Here's Why Investors Should Retain Wingstop Stock for Now

Wingstop Inc. WING is likely to benefit from digital efforts, unit expansion and strategic partnerships. Also, the emphasis on AI-powered kitchen technology bodes well. However, an uncertain macroeconomic environment is a concern.

Let us discuss the factors that highlight why investors should retain the stock for now.

Factors Driving WING Stock

Digital remains a cornerstone of Wingstop’s growth engine. In 2024, the digital sales mix rose to 70%, underpinned by the launch of the company’s proprietary tech stack, MyWingstop. The digital platform now boasts over 50 million users, reflecting nearly 30% annual growth. With enhanced personalization, increased customer opt-ins and improved return on investment on marketing spend, Wingstop is strengthening both guest frequency and loyalty.

Wingstop is leveraging AI-powered kitchen technology to modernize its back-of-house operations. This initiative aims to significantly reduce quote times, improve consistency and unlock additional demand — especially during high-traffic periods such as lunch. Over 10% of its system is already operating above its new $3 million average unit volume (AUV) target, reinforcing the scalability of this model.

Wingstop is witnessing strong momentum in its development strategy, fueled by robust demand from existing brand partners. In 2024, it achieved a record 349 net new restaurant openings, underscoring confidence in the brand’s growth potential. Looking ahead, the company anticipates unit growth rate of 14% to 15% in 2025. Notably, approximately 95% of new development continues to stem from existing partners reinvesting in the brand, reflecting a high level of franchisee commitment.

Wingstop continues to scale brand awareness through always-on marketing and high-profile partnerships, such as its collaboration with the NBA. Additional partnerships with the NFL, UFC and WWE are poised to further strengthen brand visibility, particularly among younger Gen Z and millennial consumers, resonating with the company’s value proposition.

Looking ahead, Wingstop is focused on executing its multi-year growth strategy with a goal of achieving $3 million in AUV and scaling to over 10,000 global units. With consistent gains in brand consideration, quality and purchase intent, management believes much of the upside potential persists.

Concerns for WING Stock

Shares of Wingstop have declined 16.5% in the past three months against the industry’s 3.1% rise. The downside can be attributed to the uncertain macroeconomic environment.

Wingstop has been continuously incurring increased expenses, which have been detrimental to margins. During the fiscal fourth quarter, Wingstop reported cost of sales totaling $23.3 million, up from $19.7 million in the same period a year ago. As a percentage of company-owned restaurant sales, the cost of sales rose to 77.6% from 75.1%. This uptick was largely attributed to higher food, beverage and packaging costs, primarily stemming from an increase in the price of bone-in chicken wings. Selling, general and administrative expenses increased $3.2 million year over year to $31.2 million. The rise was mainly due to a $3.0 million increase in headcount-related costs, reflecting the company’s continued investment in personnel to support its expanding operations. Going forward, WING remains cautious of inflationary pressures and interest rates changes.

WING’s Zacks Rank & Key Picks

Wingstop currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Retail-Wholesale sector are BJ's Restaurants, Inc. BJRI, Kura Sushi USA, Inc. KRUS and Sprouts Farmers Market, Inc. SFM.

BJ's Restaurants currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The company delivered a trailing four-quarter negative earnings surprise of 84.7%, on average. The stock has declined 0.2% in the past six months. The Zacks Consensus Estimate for BJ's Restaurants’ 2025 sales and earnings per share (EPS) indicates growth of 3.3% and 13.6%, respectively, from the year-ago period’s levels.

Kura Sushi currently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of negative 70.8%, on average. The stock has declined 56.9% in the past year.

The consensus estimate for Kura Sushi’s 2025 sales and EPS indicates growth of 18.5% and 237.5%, respectively, from the year-ago period’s levels.

Sprouts Farmers currently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 15.1%, on average. The stock has gained 35.6% in the past six months.

The Zacks Consensus Estimate for Sprouts Farmers’ 2025 sales and EPS indicates a rise of 11.9% and 24.3%, respectively, from the year-ago period’s level.

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This article originally published on Zacks Investment Research (zacks.com).

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