Wingstop's Q3 2025: Contradictions Emerge on Smart Kitchen's Delivery Impact, Consumer Demand, International Expansion, and Comp Sales Outlook

Date of Call: November 4, 2025

Financials Results

• Revenue: $175.7M, up 8.1% YOY
• EPS: $1.09 adjusted EPS, up 15.6% YOY (includes $0.24 impact from additional interest expense)
• Gross Margin: Company-owned restaurant cost of sales 74.8% of sales, down 300 bps YOY (implied gross margin ~25.2%, improved ~300 bps YOY)

Guidance:

• Domestic same-store sales for full-year 2025 expected to decline 3% to 4%.
• Global net new restaurants guidance for 2025 raised to 475–485 openings.
• SG&A guidance updated to $131M–$132M (includes ~ $26M stock-based comp and $4.5M nonrecurring system implementation costs).
• Target national launch of Club Wingstop loyalty by end of Q2 2026; expect Smart Kitchen + new ad campaign + loyalty to drive return to positive comps in 2026.
• 2026 unit growth expected in the mid-teens.

Business Commentary:

• Revenue Growth and Unit Expansion:
• Wingstop reported 10% system-wide sales growth in Q3 2025, with 19% unit growth, marking 369 net new restaurants opened in the first 9 months of the year.

• The growth is attributed to the brand's focus on expanding its global footprint and executing its new kitchen operating platform, the Wingstop Smart Kitchen, across its 2,500 domestic restaurants.

• Challenges in Consumer Demand:

• There was a 5.6% decline in same-store sales in Q3, driven by a broadened dynamic of softness in sales across various geographies and income levels.

• The company believes this is a temporary issue and is focused on strategies to return to same-store sales growth, such as the implementation of the new marketing campaign and loyalty program.

• Impact of the Wingstop Smart Kitchen:

• The kitchen operating platform has positioned the brand to improve speed of service by over 50%, contributing to a significant improvement in guest satisfaction scores and potentially increasing guest retention rates.

• The Southwest region, with the highest tenure on the new platform, experienced a mid-single-digit delta in sales performance compared to the overall system average.

• Global Growth and Development:

• Wingstop opened in several new international markets, including the GCC, Netherlands, France, Ireland, Thailand, and Italy, with plans for further expansion.
• The global development pipeline continues to build, driven by demand from brand partners and the strong unit economics and returns supported by the asset-light operating model.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted record Q3 adjusted EBITDA and highest single-quarter adjusted EBITDA, raised 2025 unit-growth guidance to 475–485, opened 369 net restaurants YTD (19% unit growth) and emphasized rollout of Wingstop Smart Kitchen and Club Wingstop loyalty as drivers to restore comps and scale AUVs.

Q&A:

• Question from David Tarantino (Robert W. Baird & Co. Incorporated): My question is on the comp outlook. I think if I look at your full year guidance, it would imply a pretty low number for Q4, maybe worse than what you reported for Q3. So I guess first question is, is that how you're running quarter-to-date? Or are you trying to leave yourself a little bit of room given the uncertainty in the environment? Any way to frame up how you're thinking about Q4? And then I have a follow-up on that.
  Response: Trend stabilized into Q4 but some near-term choppiness remains; management is encouraged by data (dinner growth, stronger $75k+ cohort) and is prioritizing long-term investments over short-term fixes.

• Question from David Tarantino (Robert W. Baird & Co. Incorporated): My follow-up is, Alex, I think you mentioned that you're confident or you expect comps to be positive in 2026. I guess maybe what would be helpful is just to kind of lay out the path you think the comps take as you move into next year and what some of the key drivers of returning to positive might be, whether it's easier comparisons or whether the Smart Kitchen rollout or the loyalty program, I guess, what is the catalyst that's going to get it positive? And then how are you thinking about the timing of that? Is it later in the year? Or is it earlier in the year? Anything you could offer would be helpful.
  Response: Expect comps to turn positive in 2026 driven by Smart Kitchen (regional lift evidence), Club Wingstop loyalty (national by end-Q2 2026) and a new ad campaign that expands the top of funnel; these initiatives will layer through 2026.

• Question from Danilo Gargiulo (Sanford C. Bernstein & Co., LLC.): Michael, I have a question on the Smart Kitchen incrementality. You're mentioning that you're still seeing a mid-single-digit incrementality in the areas where you have the highest concentration of Smart Kitchen. And I was wondering if you can give an estimate of how long do you think the change management will take to see the benefits across the franchise stores? And perhaps also if you can comment on the biggest delta or what are some of the challenges that franchise stores might be seeing in delaying the implementation and following the change management that you're suggesting?
  Response: Smart Kitchen is a new operating standard with mid-single-digit comp lift observed in mature regions; benefits show up with notable speed improvements in ~6–8 weeks and sustained guest retention/frequency in ~3–6 months as more restaurants adopt the standard.

