concerns or dietary trends related to cholesterol, carbohydrate, fat and salt content of certain food items, including chicken wings, in favor of foods that are perceived as healthier.

Our menu is currently comprised primarily of chicken wings, tenders and sandwiches, and fries, and a change in consumer preferences away from these offerings would have a material adverse effect on our business.

Negative publicity over

the health aspects of, or animal welfare or other social or environmental concerns related to, the food items we sell may adversely affect demand for our menu items and could have a material adverse effect on traffic, sales and results of operations.

Negative publicity over, or increased costs relating to, the health aspects of, or animal welfare or other social or environmental concerns related to, the food items we sell may adversely affect demand for our menu items and could have a material adverse effect on traffic, sales and results of operations.

Regulations may also continue to change as a result of new information and attitudes regarding diet and health.

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Furthermore, any change in our menu could result in a decrease in existing customer traffic.

Our operating results may fluctuate significantly because of a number of factors, including:

• the timing of new restaurant openings;

• profitability of our restaurants, especially in new markets;

• inflationary pressures and changes in interest rates;

• increases and decreases in average weekly sales and same store sales, including due to the timing and popularity of sporting and other events;

• macroeconomic and geopolitical conditions, globally, nationally and locally;

• changes in consumer discretionary spending, consumer preferences and competitive conditions;

• legal and regulatory changes;

• costs associated with litigation;

• increases in infrastructure costs;

• fluctuations in commodity prices.

In the future, operating results may fall below the expectations of securities analysts and investors.

In that event, the price of our common stock would likely decrease.

Because many of our restaurants are concentrated in certain geographic areas, we are susceptible to economic and other trends and developments, including adverse weather conditions, in these areas.

As of December 31, 2022, 57% of our 1,721 domestic restaurants were spread across Texas (25%), California (20%), Illinois (6%), and Florida (6%).

Given our geographic concentrations, economic conditions and other unforeseen events, including but not limited to negative publicity, local strikes, terrorist attacks, increases in energy prices, natural or man-made disasters, adverse weather conditions, or the enactment of more stringent state and local laws and regulations in these areas, could have a disproportionate adverse effect on our business and results of operations.

The ongoing COVID-19 pandemic impacted our business and it, or another pandemic or epidemic, may in the future impact our business, financial condition and results of operations.

The COVID-19 pandemic has had, and may continue to have, negative impacts on economic conditions worldwide.

A public health epidemic or outbreak, such as COVID-19, could have a significant impact on our business, employees, franchisees, distribution centers, suppliers, customers, third party delivery providers and other partners and could disrupt operations due to social distancing or other restricting policies put in place or the impact of such a pandemic on the available workforce.

The COVID-19 pandemic and our responses to date have adversely affected our international guest traffic and sales and increased operating costs for our company-owned restaurants.

It is difficult to estimate with any certainty what the potential impact of the COVID-19 pandemic or a future pandemic may have on our business, including effects on our operations, customers, suppliers, or our financial results.

As of December 30, 2023, 56% of our 1,926 domestic restaurants were spread across Texas (23%), California (20%), Florida (7%), and Illinois (6%).

Given our geographic concentrations, economic conditions and other unforeseen events, including but not limited to negative publicity, local strikes, terrorist attacks, increases in energy prices, natural or man-made disasters, adverse weather conditions, or the enactment of more stringent state and local laws and regulations in these geographic areas, could have a disproportionate adverse effect on our business, financial condition, and results of operations.

Unexpected events have impacted and may in the future impact our business, financial condition and results of operations.

The occurrence of one or more unexpected events, including war, acts of terrorism, epidemics and pandemics (such as the COVID-19 pandemic), civil unrest, fires, tornadoes, tsunamis, hurricanes, earthquakes, floods, and other forms of severe weather (including those caused or exacerbated by climate change) in the United States or in other countries in which we operate, or in which our suppliers are located, have affected and could in the future affect our operations and financial performance.

