March 1, 2023 | Last Updated on: April 4, 2023
If you have ever spent a late night with friends and gotten hungry, you may have turned to Wingstop to help you out. Indeed, the tasty flavors of their chicken wings and chicken sandwiches draw many to their restaurant. Wingstop’s fries are also famous for their delicious flavors. Aside from the food, Wingstop is a convenient place to get a quick bite to eat.
You may be an entrepreneur saving up to start your own business. As you browse business opportunities, you may be looking for a profitable business that you can be relatively sure of its chances for success. As a result, you might look toward a franchising model. After all, franchising is based on a proven business model and is attractive to franchisees who want to turn a profit. Having this kind of support for your new business endeavor would understandably be attractive.
As you search through franchising options, you may have considered Wingstop. Given its rise to popularity and current success, you might think that the brand could offer an attractive franchise. At the same time, you may be thinking about the cost of the franchise and other details, such as their training, support, and the franchise’s profitability and requirements to apply
You have come to the right place! In this article, we will dive into the details of the Wingstop franchise, the pros and cons of owning a location, the requirements for franchising with Wingstop, and the costs involved in starting a Wingstop franchise. We’ll cover the following topics in detail:
After reading through the requirements of opening a Wingstop franchise and seeing that you meet the requirements to apply, you may be interested in the overall cost of owning a Wingstop franchise. Cost may be a particularly important factor for you if you are looking for a low-cost franchise to start.
Generally, there are two categories of costs that you need to be aware of. These are costs paid to corporate and costs paid to the rest of the overall investment. This distinguishes between the fees you need to pay to the franchisor for the franchising agreement versus the costs involved with your business’s operations. There are also two types of costs. There are costs that you need to pay upfront and ongoing costs which include the first few months of your Wingstop franchise’s operations. Understanding all of these costs can help you assess whether Wingstop is the right franchise brand for you.
One of the first fees that you will pay to corporate is the initial franchise fee. The franchise fee is an upfront lump sum that you pay to the franchisor at the signing of your franchising agreement with Wingstop corporate. This fee is used by Wingstop as revenue for corporate, but it also initiates the franchising relationship and the logistics involved in starting your units and the training involved with it. The franchise fee is also charged per store. Since you have to open up at least three stores, the total amount of your investment will be a multiple based on the number of stores that you open.
The franchise fee for Wingstop is only $20,000. However, this franchise fee does not entirely encapsulate the costs of a franchise since there is a further development fee that Wingstop charges. The development fee is $10,000. As a result, for every unit that you need to open, you need to pay a combined fee of $30,000 per unit. This franchise fee in total is still lower than other competitor brands. This can make Wingstop an attractive option to franchise since the cost paid to the franchisor is much lower than industry standards.
There are also ongoing costs paid to the franchisor that you need to be aware of. The two main fees are known as the royalty fee and the marketing fee. The royalty fee is a fee paid monthly based on gross sales that the corporate franchisor treats as revenue. This royalty fee allows corporate to get revenue from their franchisees, but it also helps to support logistical operations involved in supporting the Wingstop brand.
The royalty fee for Wingstop is 6%. This royalty fee is pretty fair for industry standards. As a prospective franchisee, you can be confident in knowing that you are getting a decent deal.
The marketing fee works similarly to the royalty fee, but it has a different purpose. The marketing fee, or advertising fee, is like the royalty fee in that it is a percentage of your gross sales charged monthly from your Wingstop to corporate. However, it is different from the royalty fee in that the marketing fee has an explicit purpose to be used for marketing the brand at both a local and national level. As such, your marketing fee will help to contribute back to your Wingstop franchise.
The marketing fee for a Wingstop is 4%, which is average for other brands. As such, both of your ongoing fees are fairly reflective of industry standards for franchising with a quick-service restaurant like Wingstop. However, Wingstop is different in that they add a local advertising and promotional fee of 1%. This fee is likely used to fund local advertising efforts, whereas the 4% is instead used on a national scale. Ultimately, this makes your required marketing fees greater.
Now that you have a good grasp on corporate costs, it is time to turn to the costs of the total investment. The costs of the total investment include the initial franchise fee as well as estimated costs for the real estate, materials, construction, equipment, and inventory needed to open a Wingstop. This amounts to approximately $400,000 total per store. This total investment cost is relatively low, which is supported by the small size of the Wingstop store and the reputation of the brand as being an affordable franchise with whom you can franchise.
