Wingstop
Annual Report 2023

®

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark one)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FORM 10-K

For the fiscal year ended December 30, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 001-37425

WINGSTOP INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or
organization)

15505 Wright Brothers Drive
Addison, Texas

(Address of principal executive offices)

47-3494862
(IRS Employer Identification No.)

75001

(Zip Code)

(972) 686-6500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s) Name of each exchange on which registered

Common Stock, par value $0.01 per share

WING

NASDAQ Global Select Market

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
x Yes ¨ No

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x
Non-accelerated filer ¨

Accelerated filer

☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

As of June 30, 2023, the aggregate market value of the registrant’s outstanding common equity held by non-affiliates was
approximately $6.0 billion, based on the closing price of the registrant’s common stock on June 30, 2023, the last trading day of the
registrant’s most recently completed second fiscal quarter.

As of February 20, 2024, there were 29,337,920 shares of common stock, par value of $0.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the registrant's 2024 annual meeting of stockholders, which will be filed no later than 120 days
after the end of the registrant’s fiscal year ended December 30, 2023, are incorporated by reference into Part III of this report.

TABLE OF CONTENTS

PART I

Business

Risk Factors

Unresolved Staff Comments

Cybersecurity

Properties

Legal Proceedings

Mine Safety Disclosures

PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

Reserved

Management's Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures About Market Risk

Financial Statements and Supplementary Data

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Controls and Procedures

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III

Directors, Executive Officers and Corporate Governance

Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

Item 1.

Item 1A.

Item 1B.

Item 1C.

Item 2.

Item 3.

Item 4.

Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Item 9B.

Item 9C.

Item 10.

Item 11.
Item 12.

Item 13.
Item 14.

PART IV

Item 15.

Item 16.

Signatures

Exhibits and Financial Statement Schedules

Form 10-K Summary

Page

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31

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40

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Cautionary Note Regarding Forward-Looking Statements

This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to come within the safe harbor protection
provided by those sections. These statements, which involve risks and uncertainties, relate to the discussion of our business
strategies and our expectations concerning future operations, sales, margins, profitability, net new units, trends, liquidity and
capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not
yet determinable. These forward-looking statements can generally be identified by the use of forward-looking terminology,
including the terms “may,” “will,” “should,” “expect,” “intend,” “plan,” “outlook,” “anticipate,” “believe,” “think,” “estimate,”
“seek,” “predict,” “can,” “could,” “project,” “potential” or, in each case, their negative or other variations or comparable
terminology, although not all forward-looking statements are accompanied by such terms. Examples of forward-looking
statements in this Annual Report on Form 10-K include, but are not limited to, our expectations with respect to our growth,
strategic initiatives, and future operations, liquidity, expenses, and consumer appeal. These forward-looking statements are
made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks, and factors
relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our
control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-
looking statements. Such risks and other factors include those listed in “Item 1A. Risk Factors,” and elsewhere in this report.

When considering forward-looking statements in this report or that we make in other reports or statements, you should keep in
mind the cautionary statements in this report and future reports we file with the Securities and Exchange Commission (the
“SEC”). New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may
affect us. Any forward-looking statement in this report speaks only as of the date on which it was made. Except as required by
law, we assume no obligation to update or revise any forward-looking statements for any reason, or to update the reasons actual
results could differ materially from those anticipated in any forward-looking statements, even if new information becomes
available in the future.

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Item 1.

Business

PART I

Throughout this report, unless the context indicates otherwise, Wingstop Inc. (NASDAQ: WING) and its consolidated
subsidiaries are referred to as the “Company,” “Wingstop,” or in the first-person notations of “we,” “us,” and “our.”

General

Wingstop is the largest fast casual chicken wings-focused restaurant chain in the world, with over 2,200 locations worldwide.
The first Wingstop opened in Garland, Texas in 1994, and we began franchising Wingstop restaurants in 1997. Since 2015,
Wingstop Inc.’s common stock has traded on the Nasdaq Global Select Market under the symbol “WING.” We are dedicated to
serving the world flavor through an unparalleled guest experience and offering of classic wings, boneless wings, tenders, and
chicken sandwiches, always cooked to order, and hand-sauced-and-tossed in 11 bold, distinctive flavors.

The Company is primarily a franchisor, with approximately 98% of Wingstop’s restaurants currently owned and operated by
independent franchisees. We operate in a single segment for reporting purposes and generate revenues by charging royalties,
advertising fees, and franchise fees to our franchisees and by operating a number of our own restaurants. We believe our asset-
light, highly-franchised business model generates strong operating margins and requires low capital expenditures, creating
stockholder value through strong and consistent free cash flow and capital-efficient growth.

Our Brand

It is our mission to serve the world flavor. We offer our guests fresh, cooked-to-order wings, tenders, and chicken sandwiches
with bold, layered flavors that touch all of the senses, and we complement our wings, tenders, and chicken sandwiches with
fresh-cut, seasoned fries and fresh, hand-cut carrots and celery. We round out the flavor experience with ranch and bleu cheese
dips that are made in-house daily. We never use heat lamps or microwaves in the preparation of our food.

Our 11 flavor offerings, along with limited time offerings of special flavors, create a differentiated experience that drives
demand across multiple day parts and occasions. Paired with our numerous order options (dine-in / carryout / delivery;
individual / combo meals / family packs) that allow guests to enjoy Wingstop during any occasion, whether it is a quick carry-
out snack, a party size order for their favorite group occasion, or delivery for a family meal, we believe this customizable
unique experience drives repeat business and brand loyalty.

Our Vision

Our vision is to become a Top 10 Global Restaurant Brand. Based on our internal analysis, we believe there is opportunity for
our brand to grow to more than 4,000 restaurants across the United States and to more than 3,000 restaurants internationally.
Our approach to becoming a Top 10 Global Restaurant Brand centers around the following key strategic priorities:

–

sustaining long-term same store sales growth;

– maintaining best-in-class returns; and

–

expanding our global footprint.