• Question from Danilo Gargiulo (Sanford C. Bernstein & Co., LLC.): Great. And then I wanted to ask a question on the net unit growth because you have a very strong pipeline. You've been accelerating for 2025. I was wondering if you can provide any context on the amount of cannibalization that you're seeing today and how that relates to the past. Obviously, the cash-on-cash returns have been very strong. I just want to understand also what it means from a same-store sales drag potentially going forward.
  Response: Historic cannibalization is roughly ~1 point of comp; recent modest drag reflects lapping honeymoon sales from high-performing new openings in white-space markets, a near-term effect not a structural decline.

• Question from Andrew Charles (TD Cowen): I was hoping you can unpack the mid-single-digit outperformance from Smart Kitchens in the Southwest with the gap between company-operated same-store sales and franchise -- or I should say, system, excuse me, that widened to a 940 [indiscernible] outperformance in the Southwest is perhaps underrepresented just given the outsized Hispanic consumer penetration in this market? Or is it perhaps that we're seeing some other benefit to company-operated same-store sales in the third quarter?
  Response: Southwest (600+ restaurants) outperformance driven by longest-tenured Smart Kitchen rollout and favorable DFW market dynamics (higher awareness, higher income), showing interplay of operational improvements and local demographics.

• Question from Andrew Charles (TD Cowen): That's helpful. And then my follow-up question is just, obviously, the industry is trying to figure out ways to better emphasize value. And obviously, Wingstop has been very reticent in pricing, only taking about 1% to 2% per year in recent years. But I guess as you think about how to better pulse value to help traffic in this more challenging time for the industry, what place does the 20 for 20 promotion that you successfully ran in the May and June time frame have as we look forward?
  Response: Management will avoid broad discounting; they prioritize protecting unit economics and prefer strategic investments (Smart Kitchen, marketing, loyalty) over heavy promotional activity.

• Question from Hyun Jin Cho (Goldman Sachs Group, Inc.): So Michael, I think you mentioned earlier the importance of unlocking that under 30 minutes or fastest near new mechanism in 3PD and getting into kind of the guest consideration set. So I was wondering if you're tracking kind of the changes in the percentage of the stores that are now falling into this bucket along with the progress of the Smart Kitchen rollout and whether you're seeing any shifts in sales trends in this channel. Additionally, are you contemplating on any ways to better communicate that faster speed of service to your guests?
  Response: Smart Kitchen is reducing service times and improving DSP placement; faster service increases consideration and repeat behavior, and management plans to emphasize speed as rollout completes in 2026.

• Question from Hyun Jin Cho (Goldman Sachs Group, Inc.): Great. And also excited about the new Wingstop Is Here campaign. But you also have several very important messages to deliver to customers, including your value proposition, improved speed of service, all of that. So what are kind of the key messages that you will prioritize? And how do you plan to kind of allocate media spending to achieve these goals while kind of maximizing leverage on your NFL and NBA partnership?
  Response: The 'Wingstop Is Here' campaign is designed to broaden top-of-funnel while communicating speed, quality and abundance; a national 30-second spot will educate new guests and be leveraged alongside partnerships then layered with loyalty.

• Question from Jeffrey Bernstein (Barclays Bank PLC): Great. Just looking at the near-term comps. It looks like you're assuming down 5% or more in the fourth quarter. That would be similar to or actually a little bit of easing from the third quarter. But as we've talked about all year long, the compares are easing. I know in the fourth quarter, they're easing 1,100 basis points from the third quarter. Therefore, I guess, that 2-year stack still seems to be slowing materially. I'm just wondering whether you're surprised the compares are not driving the inflection -- or said another way, it does seem like the business is slowing further from here. So just wondering whether or not the compares in and of itself are not enough or how you go about directly bringing back, like you said, you over-indexed to perhaps a little bit lower income or more minority consumers, how you go about more aggressively bringing them back to slow that decline? And then I had one follow-up.
  Response: Management sees stabilization entering Q4 but won't chase short-term fixes; plan is to drive long-term share via Smart Kitchen, loyalty and advertising while protecting unit economics to win back occasions over time.

• Question from Jeffrey Bernstein (Barclays Bank PLC): Understood. And then just following up on that. As you look back over the past few months, how much do you think of the deceleration with industry or consumer versus maybe anything that would be self-inflicted. I mean, obviously, this is hindsight, but what could have been done better to mitigate the choppiness that you could perhaps use as you think about potential risks of this type of choppiness in the future?
  Response: Deceleration attributed primarily to exposure to consumer cohorts under pressure; management believes executing on broader top-of-funnel strategy and operational standards will reduce sensitivity in future cycles.