Such events could affect our guest traffic, sales and operating costs and/or cause complete or partial closure of one or more distribution centers, cause temporary or long-term disruption or inoperability of our information technology systems (including our digital platform), temporary or long-term disruptions in our delivery channel or the supply of products from suppliers, and disruption and delay in the transport of products, any of which may have a material adverse effect on our business, financial condition, and results of operations.

Existing insurance coverage may not provide protection from all the costs that may arise from such events.

Our business is subject to various laws and regulations and changes in such laws and regulations, and/or our failure to comply with existing or future laws and regulations, could materially adversely affect us.

We are subject to certain state franchise registration requirements, the rules and regulations of the FTC and various state laws regulating the offer and sale of franchises in the United States through the provision of franchise disclosure documents containing certain mandatory disclosures, various state laws regulating the franchise relationship, and certain rules and requirements regulating franchising arrangements in foreign countries.

Noncompliance with applicable laws, regulatory requirements and governmental guidelines regulating franchising could reduce anticipated royalty income, which in turn could materially adversely affect our business and operating results.

We and our franchisees are subject to various existing U.S.

federal, state, local, and foreign laws affecting the operation of restaurants and the sale of food and alcoholic beverages, including various license and permit requirements, health, sanitation, fire, and safety standards.

federal, state, local, and foreign laws affecting the operation of restaurants and the sale of food and alcoholic beverages, including various sales tax laws, license and permit requirements, health, sanitation, fire, and safety standards.

We and our franchisees may in the future become subject to regulation (or further regulation) seeking to tax or regulate high-fat foods, to limit the serving size of beverages containing sugar, to ban or restrict the use of certain packaging materials, or to require the display of detailed nutrition information.

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We and our franchisees may also have a substantial number of hourly employees who are required to be paid pursuant to applicable federal or state minimum wage laws.

From time to time, various federal and state legislators have proposed or approved changes to the minimum wage requirements, especially for fast-food workers.

These and any future similar increases

in other regions in which our restaurants operate will increase the cost of labor and may negatively affect our and our franchisees profit margins as we and our franchisees may be unable to increase our menu prices in order to pass future increased labor costs on to our guests.

From time to time, various federal, state, and local legislators have proposed or approved changes to minimum wage, predictive scheduling with penalty pay, and additional time off requirements, especially for fast-food workers.

These and any future similar increases in other regions in which our restaurants operate will increase the cost of labor and may negatively affect our and our franchisees profit margins as we and our franchisees may be unable to increase our menu prices in order to pass future increased labor costs on to our guests.

Also, reduced margins of franchisees could make it more difficult to sell franchises.

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We could also become subject to fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state employment eligibility or immigration compliance laws.

Failure by our franchisees to comply with employment eligibility or immigration laws may also result in adverse publicity and reputational harm to our brand and could subject them to fines, penalties and other costs.

Failure by our franchisees to comply with employment eligibility or immigration laws may also result in adverse publicity and

reputational harm to our brand and could subject them to fines, penalties and other costs.

These factors could materially adversely affect our business, financial condition, and results of operations.

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However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure.

Such losses could have a material adverse effect on our business and results of operations.

Such losses could have a material adverse effect on our business, financial condition, and results of operations.

Our franchise agreements require each franchisee to maintain certain insurance types and levels.

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We may be adversely affected by news reports or other negative publicity, regardless of their accuracy, regarding food quality issues, public health concerns, illness, safety, injury, security breaches or intrusions with respect to confidential guest or employee information, employee related claims relating to alleged employment discrimination, wage and hour violation, labor standards or health care and benefit issues, or government or industry findings concerning our restaurants, restaurants operated by other food service providers, or others across the food industry supply chain.

The risks associated with such negative publicity cannot be eliminated or completely mitigated and may materially affect our business.

The risks associated with such negative publicity cannot be eliminated or completely mitigated and may materially affect our business, financial condition, and results of operations.

The availability of information on social media platforms is virtually immediate as is its impact.

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Our expansion into international markets exposes us to a number of risks that may differ in each country where we have franchise restaurants.