While these costs do help provide you with helpful estimates of just how much it is likely to cost you when opening a Wingstop, you should know that the best and most recent and detailed estimates are available in Wingstop’s Franchise Disclosure Document (FDD). After you pass through the initial stages of applying to be a franchisee with Wingstop, Wingstop will share this document with you so that you can get a full picture of the likely costs that you are going to have as a Wingstop franchisee.
Even though some of your costs may be relatively high in the franchise setup process, remember that you do not have to fund all of this upfront by yourself. There are several financing options available to interested entrepreneurs like yourself. This can help your Wingstop franchise get off the ground even sooner.
Here is a quick breakdown of the costs you can expect:
Wingstop is an American fast-food chain focused on serving products like chicken wings, french fries, and chicken sandwiches while having a variety of wing flavors and sauce options. The chain has risen to massive success, especially considering that it was only founded in 1994. The original Wingstop was so successful that in 1997 they opened a franchising program, approximately three years after the first store opened. Since then, the chain has grown to over 1,200 stores.
Wingstop features a menu with authentic, specially developed, and signature tastes. Their menu features the ability to choose between wings tossed in different sauces as well as between boneless wings and bone-in wings. Wingstop has become famous for its sauces, such as its Atomic sauce, which is known for being very spicy. Their fries also feature spice options, which allows customers to customize their orders. Some locations even offer beer and wine, which can help to increase customer options and revenue!
One of the great things about Wingstop’s menu is that it allows them to run an efficient business model. With only fryers and other items needed for producing wings and fries, Wingstop can, in essence, control the costs involved in operating their kitchen. They can also control inventory fairly easily by only needing to have amounts of certain types of items.
Another part of the famous Wingstop business model is its relatively small restaurant size. If you have been to a Wingstop before, you might notice that their building size is pretty small. This is because Wingstop tends to focus more on the takeout and app-based delivery forms of ordering. In doing so, Wingstop can help control its costs related to the rent and upkeep of larger restaurants.
Having read through the background of the Wingstop franchise, you might be curious to learn about the pros and cons of owning one of your own Wingstop franchises. In doing so, you can form a more educated opinion on the worthiness of the franchise of your investment of time and money.
One of the best parts about buying a Wingstop franchise is the low cost. Wingstop aims to make its franchises easy to start so that they can be accessible to people who want to franchise. The low-cost nature of a Wingstop franchise is seen in its relatively low initial investment cost and royalty fee compared to industry standards. However, Wingstop also has a relatively low total investment cost. This is because the facility is rather small compared to other wing restaurants or quick service restaurants. Moreover, the equipment you need is relatively standard and small in number, so it should reduce the overall cost burden on you as a franchisee.
If you are trying to optimize for reducing your initial per-unit investment, Wingstop might be the right franchise choice for you. However, it is important to note that Wingstop is a multi-unit franchise opportunity. This means that you will need to be prepared to invest in multiple locations to have a good chance of having your franchising application accepted. Since this commitment is not small, both logistically and financially speaking, it should be put in the context of low relative per-unit costs.
Another great part about Wingstop is that they provide each of your units with a guarantee that another Wingstop franchise cannot be opened within a certain distance from that location. This prevents your unit from competing with another Wingstop unit that might open close nearby. This protection is often very attractive for prospective franchisees since it shows that the franchisor cares about limiting the amount of internal competition and increasing the profits for the franchisees.
If you are concerned about the competition involved in owning a Wingstop franchise, you can be comforted by this detail.
One of the other great plusses of the Wingstop brand is that they offer a great selection of products on their menu. Their signature wings, sauces, rubs, and french fries have created a massive following all around the United States. By franchising with Wingstop, you are getting access to their tasty menu as well as their loyal customer base. This can reduce the risk to you as a franchisee to know that you are buying into a successful franchise business.
While Wingstop has honed in a model of reduced costs by only serving a small menu of chicken wing products, options are decreased for other customers that may not want wings or chicken. This has made Wingstop a place to go for wings and fries but not much else. Recently, Wingstop has introduced chicken sandwiches, which have somewhat helped this problem. However, the limited menu may reduce the number of customers that your Wingstop attracts. This may be a disadvantage when comparing your potential to franchise with other brands.