The foundation of this approach is our culture, which we define as The Wingstop Way, our investment in people as a
competitive advantage necessary to continue to scale our organization for the next phase of growth, and our cultivation of a
global mindset. The Wingstop Way includes core values centered around being Authentic, Entrepreneurial, Service-minded,
and Fun. The Wingstop Way extends to the brand’s environmental, social and governance platform as Wingstop seeks to
provide value to all guests.

Sustaining Long-Term Same Store Sales Growth

We believe in sustaining long-term same store sales growth through a combination of brand awareness, menu innovation,
delivery, data-driven marketing and maximizing our digital leadership position. Our national advertising program is funded
through the Wingstop Restaurants Advertising Fund (the “Ad Fund”), a consolidated not-for-profit advertising fund for which a
percentage of gross sales is collected from Wingstop restaurant domestic franchisees and company-owned restaurants to be
used for various forms of advertising for the Wingstop brand. Domestic franchisees are required to contribute 5% of gross sales
to the Ad Fund. The national advertising program supports elevated marketing spend and premium placements through an
extensive range of social media and digital marketing channels, including search engine, digital video, and social media
advertising, to allow us to target core customers and create top of mind consideration with relevant, impactful messaging.

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The national advertising program also supports our digital initiatives and related strategies, including our focused investments
in customer relationship management (“CRM”) and our digital platform, which allows us to deploy a digital platform-based
marketing strategy. As a result of these investments, we continue to sustain digital sales above 60%.

Maintaining Best-in-Class Unit Economics

We believe the growing popularity of the Wingstop experience and the operational simplicity of our restaurants translate into
attractive economics at our franchised- and company-owned locations. Existing franchisees accounted for more than 90% of
franchised restaurants opened in each of 2022 and 2023, which we believe further underscores our restaurant model’s financial
appeal.

Upon the opening of a new restaurant, its sales volume generally builds year after year. Our domestic average unit volume
(“AUV”) has grown consistently, approximating $1.8 million during fiscal year 2023. Our domestic operating model provides
for a low average initial investment of approximately $480,000, excluding real estate purchase or lease costs and pre-opening
expenses. In year two of operation of a new restaurant, we target a franchisee unlevered cash-on-cash return of approximately
70%+. We believe low entry costs and high returns provide a compelling investment opportunity for our franchisees that has
helped drive the continued growth of our system.

Expanding Our Global Footprint

We believe in the importance of building one global brand with a distinctive flavor experience that is consistent around the
globe. This includes laying the groundwork for a global supply chain to support expansion of our global footprint, as well as
creating a consistent digital presence centered around our global technology strategy which includes expanding our best-in-class
domestic digital platform internationally.

We believe that there is significant opportunity to continue to expand globally, and we intend to focus our efforts on increasing
our geographic penetration in both existing and new domestic markets, as well as international markets. We believe our highly-
franchised model positions us for continued strong unit growth over the medium- and long-term. We expect franchisee demand
for our brand, supported by compelling unit economics, operational simplicity, low entry costs, and flexible real estate profile,
to drive global restaurant growth.

We believe we can achieve our domestic restaurant potential by doubling our current footprint through expansion in both
existing and emerging markets. Our domestic market expansion strategy focuses on maximizing our brand market share and
visibility in key priority markets. We have a robust development pipeline with approximately 90% of our domestic
commitments as of December 30, 2023 from existing franchisees, supporting the strength of our restaurant business model and
our positive franchisor-franchisee relationships.

We also believe that there is a significant opportunity to grow our business internationally. In fiscal year 2023, we opened 50
net new international restaurants, and as of December 30, 2023, we had 288 international restaurants located in 10 countries and
U.S. territories, all of which were franchised.

We believe that our restaurant operating model translates well internationally based on our small real estate footprint, our
simplicity of operations, the universal and broad appeal of chicken, and our ability to customize our wide variety of flavors to
local tastes.

Our Franchise

Franchise Overview

Our franchisees operated a total of 2,165 restaurants in 45 states and 11 countries and U.S. territories as of December 30, 2023.
We have rigorous qualification criteria and training programs for our franchisees and require them to adhere to strict operating
standards. We work hard to ensure that every Wingstop franchise location meets the same quality and customer service
benchmarks in order to preserve the consistency and reliability of the Wingstop brand.

Franchisees (along with their managers) must attend and successfully complete a four-week training program prior to opening a
new franchise restaurant. Our training program covers various topics including Wingstop culture, food preparation and storage,
food safety, cleaning and sanitation, marketing and advertising, point of sale (“POS”) systems, accounting, and hospitality,
among others.

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All of our franchise agreements require that each franchised restaurant be operated in accordance with our defined operating
procedures, adhere to the menu we establish, and meet applicable quality, service, health, and cleanliness standards. We may
terminate the franchise rights of any franchisee who does not comply with our standards and requirements. We believe that
maintaining superior food quality, an inviting and energetic atmosphere, and excellent guest service are critical to the reputation
and success of our concept. Therefore, we enforce the contractual requirements of our franchise agreements.

We have a broad and diversified domestic franchisee base. Since 2014, the number of franchisees who own ten or more
restaurants has more than doubled. This increase is consistent with our strategy to grow with our existing franchisees. As of
December 30, 2023, our domestic franchise base of 216 franchisees had an average restaurant ownership of approximately
nine restaurants per franchisee and an average tenure of fourteen years.

U.S. Franchise Agreements

We enter into area development agreements with U.S. franchisees, pursuant to which they are granted the right to develop
restaurants in a defined market area. Franchisees pay a $10,000 development fee per restaurant to-be-developed at the time a
development agreement is signed, which fee is not refundable. When a mutually agreeable site for a restaurant has been chosen,
we enter into a franchise agreement with the franchisee, under which the franchisee is generally granted the right to operate a
restaurant in a particular location, typically providing for a 10-year initial term, with an opportunity to enter into one or more
renewal franchise agreements subject to certain conditions. We generally update and/or revise our franchise agreement on an
annual basis and, as a result, the agreements we enter into with individual franchisees may vary. Our franchise documents
currently provide that franchisees must pay a franchise fee of $20,000 for each restaurant opened.