As of December 31, 2022, we have franchised restaurants in eight international countries and plan to continue to grow internationally.

However, our international operations are in the early stages.

As of December 30, 2023, we have franchised restaurants in ten international countries and U.S.

territories and plan to accelerate our growth internationally.

Expansion in international markets may be affected by local economic, market, and cultural conditions.

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These factors, over which neither our franchisees nor we have control, may include:

• recessionary or expansive trends in international markets;

• recessionary or expansive trends and economic downturns in international markets;

• changing labor conditions and difficulties in staffing and managing our foreign operations;

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• difficulty in securing suitable local suppliers in international markets;

• changes in inflation rates;

• changes in inflationary pressures and interest rates;

• changes in exchange rates and the imposition of restrictions on currency conversion or the transfer of funds;

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• anti-American sentiment in certain locations and the identification of the Wingstop brand as an American brand;

• political and economic instability, including due to COVID-19 or other pandemics or similar events;

• political and economic instability, including due to national and international conflicts or wars, sanctions, acts of terror, COVID-19 or other pandemics or similar events;

Foreign Corrupt Practices Act and other similar anti-bribery and anti-kickback laws;

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Our international expansion efforts may require considerable management time as well as start-up expenses for market development before any significant revenues and earnings are generated.

Negotiated incentives or discounts provided in connection with the opening of new markets may result in lower cash flows and profits than existing international markets.

Operations in new foreign markets may achieve low margins or may be unprofitable, and expansion in existing markets may be affected by local economic and market conditions.

Therefore, as we continue to expand internationally, we or our franchisees may not experience the operating margins we expect, our results of operations may be negatively impacted, and our common stock price may decline.

We depend upon our executive officers and other key employees and may not be able to retain or replace these individuals or recruit additional personnel, which could harm our business.

We believe that we have already benefited and expect to benefit substantially in the future from the leadership and experience of our executive officers and management team.

Additionally, our business strategy includes successfully attracting and retaining talented employees.

The loss of key employees or difficulties recruiting and retaining qualified employees or effectively managing changes in our workforce could adversely impact our business, financial condition, and operating results.

Much of our future success depends on the continued availability and service of our executive officers and qualified employees.

The market for highly skilled employees and leaders in the restaurant industry is extremely competitive.

Our inability to successfully recruit and retain highly-skilled and talented executive officers and other key employees, or successfully execute succession planning, could have a material adverse effect on our business and prospects and impair our growth, as we may not be able to find suitable individuals to replace such personnel on a timely basis.

Our inability to successfully recruit and retain highly-skilled and talented executive officers and other key employees, as well as a qualified workforce in our restaurants, or to successfully execute succession planning for key employees, could have a material adverse effect on our business and prospects and impair our growth, as we may not be able to find suitable individuals to replace such personnel on a timely basis.

The departure of any of our executive officers or key employees could be viewed in a negative light by investors and analysts, which could cause the price of our common stock to decline.

We also place a large amount of importance on our culture, which we believe has been an important contributor to our success, and as we continue to grow, it may be increasingly difficult to maintain our culture.

If we are unable to recruit, retain and motivate employees sufficiently to maintain our current business and support our projected growth, our business, financial condition, and operating results may be adversely affected.

Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of our brand.

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As a result, any such claim could have a material adverse effect on our business, results of operations, and financial condition.

Environmental, social and corporate governance (ESG) matters may impact our business and reputation.

There is increasing focus, public interest, and legislative pressure related to public companies’ ESG practices.

Legislative, regulatory or other efforts, including those of the SEC and multiple states and countries, to combat ESG concerns could result in new or more stringent forms of oversight and expand mandatory and voluntary reporting, diligence and disclosure, which could increase costs and require resources dedicated toward the collection and disclosure of data (such as information regarding potential risks of climate change or greenhouse gas emissions), and bring additional focus on and further impact our business, results of operations, and financial condition.