• Question from Andrew Barish (Jefferies): Just following up on that. It kind of reminds me of '22 when you had a negative comp and obviously, the ad budget was going up, chicken sandwich in the Uber were rolled out. Are you kind of thinking about this in a similar way? It's just maybe going to take a little bit longer until all 3 of the current sort of drivers you laid out layer on top of one another?
  Response: Comparable to 2022 in that multiple initiatives must layer, but now the focus is on broadening the funnel beyond the core to diversify guest base as the drivers converge.

• Question from Sara Senatore (BofA Securities): I wanted to go back to the comment, I think Alex made about a honeymoon period for restaurants. I don't think we've heard you talk about that in the past. And I was just curious, I guess, a couple of things. One is, do you see that across different types of markets? And do you think it signals anything about where brand awareness is? I guess, when I think of a big awareness gap, which has been a long-term opportunity, typically, I would not associate that with a honeymoon.
  Response: Honeymoon effect was specific to unusually strong 2024 white-space openings where early restaurants saw outsized initial sales; it's a near-term lapping dynamic, not a broad awareness signal.

• Question from Sara Senatore (BofA Securities): And then the awareness piece, I guess that was the second part. Do you think that awareness kind of has reached a critical mass? Or do you still see a lot of opportunity there?
  Response: Awareness gap remains (>20% behind larger national QSRs) and consideration gap is larger; management sees meaningful opportunity to close both via speed, consistency and marketing.

• Question from Christopher O'Cull (Stifel): Michael, my question is about the new ad campaign. Have you conducted any testing to confirm how the message resonates with consumers, particularly new consumers? I would just like to understand what gives you confidence that it's going to be successful.
  Response: Early testing and feedback on the new campaign are very positive; the 30-second spot with voiceover educates new guests and highlights Wingstop as #1 wing brand.

• Question from Christopher O'Cull (Stifel): Okay. And then my follow-up is you mentioned finalizing an agreement in India. Can you talk about the partner you selected, maybe the structure of the agreement for that market and why you believe this operator you've chosen is the right one for the market?
  Response: Selected a proven multinational operator with India experience to pursue a >1,000 restaurant opportunity; partnership details to be finalized and shared later.

• Question from Jeffrey Farmer (Gordon Haskett Research Advisors): Just wanted to drill down further on the lower income and Hispanic consumer cohorts. I know you guys don't share a lot, but anything that you can share as it relates to exposure to these cohorts even if it's just broad strokes?
  Response: Broad strokes: business over-indexes to cohorts under pressure which contributed to recent softness, but brand health metrics are improving and management views the weakness as near-term.

• Question from Jeffrey Farmer (Gordon Haskett Research Advisors): Okay. And then unrelated follow-up. The development guidance has been pretty crazy. It's jumped 100 units, I think, almost 30% over the last 9 months. I can't remember ever seeing anything of this magnitude for as many restaurants as you guys have. So really, the question is, how did that happen? And I know you talked about 2026 development, but in terms of just really sort of overperforming on your initial development guidance, what drove that? And why theoretically wouldn't that outperformance continue in coming years?
  Response: Outperformance driven by market-level playbooks, brand partners scaling their development capabilities, faster international openings and partners investing to support Smart Kitchen rollout; management expects continued strong demand while maintaining unit economics.

• Question from James Salera (Stephens Inc.): I was hoping that you might help us deconstruct some of the frequency trends that you've talked about. You guys have highlighted between rewards and the Smart Kitchen uplift and some of the new marketing, those are all opportunities to drive better frequency. But maybe in kind of here and now, are you seeing any particular daypart or kind of specific consumer cohort that's seen a step down in frequency? And particularly maybe around some of your restaurants that are closer to the border, maybe there's just less cross-border trade. And so it's not even so much that a guest is choosing not to come to Wingstop, but just there is not that restaurant occasion available anymore because there's fewer people trading in that area. Just any color on that dynamic would be helpful.
  Response: Some frequency pressure showed in the snack daypart and ticket management, while dinner grew in Q3; overall brand health remains strong.

• Question from James Salera (Stephens Inc.): Kind of keeping that in mind, are you able to disaggregate what we would think about as group occasion, which I would assume leans heavily dinner versus somebody going by themselves. Is that really where the frequency pressure is concentrated is in those occasions where the guest is buying food just for themselves versus kind of group occasion?
  Response: Frequency softness skewed to individual occasions—tenders saw more single-person visits; highest acquisitions were 18–25 year olds, who tend to buy tenders.