Under our current standard franchise agreement, each franchisee is required to pay us a royalty of 6% of their gross sales net of
discounts. Each restaurant also contributes 5% of gross sales net of discounts to the Ad Fund to fund national marketing and
advertising campaigns. The national advertising fund contribution rate increased to 5% from 4% effective the first day of the
fiscal second quarter 2022. These funds are managed by the Ad Fund and are primarily used to create advertising content and
purchase digital and television advertising on a national level. Beginning the second fiscal quarter 2024, the advertising fund
contribution rate will increase to 5.3% to support digital and technology-related costs.

International Franchise Agreements

Our markets outside of the United States are operated by master franchisees with franchise and distribution rights for entire
regions or countries. The master franchise agreement typically requires the franchisees to open a minimum number of
restaurants within a specified period. The master franchisee is generally required to pay an initial, upfront development fee for
the territory as well as a franchise fee for each restaurant opened. Under our current standard master franchise agreement, each
master franchisee is also required to pay a continuing royalty fee as a percentage of sales, which varies among international
markets, but is currently set at 6%.

Suppliers and Distribution

Our franchisees are required to purchase all chicken, groceries, produce, beverages, equipment and signage, furniture, fixtures,
logo-imprinted paper goods, and cleaning supplies solely from suppliers that we designate and approve. Our supply partners are
required to meet strict quality standards. We regularly inspect vendors to ensure our standards are being met and that prices
offered are competitive. We also have a Global Supplier Code of Conduct that outlines the standards and business practices that
we expect of all our direct and extended suppliers as we strive to meet the highest standards of business conduct.

The principal raw materials for a Wingstop restaurant operation are bone-in and boneless chicken wings, tenders, and chicken
fillets. Therefore, chicken is our largest product cost item and represented approximately 53.3% of all purchases for the 2023
fiscal year. Company-owned and franchised restaurants purchase their bone-in and boneless chicken wings, chicken tenders,
and chicken fillets from suppliers that we designate and approve. Our chicken supply is diversified both geographically and
with a broad range of suppliers supporting the Wingstop system. We designate sources for potatoes to ensure that they are
grown to our specifications. We also require franchisees to use our proprietary sauces, seasonings, and spice blends and to
purchase them and other proprietary products only from designated sources.

All food items and packaging goods for Wingstop restaurants in the U.S. are currently supplied through one distributor.
Currently, there are 17 geographically diverse distribution centers, which carry all products required for a Wingstop restaurant
and service all of Wingstop’s domestic restaurants. The distributor is contractually obligated to deliver products to our
restaurants at least twice weekly, and provides consolidated deliveries with a tightly controlled and monitored cold chain for
perishable items. The distributor’s national distribution system has a documented recovery plan to handle any disruption.

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Wingstop contracts directly with manufacturers to sell products to the distributor, who in turn receives a fee for delivering these
items to our restaurants. The majority of Wingstop’s highest-spend items are formula or fixed-contract priced. Wingstop has
also negotiated agreements with its beverage suppliers to offer beverage dispensing systems, along with associated branded
products, in all Wingstop restaurants.

Information / Technology Systems

We have core information systems in place that, together with focused investments we are making in technology (including our
digital platform), we believe are designed to scale and support our future growth plans. We specify a POS system and restaurant
management system in all domestic restaurants that help facilitate the operation of the restaurants by recording sales,
purchasing and inventory of goods, managing of labor and assessing restaurant performance. Our POS system and restaurant
management system is configured to record and store financial information in a manner that we specify, and we require
franchisees to provide us with continual and unlimited independent access to all information on each POS system.

We have an online ordering platform and mobile ordering applications that integrate with third party delivery providers and our
POS system, which makes it easy for our guests to order-ahead, and which we believe leads to higher check averages.

We require our franchisees’ electronic information systems, including POS systems, to comply with and be maintained in
accordance with established network security standards,
including applicable Payment Card Industry and data privacy
standards.

Human Capital Resources

As of December 30, 2023, we employed 1,225 employees, affectionately referred to as “team members,” of whom 271 were
full-time corporate-based and regional personnel. The remainder were part-time or restaurant-level team members. None of our
team members are represented by a labor union or covered by a collective bargaining agreement, and we believe that we have
good relations with our team members. Our franchise owners are independent business owners, so they and their employees are
not considered our team members and are therefore not included in our team member count.

Our human capital objectives include attracting, retaining, and accelerating the growth of our team members. Our team member
programs are designed to develop talent and prepare team members for advancement and leadership positions in the future;
provide market-competitive pay and benefits; focus on team members’ health, safety and well-being; enhance our culture
through our continuing efforts to make our workplace more engaging and inclusive; and acquire talent and facilitate internal
talent mobility to create a high-performing and diverse workforce.

Diversity, Equity, and Inclusion

We are committed to fostering an environment of diversity, equity, and inclusion, including among our board of directors, and
having diverse representation across all levels of our workforce. Examples of some of our recent efforts and metrics include:

•

•

•

•

diversity and inclusion education training was offered to team members throughout the year;

60% of our franchisees and 56% of our board of directors identify as diverse;

85% of our team members identify as diverse; and

we are a member of the Women’s Foodservice Forum and the Multicultural Foodservice & Hospitality Alliance
Group.

We are also committed to providing competitive pay to compensate and reward our team members. All corporate management
and staff and restaurant management positions for company-owned restaurants, including hourly assistant managers and shift
leaders, are eligible for performance-based cash incentives. Our incentive plan reinforces and rewards individuals for
achievement of specific company and/or restaurant business goals.

We offer comprehensive benefit programs to eligible team members. Our core health and welfare benefits are supplemented
with a variety of voluntary benefits and paid time away from work programs. We maintain a strong focus on team member
well-being, health and safety.

We invest in people and infrastructure to build the organization for the next level. In addition to seeking to acquire new talent in
the marketplace that share our values and goals, we recognize and support the growth and development of our team members
and offer opportunities to participate in regular talent and development planning reviews to assist us with growing our internal
restaurant teams.