Further, if our ESG practices fail to meet investor, customer, consumer or employees’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship (including climate change, greenhouse gas emissions, packaging and waste), animal welfare, diversity, human capital management, and corporate governance and transparency, our reputation, brand, appeal to current and potential customers and investors, and employee retention may be negatively impacted, which could have a material adverse effect on our business, financial condition, and results of operations.

Furthermore, if our competitors’ ESG practices are perceived to be better than our own, certain investors or customers may elect to invest in or be a patron of our competitors instead, which would have an adverse impact on our business, financial condition, and results of operations.

Risks Related to our Indebtedness

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If amounts owed under the securitized debt facility are accelerated because of a default and we are unable to pay such amounts, the investors may have the right to assume control of substantially all of the securitized assets.

In the event that a rapid amortization event occurs under the indenture governing the securitized debt (including, without limitation, upon an event of default under the indenture or the failure to repay the securitized debt at the end of the applicable term), the funds available to us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business and materially adversely affect our results of operations.

If a rapid amortization event occurs under the indenture governing the securitized debt (including, without limitation, upon an event of default under the indenture or the failure to repay the securitized debt at the end of the applicable term), the funds available to us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business and materially adversely affect our financial condition or results of operations.

If we are unable to refinance or repay amounts under the securitized debt facility prior to the expiration of the applicable term, our cash flow would be directed to the repayment of the securitized debt and, other than management fees sufficient to cover minimal selling, general and administrative expenses, would not be available for operating our business.

No assurance can be given that any refinancing or additional financing will be possible when needed or that we will be able to negotiate acceptable terms.

In addition, our access to capital is affected by prevailing conditions in the financial and capital markets and other factors beyond our control.

In addition, our access to capital is affected by prevailing conditions in the financial and capital markets and other factors

beyond our control.

There can be no assurance that market conditions will be favorable at the times that we require new or additional financing.

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If our business does not generate sufficient cash flow from operations, in the amounts projected or at all, or if future borrowings are not available to us under our variable funding notes in amounts sufficient to fund our other liquidity needs, our financial condition and results of operations may be materially adversely affected.

If we cannot generate sufficient cash flow from operations to make scheduled principal amortization and interest payments on our debt

obligations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures, or seek additional equity investments.

If we cannot generate sufficient cash flow from operations to make scheduled principal amortization and interest payments on our debt obligations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures or seek additional equity investments.

Risks Related to Ownership of our Common Stock

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• downgrades by any securities analysts who follow our common stock;

• changes in our dividend policy or any share repurchase program;

• future sales of our common stock by our officers, directors and significant stockholders;

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Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if stockholders view them as discouraging future takeover attempts.

stockholder with 15% or more of our capital stock) for a period of three years following the date on which the stockholder became an “interested” stockholder is prohibited, subject to certain exceptions.

In addition, we have opted out of the Delaware General Corporation Law (“DGCL”) Section 203, relating to business combinations with interested stockholders, but our amended and restated certificate of incorporation provides that engaging in any of a broad range of business combinations with any “interested” stockholder (any stockholder with 15% or more of our capital stock) for a period of three years following the date on which the stockholder became an “interested” stockholder is prohibited, subject to certain exceptions.

Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

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In addition, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action.

We may not continue to declare cash dividends in the future.

In August 2017, we announced that our board of directors authorized a regular dividend program under which we have paid, and intend to continue paying, quarterly dividends on our common stock, subject to quarterly declarations by our board of directors.

In addition, we have paid special dividends in connection with refinancings of our indebtedness.

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 our stockholders and are in compliance with all applicable laws and any agreements containing provisions that limit our ability to declare and pay cash dividends.

Our ability to pay dividends in the future will depend upon, among other factors, our cash balances and potential future capital requirements, debt service requirements, earnings, financial condition, the general economic and regulatory climate, and other factors beyond our control that our board of directors may deem relevant.

Our dividend payments may change from time to time, and we may not continue to declare dividends in the future.

A reduction in or elimination of our dividend payments could have a negative effect on our stock price.

Unresolved Staff Comments

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 1A. Risk Factors