Another disadvantage of owning a Wingstop is the sheer amount of competition that your brand will face. While you do have a territory guarantee preventing other Wingstop locations from opening up near you, you will be competing with other wing restaurants like Buffalo Wild Wings or other local chicken wing locations. Additionally, you will face competition from popular quick service restaurants such as McDonald’s, Burger King, or Pizza Hut.
This is why choosing a good location is key. Since you will be dealing with a large amount of competition by the nature of the restaurant and food, you should try to optimize your revenues by selecting locations for your franchises that are far from other similar fast-food restaurants.
One of the other problems of franchising with Wingstop is that Wingstop has a multi-unit requirement for its franchisees. This means that if you want to open a Wingstop franchise, you need to be prepared to open three units when you apply. This can be a very large financial commitment to be ready to open three Wingstop locations. Moreover, you will need to be sold on the brand, the products, and the franchising model with Wingstop.
Now that you have read through the advantages and disadvantages of opening up a Wingstop, you may be interested in continuing with your franchising interest. In doing so, you may be wondering what the requirements are for franchising with Wingstop. There are two main financial requirements that you need to be prepared to meet.
The first requirement is a net worth requirement. For Wingstop, the net worth requirement is $1.2 million. This net worth requirement may seem high, especially compared to the size of the Wingstop stores usually are. However, you will be required to have a minimum of three stores, so Wingstop wants to ensure that you are financially capable of supporting your intent to do so.
If you are interested in knowing whether you meet Wingstop’s net worth requirement, start by adding up the value of all of your assets. This includes your house, cars, valuables, savings, cash, stocks, and any other good of value. Then, add up the value of all of your liabilities. This includes your mortgage, student debt, car loans, or other forms of debt. Subtract your liabilities from your assets. The number that you arrive at is known as your net worth. If your net worth is at or above $1.2 million, then you meet the net worth requirement.
The next main financial requirement is known as the liquid assets, or liquid capital, requirement. Liquid assets are assets that you have which are quickly convertible to cash. The liquid assets requirement for Wingstop is $600,000. This makes sense, as spread across three units, $600,000 is likely a good starting number to help you fund your store setup. On a per-store average calculation, this liquid assets requirement is pretty fair.
If you want to know if you meet Wingstop’s liquid asset requirement, start by adding up the value of all of your cash, short-term-sellable stocks, savings, and any other asset that can quickly be convertible for cash. The number that you arrive at is your liquid assets. If this number is at or greater than $600,000, then you will be able to meet the liquid assets requirement to franchise with Wingstop.
Keep in mind that outside of financial requirements, there is also the minimum unit requirement involved in opening up a Wingstop franchise. As a prospective franchisee, you need to be ready to open three franchises of Wingstop at a minimum. As such, you should be familiar and comfortable with this requirement when you apply to franchise with Wingstop.
You should also note that Wingstop will have more specific details available for you in your conversations with them when you apply to the franchise. You can inquire about the particulars of their requirements during your application process.
Here is a quick breakdown of the two key requirements you will need to keep in mind:
Starting a new business, even a franchise, is never easy work. It takes time, dedication, and perseverance to make a new business a success. However, with the right methodology and approach, starting a franchise can be an incredible way to become a small business owner. And with this in mind, Wingstop might be the ideal franchise opportunity for you! As with anything, the key component to minimizing your risk is research. While this article is a good starting place, it’s hardly the whole thing. You’ll need to continue researching Wingstop, as well as other franchises, to really understand what you will be getting into. That way, you can sit down and compare and contrast all of your options. So, what are you waiting for? Get ready, get set, and start researching! The sooner you get started, the sooner you will be on your way to starting your very own small business in the near future!
At Biz2Credit, we understand the many challenges facing small business owners as they work to make their companies successful. That is why we work hard to provide small business owners with tools and resources that can help them succeed. Many of these resources are located right here on our website, including our Biz2Credit Blog! We post brand-new content surrounding news, trends, and events impacting small businesses each weekday. So, please continue to check back here for all the latest posts.