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Government Regulation

We and our franchisees are subject to various federal regulations affecting the operation of our business. We and our
franchisees are subject to the U.S. Fair Labor Standards Act, the U.S. Immigration Reform and Control Act of 1986, the
Occupational Safety and Health Act, and various other federal and state laws governing matters such as minimum wage
requirements, overtime, fringe benefits, workplace safety and other working conditions and citizenship requirements. A
significant number of our and our franchisees’ food service personnel are paid at rates related to the applicable minimum wage,
and past increases in the minimum wage have increased our and our franchisees’ labor costs, as would future increases. Our
distributors and suppliers also may be affected by higher minimum wage and benefit standards, which could result in higher
costs for goods and services supplied to us and our franchisees.

We are subject to extensive and varied state and local government regulation affecting the operation of our business, as are our
franchisees, including regulations relating to public and occupational health and safety, sanitation, fire prevention, and franchise
operation. Each Wingstop restaurant is subject to licensing and regulation by a number of governmental authorities, including
with respect to zoning, health, safety, the preparation and sale of food, sanitation, food safety, nutritional information
disclosure, environmental, and building and fire safety, in the jurisdiction in which the restaurant is located. Our and our
franchisees’ licenses to sell alcoholic beverages must be renewed annually and may be suspended or revoked at any time for
cause, including violation by us or our employees, or our franchisees or their employees, of any law or regulation pertaining to
alcoholic beverage control, such as those regulating the minimum age of patrons or employees, advertising, wholesale
purchasing, and inventory control.

In addition, we are subject to the rules and regulations of the Federal Trade Commission (the “FTC”) and various state laws
regulating the offer and sale of franchises. The FTC and various state franchise laws require that we furnish a franchise
disclosure document containing certain information to prospective franchisees in advance of any franchise sale or the receipt of
any consideration for the franchise, and a number of states require registration of the franchise disclosure document at least
annually with state authorities. We are operating under exemptions from registration (though not disclosure) in several states
based on our qualifications for exemption as set forth in each such state’s laws. Substantive state laws that regulate the
franchisor-franchisee relationship, including in the areas of termination and non-renewal, presently exist in a substantial number
of states. We believe that our franchise disclosure document and franchising procedures comply in all material respects with
both the FTC guidelines and all applicable state laws regulating franchising in those states in which we have offered franchises.

Our international franchised restaurants are subject to national and local laws and regulations that are often similar to those
affecting our U.S. restaurants. We believe that we have established procedures at our international franchised restaurants that
provide reasonable assurance that our international franchised restaurants comply in all material respects with the laws of the
applicable foreign jurisdiction.

Other factors pertaining to our competitive position in the industry are addressed under the section entitled “Risks Related to
Our Business and Our Industry” and listed in “Item 1A. Risk Factors” of this report.

Trademarks

We have many registered trademarks and believe that the Wingstop mark and Wingstop names and logos, in particular, have
significant value and are important to our business. Our policy is to pursue registration of our trademarks and to vigorously
oppose the infringement of any of our trademarks. We license the use of our registered marks to franchisees through franchise
agreements.

Environmental Matters

We are not aware of any federal, state or local environmental laws or regulations that we would expect to materially affect our
earnings or competitive position or result in material capital expenditures. However, increased focus on environmental matters
by legislative, governmental or other authorities may lead to new regulatory initiatives, particularly in the area of climate
change. We cannot predict the effect of possible future environmental legislation or regulations (including those related to
climate change). During the 2023 fiscal year, we had no material environmental compliance-related capital expenditures.

Community Involvement

In 2016, we created Wingstop Charities, a non-profit organization dedicated to enhancing and elevating the community work of
our franchisees to make a difference in the communities we serve. We are committed to strengthening those communities
through the Wingstop Charities Community Grant Program, which supports nonprofit organizations focused on education,
sports, entrepreneurship, the environment, and food. In fiscal year 2023, more than 100 community organizations received grant

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funding totaling over $1.3 million from Wingstop Charities, including our first national partnership with No Kid Hungry. Since
its inception, Wingstop Charities has awarded over 300 grants and contributed more than $3 million across three key programs:
Community Grants, Team Member Assistance, and the Morrison Family Scholarship Program. To learn more about how
Wingstop Charities is making an impact in our local communities, visit www.wingstopcharities.org.

Available Information

We make available, free of charge, through our internet website www.wingstop.com, our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is
electronically filed with or furnished to the SEC. Materials filed with the SEC are also available at www.sec.gov.

References to our website addresses or the website addresses of third parties in this report do not constitute incorporation by
reference of the information contained on such websites and should not be considered part of this report.

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Item 1A.

Risk Factors

Risks Related to Our Business and Our Industry

If we fail to successfully implement our growth strategy, which includes opening new restaurants, our ability to increase our
revenue and operating profits could be materially adversely affected.

Our growth strategy relies substantially upon new restaurant development by existing and new franchisees and we are
continuously seeking to identify target markets where we can enter or expand. We and our franchisees face many challenges in
opening new restaurants, including:

•

•

•

•

•

•

•

•

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 compensation for, qualified personnel;

availability of required restaurant equipment;

unanticipated increases in construction and development costs; and

the legal and regulatory requirements applicable to our industry.

In particular, because substantially all of our new restaurant development is funded by franchisee investment, our growth
strategy is dependent on our franchisees’ (or prospective franchisees’) ability to access funds to finance such development. We
do not provide our franchisees with direct financing and therefore if our franchisees (or prospective franchisees) are not able to
obtain independent financing at commercially reasonable rates, or at all, they may be unwilling or unable to invest in the
development of new restaurants, and our future growth could be adversely affected. 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 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. We may need to upgrade and expand our infrastructure and information systems, automate more processes and hire,
train and retain restaurant employees and corporate support staff, all of which may result in increased costs and inefficiencies

Our success depends in significant part on the future performance of existing and new franchise restaurants, and we are
subject to a variety of additional risks associated with our franchisees.