• Question from Dennis Geiger (UBS Investment Bank): You touched on it some, but I wanted to ask a little bit more on Smart Kitchen, the franchisee feedback. And as it relates to sort of the rollout and if you'd say that the rollout so far across similar stores at various stages of the rollout process, if that's been largely consistent or if there's some variability there. If anything more there, obviously, the Southwest data is super helpful. But anything more just kind of on how that rollout has gone and sort of performance along the various stages, a couple of months in, 2 months in, 3 months in, et cetera, if you could get that granular.
  Response: Rollout consistent across >2,000 restaurants; typical pattern: speed improves meaningfully in 6–8 weeks, frequency/guest retention builds in 3–6 months, early results are organic and franchisees are broadly supportive.

Contradiction Point 1

Smart Kitchen Impact on Delivery and Ordering

It involves the impact of Smart Kitchen on delivery and ordering efficiency, which directly affects customer experience and sales.

What is the incremental impact of Smart Kitchens in high-concentration regions, and what challenges do franchisees face in change management implementation? - Danilo Gargiulo (Sanford C. Bernstein & Co., LLC., Research Division)

2025Q3: Smart Kitchen is a transformational change. The Southwest region's consistent delivery of 10-minute speed of service shows market-level progress. - Michael Skipworth(CEO)

Will the quarter be positive in Q3? Is it continuing current trends or expecting acceleration? - David Tarantino (Baird)

2025Q2: We're seeing some weakening in consumer demand, especially in pockets that over-indexed to lower-income or Hispanic consumers. We haven't seen improvement in those pockets. - Michael Skipworth(CEO)

Contradiction Point 2

Consumer Demand and Economic Conditions

It highlights the company's perspective on consumer demand and economic conditions, which are crucial for forecasting future sales and growth.

Can you clarify the comp outlook for Q4? Is it consistent with Q3, and how do you assess consumer environment stability? - David Tarantino (Baird)

2025Q3: We acknowledge near-term choppiness, with Q3 expectations met but industry trends impacting our business. We expect Q4 to be similar but see stabilization within the quarter. - Michael Skipworth(CEO)

Do you expect Q3 to be positive overall, and is the outlook based on current trends or expected acceleration? - David Tarantino (Baird)

2025Q2: We're seeing some weakening in consumer demand, especially in pockets that over-indexed to lower-income or Hispanic consumers. We haven't seen improvement in those pockets. - Michael Skipworth(CEO)

Contradiction Point 3

Sales Impact of Smart Kitchen Rollout

It relates to the impact of the Smart Kitchen rollout on sales, which could affect strategic decision-making and investor expectations for future growth.

How has the Smart Kitchen rollout progressed, and what is the franchisee feedback? - Dennis Geiger(UBS Investment Bank)

2025Q3: We're encouraged by over 2,000 restaurants operating with Smart Kitchen. The transition to new operating standards shows positive results, with plans to ensure consistent guest satisfaction nationwide. - Michael Skipworth(CMO)

What are the sales impacts of launching the Wingstop Smart Kitchen, and is this included in the 2025 outlook? - David Tarantino(Robert W. Baird & Co. Incorporated)

2025Q1: We're seeing positive sales trends vs. control restaurants for those with Smart Kitchen. The rollout in Dallas Fort Worth showed a 5% increase in delivery marketplace conversion. - Alex Kaleida(CFO)

Contradiction Point 4

International Expansion Focus

It involves strategic priorities for international expansion, which could impact future revenue growth and market penetration.

What does the honeymoon period in restaurant openings signify, and is there still opportunity in brand awareness? - Sara Senatore(BofA Securities)

2025Q3: Our fastest-growing markets are Australia and India, and that's where we are really focused. India has been a significantly underpenetrated market. - Michael Skipworth(CMO)

Could you outline the international expansion strategy, specifically new market focus and China's role? - Danilo Gargiulo(Sanford C. Bernstein & Co., LLC., Research Division)

2025Q1: International business is performing well, with records set in new markets. China remains a long-term opportunity, but not a current focus due to geopolitical concerns. Australia and India are other significant markets for expansion. - Michael Skipworth(CMO)

Contradiction Point 5

Comp Sales Expectations and Industry Trends

It highlights a shift in expectations regarding the consistency of comp sales growth and the impact of industry trends on the business.

What is the compensation cost outlook for Q4, how does it compare to Q3, and how do you assess the stability of the consumer environment? - David Tarantino(Robert W. Baird & Co. Incorporated)

2025Q3: We acknowledge near-term choppiness, with Q3 expectations met but industry trends impacting our business. - Michael Skipworth(CEO)

What is the framework for comparable sales growth outlook for long-term targets, and what is the trajectory for 2025? - David Tarantino(Baird)

2024Q4: The low- to mid-single-digit comp outlook guide is an average for long-term modeling. We expect some quarterly variability, reflecting the industry backdrop. - Michael Skipworth(CEO)