Wingstop's Q3 2025 Earnings: Can Strong Unit Growth Offset Same-Store Sales Weakness?

In the third quarter of 2025, Wingstop Inc. (NASDAQ: WING) delivered a mixed performance, with robust unit growth and margin improvements partially offset by a sharp decline in domestic same-store sales. The company reported GAAP earnings per share (EPS) of $1.02, exceeding estimates by $0.11, and total revenue of $175.7 million, an 8.1% year-over-year increase, according to Seeking Alpha. However, the revenue figure fell short of expectations by $9.62 million, underscoring challenges in maintaining sales momentum at existing locations. This raises a critical question: Can Wingstop's aggressive franchise expansion and capital-efficient unit development offset the drag from declining same-store sales?

Franchise Growth: A Double-Edged Sword

Wingstop opened 114 net new restaurants in Q3 2025, representing 19% unit growth year-over-year, the Seeking Alpha article reports. This expansion contributed to a 10.0% rise in system-wide sales to $1.356 billion, demonstrating the company's ability to scale through franchise development. The updated 2025 guidance-targeting 475–485 global net new units-reflects a strategic pivot toward capitalizing on untapped markets, according to the same Seeking Alpha article. However, the average initial investment per franchise unit in 2025 stands at $2.061 million, according to StockTitan, suggesting that sustaining this growth rate will require significant capital allocation.

The company's capital efficiency metrics, while strong, highlight both opportunities and risks. Wingstop's Return on Invested Capital (ROIC) for Q3 2025 was 28.24%, with a trailing twelve months ROIC of 30.19%, both exceeding its weighted average cost of capital (WACC) of 13.05%, per GuruFocus. This indicates that the company is generating returns that justify its reinvestment. Adjusted EBITDA also hit a record $63.7 million, up 18.6% year-over-year, the Seeking Alpha article notes, signaling improved profitability per unit.

The Same-Store Sales Conundrum

Despite the optimism around unit growth, domestic same-store sales declined by 5.6% in Q3 2025, the Seeking Alpha article reports, a trend the company now expects to persist, with full-year guidance revised to a 3–4% decline (also noted in the Seeking Alpha article). This weakness could erode the long-term value of new units if customer traffic and average ticket sizes fail to recover. The challenge lies in balancing rapid expansion with operational execution at existing locations.

Wingstop's updated guidance for 2025 reflects a recalibration of priorities. The company has trimmed its global unit growth target from 17–18% to 475–485 net new units, while also reducing projected SG&A expenses to $131–$132 million and depreciation/amortization to $26 million, according to the Seeking Alpha article. These adjustments aim to enhance capital efficiency but risk underinvesting in markets where same-store sales could rebound with targeted marketing or menu innovation.

Can Growth Compensate for Sales Slumps?

The answer hinges on Wingstop's ability to maintain high ROIC while scaling. With each new unit requiring an average investment of $2.061 million, StockTitan notes, the company must ensure that new locations generate sufficient cash flows to justify their cost. The current ROIC of 30.19% (TTM) suggests that capital is being deployed effectively, but this metric could deteriorate if same-store sales declines persist or if unit-level economics weaken due to rising labor or supply-chain costs.

Moreover, Wingstop's share-repurchase program-$151.3 million remaining-and its $0.30 quarterly dividend are outlined in the Seeking Alpha article, indicating confidence in its capital structure. However, these returns to shareholders may come at the expense of reinvestment in underperforming locations, potentially exacerbating same-store sales challenges.

Conclusion

Wingstop's Q3 2025 results underscore a company in transition. While unit growth and capital efficiency metrics remain compelling, the drag from same-store sales declines cannot be ignored. For investors, the key will be monitoring whether the company's focus on franchise expansion can drive long-term value without compromising operational performance at existing locations. If Wingstop can sustain its ROIC above WACC while navigating the same-store sales headwinds, its growth strategy may yet prove resilient.