As of December 30, 2023, approximately 98% of our restaurants were operated by franchisees. As a result, a substantial portion
of our revenue comes from royalties generated by our franchised restaurants. 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,
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 and/or adversely impact the goodwill
associated with our franchise. 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, 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 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, if one of our key franchisees

11

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.

If we fail to identify, recruit and contract with a sufficient number of qualified franchisees, our ability to open new
franchised restaurants and increase our revenue could be materially adversely affected.

The opening of additional franchised restaurants depends, in part, upon the availability of prospective franchisees who meet our
criteria. 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. 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.

Also, the number of new franchised Wingstop restaurants that actually open in the future may differ materially from the number
of signed commitments from existing and new franchisees. Historically, a portion of our signed commitments have not
ultimately opened as new franchised Wingstop restaurants. The historic conversion rate of signed commitments to new
franchised Wingstop restaurants may not be indicative of the conversion rates we will experience in the future, and the total
number of new franchised Wingstop restaurants actually opened in the future may differ materially from the number of signed
commitments disclosed at any point in time.

Our stated sales to investment ratio and target unlevered cash-on-cash return may not be indicative of future results of any
new franchised restaurant.

Initial investment levels, AUV levels, restaurant-level operating costs and restaurant-level operating profit of any new
restaurant may differ from average levels experienced by franchisees in prior periods due to a variety of factors, and these
differences may be material. Accordingly, our stated sales to investment ratio and average unlevered cash-on-cash return may
not be indicative of future results of any new franchised restaurant. In addition, estimated initial investment costs and
restaurant-level operating costs are based on information self-reported by our franchisees and have not been verified by us.
Furthermore, performance of new restaurants is impacted by a range of risks and uncertainties beyond our or our franchisees’
control, including those described by other risk factors described in this report.

Food safety and food-borne illness concerns may have a material adverse effect on our business.

Food safety is a top priority, and we dedicate substantial resources so that our customers enjoy safe, high quality food products.
However, food-borne illnesses, such as salmonella, E. coli infection, or hepatitis A, and food safety issues, including food
tampering or contamination, have occurred in the food industry in the past, and could occur in the future. Any report or
publicity linking our restaurants to instances of food-borne illness or food safety issues could materially adversely affect our
brand and reputation as well as our revenue and profits. Even instances of food-borne illness or food safety issues occurring
solely at our competitors’ restaurants could result in negative publicity about the food service industry or fast casual restaurants
generally and adversely impact our restaurants.

In addition, our reliance on third-party food suppliers and distributors increases the risk that food-borne illness incidents could
be caused by factors outside of our control and that multiple restaurants could be affected rather than a single restaurant. We
cannot ensure that all food items are properly maintained during transport throughout the supply chain or that our employees
and our franchisees and their employees will identify all products that may be spoiled and should not be used. 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 market 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.

12

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

Some of our new restaurants are located in markets where there may be limited or no market recognition of our brand. Those
markets may have competitive conditions, consumer tastes and discretionary spending patterns that are different from those in
our existing markets, and we may encounter well-established competitors with substantially greater financial resources than us.
As a result, those new restaurants may be less successful than restaurants in our existing markets.

We may need to build brand awareness in new markets through greater investments in advertising and promotional activity than
we originally planned, which could negatively impact the profitability of our operations in such new markets. Our franchisees
may find it more difficult in new markets to hire, motivate and keep qualified employees who can project our vision, passion
and culture. In addition, we may have difficulty finding reliable suppliers or distributors or ones that can provide us, either
initially or over time, with adequate supplies of ingredients meeting our quality standards. Restaurants opened in new markets
may also have lower average restaurant sales than restaurants opened in existing markets and may take longer to, or fail to,
ramp up and reach expected sales and profit levels. Additionally, new markets may have higher rents and labor costs. These
factors could negatively impact our unit economics and overall profitability.

We also intend to continue opening new franchised restaurants in our existing markets as a core part of our growth strategy. As
a result, the opening of a new restaurant in or near markets in which our restaurants already exist could adversely affect the
sales of our existing restaurants.

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, delivery 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
business, financial condition, and results of operations. 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. Consumer tastes, nutritional and dietary trends, traffic patterns, and the type, number, and location of
competing restaurants often affect the restaurant business, and our competitors may react more efficiently and effectively to
those conditions.

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 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. 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. 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

13

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, 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. In this regard, we and our franchisees depend on a group of suppliers and our distributor for food ingredients,
beverages, paper goods, and distribution. We and our franchisees bear risks associated with the timeliness, solvency, reputation,
labor relations, freight costs, price of raw materials, and compliance with health and safety standards of each supplier and our
distributor. We have little control over such suppliers or the distributor. 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
interruptions in the supply chain, obstacles or delays in the process of
suppliers meeting restaurant product demand,
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.

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 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. Our information technology systems include the use of electronic payment
methods and the collection and storage of personal information from individuals, which may expose us and our franchisees to
increased risk of cyber incidents, privacy and/or security breaches or intrusions, and other risks. We rely on commercially
available systems, software, tools and monitoring to provide security for processing, transmitting, and storing such information.
The use of personally identifiable information by us is regulated by foreign, federal, and state laws, which continue to evolve,
as well as by certain third-party agreements. As privacy and information security laws and regulations change, we may incur
additional costs to ensure that we remain in compliance with those laws and regulations. See “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” below for a further discussion on privacy, information security, and data protection regulations.

Our franchisees, contractors and third parties with whom we do business have experienced cyber incidents and security
breaches or intrusions in which confidential or personal information could have been stolen and we, our franchisees, contractors
and third parties with whom we do business may experience cyber incidents and security breaches or intrusions in which
confidential or personal information is stolen in the future. 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 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. Advances in computer and software capabilities, technology,
new tools, and other developments may increase the risk of such a breach. If a person is able to circumvent the security
measures of our business, our franchisees’ businesses or those of other third parties, he or she could destroy or steal valuable
information or disrupt the operations of our business. 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 business, financial condition, and results of operations. The rapid evolution and increased
adoption of artificial intelligence technologies may intensify our cybersecurity risks.

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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 business, financial condition, and results of operations.
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, 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, financial condition, or results of operations.

The majority of our restaurant sales are paid by credit or debit cards. In connection with credit or debit card transactions in-
restaurant, we and our franchisees collect and transmit confidential information to card processors. The systems currently used
for transmission and approval of electronic payment
transactions, and the technology utilized in electronic payments
themselves, all of which can put electronic payment at risk, are determined and controlled by the payment card industry, not by
us, through enforcement of compliance with the Payment Card Industry - Data Security Standards (as modified from time to
time, “PCI DSS”). 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 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 (the “CCPA”) and the California Privacy Rights Act (the “CPRA”) (which will
become enforceable in March 2024). 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. The legal framework around privacy
issues is rapidly evolving, as various federal and state government bodies are considering adopting new privacy laws and
regulations. These laws and regulations could result in significant limitations on or changes to the ways in which we can collect,
use, host, store, or transmit personal information and other data. 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 business, financial condition, and results of operations. Additionally, the rapid evolution and

15

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.

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. Any damage or failure of our computer systems or network infrastructure that causes an interruption in our
operations could have a material adverse effect on our business and subject us to litigation or actions by regulatory authorities.
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 the operation of our business, our financial
condition, and 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.

are

increasingly using e-commerce websites

and apps, both domestically and internationally,

like
Customers
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 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

16

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.

As of December 30, 2023, delivery services were available at all Wingstop restaurants throughout the United States.
Interruptions or failures in our delivery services could prevent the timely or successful delivery of our products. These
interruptions may be due to unforeseen events that are beyond our control or the control of our delivery providers, such as
inclement weather, natural disasters, transportation disruptions, sabotage by an outside party, civil protests or labor shortages or
unrest. In addition, changes in business practices of our delivery providers and governmental regulations could materially
adversely impact delivery services and/or profitability.

If our products are not delivered on time and in safe and proper condition, customers may refuse to accept our products and
have less confidence in our services, in which case our business and reputation may suffer. If our third-party delivery service
providers fail to follow the quality standards or other terms that they agreed to with us, it could result in harm to our business
and reputation and could force us to pursue arrangements with alternative delivery service providers, which could result in an
interruption to our delivery services. These factors may materially adversely impact our sales and our brand reputation. We also
incur additional costs associated with delivery orders, and it is possible that these orders could cannibalize more profitable
carry-out or in-restaurant orders.

Uncertainty in the law with respect to the assignment or allocation of liabilities in the franchise business model could
materially adversely impact our profitability.

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 (“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 profitability, which would adversely impact our business, financial condition, and 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.

We and our franchisees are, from time to time, the subject of, or potentially the subject of, complaints or litigation, including
customer claims, class-action lawsuits, personal-injury claims, environmental claims, intellectual property claims, employee
claims regarding workplace matters such as wage-related or workforce scheduling claims, allegations of improper termination,
harassment, discrimination and claims related to violations of laws, such as the Americans with Disabilities Act of 1990
(“ADA”), religious freedom laws, the Fair Labor Standards Act, other employment-related laws, the Occupational Safety and
Health Act, the Employee Retirement Income Security Act of 1974, as amended, advertising laws and state and local “dram
shop” laws. 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

17

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. 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, 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, financial condition, and results of operations.

We may engage in litigation or arbitration with our franchisees.

Although we believe we generally enjoy a positive working relationship with the vast majority of our franchisees, the nature of
the franchisor-franchisee relationship may give rise to litigation or arbitration with our franchisees. In the ordinary course of
business, we are the subject of complaints or litigation from franchisees, usually related to alleged breaches of contract or
wrongful termination under the franchise arrangements. We may also engage in future litigation or arbitration with franchisees
to enforce the terms of our franchise agreements and compliance with our brand standards as determined necessary to protect
our brand, the consistency of our products and the customer experience, or to enforce our contractual indemnification rights if
we are brought into a matter involving a third party due to the franchisee’s alleged acts or omissions. In addition, we may be
subject to claims by our franchisees relating to our Franchise Disclosure Document (“FDD”), including claims based on
financial information contained in our FDD. Engaging in such litigation or arbitration may be costly and time-consuming and
may distract management and materially adversely affect our relationships with franchisees and our ability to attract new
franchisees. Any negative outcome of these or any other claims could materially adversely affect our results of operations as
well as our ability to expand our franchise system and may damage our reputation and brand. 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. 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, 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, 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. Should our advertising and promotions not be effective, our business, financial
condition and results of operations could be materially adversely affected.

The support of our franchisees is critical for the success of the advertising and marketing campaigns we seek to undertake, and
the successful execution of these campaigns will depend on our ability to maintain alignment with our franchisees. 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

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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, 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, financial condition, and
operating results. 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. These changes
may include regulations that impact the ingredients and nutritional content of our menu items. The federal government and a
number of states, counties and cities, have enacted laws requiring multi-unit restaurant operators to make certain nutritional
information available to customers and/or legislation prohibiting the sales of certain types of ingredients in restaurants. If our
customers perceive our menu items to contain unhealthy caloric, sugar, sodium, or fat content, our results of operations could
be adversely affected. The success of our restaurant operations depends, in part, upon our ability to effectively respond to
changes in consumer preferences and eating habits, negative publicity and consumer health and disclosure regulations and to
adapt our menu offerings to fit the dietary needs, preferences and eating habits of our customers without sacrificing flavor. To
the extent we are unable to respond with appropriate changes to our menu offerings, it could materially adversely affect
customer traffic and our results of operations. Furthermore, any change in our menu could result in a decrease in existing
customer traffic.

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:

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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;

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

legal and regulatory changes;

costs associated with litigation;

increases in infrastructure costs; and

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 or change 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.

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.

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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, financial condition, and results of operations.

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 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. Each of these regulations would
be costly to comply with and/or could result in reduced demand for our products. The failure of our restaurants to comply with
applicable regulations and obtain and maintain required licenses, permits, and approvals (including those for the sale of
alcoholic beverages) could adversely affect our existing restaurants and delay or result in our decision to cancel the opening of
new restaurants, which would materially adversely affect our results of operations.

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, 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. If menu prices are increased by us and our franchisees to cover increased labor
costs, the higher prices could adversely affect transactions which could lower sales and thereby reduce our margins and the
royalties that we receive from franchisees.

Although we require all workers in our company-owned restaurants and in our corporate support office to provide us with
government-specified documentation evidencing their employment eligibility, some of our employees may, without our
knowledge, be unauthorized workers. We currently participate in the “E-Verify” program, an Internet-based, free program run
by the U.S. government to verify employment eligibility, in all of our company-owned restaurants and in our corporate support
office. However, use of the “E-Verify” program does not guarantee that we will successfully identify all applicants who are
ineligible for employment. Unauthorized workers may subject us to fines or penalties, and if any of our workers are found to be
unauthorized, we could experience adverse publicity that negatively impacts our brand and it may be more difficult to hire and
keep qualified employees. 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

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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.

The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional
requirements and the consequences of litigation relating to current or future laws and regulations, or our inability to respond
effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and
therefore have an adverse effect on our results of operations. Failure to comply with the laws and regulatory requirements of
federal, state, local and foreign authorities (including those applicable to us as a public company) could result in, among other
things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability. In addition,
certain laws, including the ADA, could require us or our franchisees to expend significant funds to make modifications to our
restaurants if we fail to comply with applicable standards. Compliance with all of these laws and regulations can be costly and
can increase our exposure to litigation or governmental investigations or proceedings.

Our current insurance and the insurance of our franchisees may not provide adequate levels of coverage against claims.

We currently maintain insurance we believe is customary for businesses of our size and type. 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, financial condition, and results of operations.

Our franchise agreements require each franchisee to maintain certain insurance types and levels. Certain extraordinary hazards,
however, may not be covered, and insurance may not be available (or may be available only at prohibitively expensive rates)
with respect to many other risks. Moreover, any loss incurred could exceed policy limits and policy payments made to
franchisees may not be made on a timely basis. Any such loss or delay in payment could have a material adverse effect on a
franchisee’s ability to satisfy obligations under the franchise agreement, including the ability to make royalty payments.

We also require franchisees to maintain general liability insurance coverage to protect against the risk of product liability and
other risks and demand strict franchisee compliance with health and safety regulations. However, franchisees may receive or
produce defective food or beverage products, which may materially adversely affect our brand’s goodwill and our business.
Further, a franchisee’s failure to comply with health and safety regulations, including requirements relating to food quality or
preparation, could subject them, and possibly us, to litigation. Any litigation, including the imposition of fines or damage
awards, could exceed or be excluded from insurance coverage, and, as a result, adversely affect the ability of a franchisee to
make royalty payments or could generate negative publicity or otherwise adversely affect us.

Damage to our reputation could negatively impact our business, financial condition, and results of operations.

We believe we have built our reputation on the high quality and bold, distinctive, and craveable flavors of our food, value, and
service, and we must protect and grow the value of our brand to continue to be successful in the future. Any incident that erodes
consumer affinity for our brand could significantly reduce its value and damage our business. For example, our brand value
could suffer and our business could be adversely affected if customers perceive a reduction in the quality and safety of our food,
value, or service or otherwise believe we have failed to deliver a consistently positive experience. We may also be adversely
affected by customers’ experiences with third-party delivery from our restaurants.

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, financial condition, and results
of operations.

The availability of information on social media platforms is virtually immediate as is its impact. Many social media platforms
immediately publish the content their subscribers and participants can post, often without filters or checks on accuracy of the
content posted. The opportunity for dissemination of information, including proprietary or inaccurate information, is seemingly
limitless and readily available. Information posted may be adverse to our interests and may be inaccurate, each of which may
harm our performance, prospects, brand, or business. The harm may be immediate without affording us an opportunity for
redress or correction. Other risks of social media use include the association with controversial celebrities or influencers. The
perception of our social media campaigns, or the inappropriate use of social media by our guests or employees, may materially
adversely affect our reputation, business, financial condition, and results of operations.

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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 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. Therefore, as we expand internationally, our franchisees may not experience the operating margins we
expect, and our results of operations and growth may be materially adversely affected. Our business, financial condition and
results of operations may be adversely affected if the global markets in which our franchised restaurants compete are affected
by changes in political, economic, or other factors. These factors, over which neither our franchisees nor we have control, may
include:

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•

recessionary or expansive trends and economic downturns in international markets;

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

increases in the taxes we pay and other changes in applicable tax laws;

legal and regulatory changes, and the burdens and costs of our compliance with a variety of foreign laws;

difficulty in securing suitable local suppliers in international markets;

changes in inflationary pressures and interest rates;

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

difficulty in protecting our brand, reputation, and intellectual property;

difficulty in collecting our royalties and longer payment cycles;

expropriation of private enterprises;

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

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;

the U.S. Foreign Corrupt Practices Act and other similar anti-bribery and anti-kickback laws; and

other external factors.

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.

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, 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.

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

We believe that our trademarks and other proprietary rights are important to our success and our competitive position, and,
therefore, we devote resources to the protection of our trademarks and proprietary rights. The protective actions that we take,
however, may not be enough to prevent unauthorized use or imitation by others, which could harm our image, brand or
competitive position. If we commence litigation to enforce our rights, we will incur significant legal fees.

We cannot assure you that third parties will not claim infringement by us of their proprietary rights in the future. Any such
claim, whether or not it has merit, could be time-consuming and distracting for executive management, result in costly
litigation, cause changes to existing menu items or delays in introducing new menu items, or require us to enter into royalty or
licensing agreements. 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

The terms of our securitized debt financing through certain of our wholly-owned subsidiaries include restrictive terms, and
our failure to comply with any of these terms could result in a default, which would have a material adverse effect on our
business and prospects.

Unless and until we repay all outstanding borrowings under our securitized debt facility, we will remain subject to the
restrictive terms of these borrowings. The securitized debt facility, under which certain of our wholly-owned subsidiaries issued
and guaranteed fixed rate notes and variable funding notes, contain a number of covenants, with the most significant financial
covenant being a debt service coverage calculation. These covenants limit our ability and the ability of certain of our
subsidiaries to, among other things: incur additional indebtedness; alter the business we conduct; make certain changes to the
composition of our management team; pay dividends and make other restrictive payments beyond specified levels; create or
permit liens; dispose of certain assets; make certain investments; engage in certain transactions with affiliates; and consolidate,
merge or transfer all or substantially all of our assets.

The securitized debt facility also requires us to maintain specified financial ratios. Our ability to meet these financial ratios can
be affected by events beyond our control, and we may not satisfy such a test. A breach of these covenants could result in a rapid
amortization event or default under the securitized debt facility. 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. 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

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

We may be unable to generate sufficient cash flow to satisfy our significant debt service obligations, which would materially
adversely affect our financial condition and results of operations.

Our ability to make principal and interest payments on and to refinance our indebtedness will depend on our ability to generate
cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and
other factors that are beyond our control. 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.

Risks Related to Ownership of our Common Stock

Our stock price may be volatile or may decline regardless of our operating performance.

The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot
control, including those described under “Risks Related to Our Business and Our Industry” and the following:

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potential fluctuation in our annual or quarterly operating results;

changes in capital market conditions that could affect valuations of restaurant companies in general or our goodwill in
particular or other adverse economic conditions;

changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these
estimates or failure of those analysts to initiate or maintain coverage of our common stock;

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;

global economic, legal, and regulatory factors unrelated to our performance;

investors’ perceptions of our prospects;

announcements by us or our competitors of significant contracts, acquisitions, joint ventures, or capital commitments;
and

investor perceptions of the investment opportunity associated with our common stock relative to other investment
alternatives.

In addition, the stock markets, and in particular Nasdaq, have experienced extreme price and volume fluctuations that have
affected and continue to affect the market prices of equity securities of many food service companies. In the past, stockholders
have instituted securities class action litigation following periods of market volatility. If we were involved in securities
litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our
business.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult,
limit attempts by our stockholders to replace or remove our current management and limit the market price of our common
stock.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of
delaying or preventing a change of control or changes in our management. Our amended and restated certificate of
incorporation and amended and restated bylaws include provisions that:

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•

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authorize our board of directors to issue, without further action by the stockholders, up to 15,000,000 shares of
undesignated preferred stock;

require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by
written consent;

specify that special meetings of our stockholders can be called only upon the request of a majority of our board of
directors or by the chairman of the board of directors;

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•

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establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including
proposed nominations of persons for election to our board of directors;

establish that our board of directors is divided into three classes, with each class serving staggered three-year terms;
and

prohibit cumulative voting in the election of directors.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by
making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the
members of our management, and may discourage, delay, or prevent a transaction involving a change of control of our
company that is in the best interest of our minority stockholders. 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. 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.

Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the
Court of Chancery of the State of Delaware will be the sole and exclusive forum, to the fullest extent permitted by law, for (i)
any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed
by any of our directors, officers and employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to
any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws or (iv)
any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery
having personal jurisdiction over the indispensable parties named as defendants therein. Any person purchasing or otherwise
acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to this
provision of our amended and restated certificate of incorporation. This choice of forum provision may limit our stockholders’
ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or employees,
which may discourage such lawsuits against us and our directors, officers and employees even though an action, if successful,
might benefit our stockholders. Stockholders who do bring a claim in the Court of Chancery could face additional litigation
costs in pursuing any such claim. The Court of Chancery may also reach different judgments or results than would other courts,
including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and
such judgments or results may be more favorable to us than to our stockholders. 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.

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Item 1B.

Unresolved Staff Comments

None.

Item 1C.

Cybersecurity

Risk Management

The Company maintains a comprehensive information security program that is designed to identify, protect against, detect and
respond to, and manage cybersecurity threats. The program contains security measures that include, but are not limited to, the
following: security policies and procedures; physical and environmental protections; monitoring processes and systems; asset
management; risk assessments; a vulnerability management and remediation program; and maintenance of a third-party risk
management program. We consult the National Institute of Standards and Technology Cyber Security Framework for guidance
and leverage internal and external resources to design and execute our cybersecurity program.

The Company also trains employees to understand their role in attempting to protect the Company from cybersecurity attacks.
Our information security training program for employees includes computer-based training at hire, annual follow-up training
and acknowledgement of our information security policies, regular internal communications, and testing to measure the
effectiveness of our information security program. For example, we conduct regular phishing awareness campaigns designed to
emulate current threats and provide immediate feedback and, as necessary, additional training or remedial action.

In addition, the Company engages third parties to assist in assessing, identifying, and remediating material risks from
cybersecurity threats. Our key cybersecurity controls are regularly tested and audited by third-party service providers, which we
retain to help identify vulnerabilities in our systems and to help maintain compliance to standards and regulatory requirements.
Other third-party service providers are enlisted by the Company for security operations center services to augment our teams’
monitoring capabilities and to assist with our investigation and response to alerts on emerging and ongoing threats.

We also maintain a third-party risk management program that includes policies and procedures designed to oversee and manage
the cybersecurity risks associated with our third-party service providers. The Company conducts risk assessments at the initial
onboarding of vendors or service providers who have access to Company systems or data and, subsequently, at regular intervals
in an effort to help determine the severity and scope of risks to Company systems, data and operations.

In addition to implementing safeguards that attempt to minimize risks associated with a cybersecurity incident, the Company
maintains disaster recovery and business continuity plans that include data backup capabilities. We also have incident response
procedures designed to address cybersecurity events that may occur despite the safeguards we have put in place. Further, our
incident response procedures and business continuity plans are also designed to assist in responding to breaches of any of our
third-party service providers.

As of the date of this report, we are not aware of any cybersecurity incidents that have materially affected or are reasonably
likely to materially affect the Company, including our business strategy, results of operations, or financial condition. In 2023,
the Company reinforced its business continuity plan in an effort to provide increased oversight of our third-party service
providers and suppliers. Risks from cybersecurity threats that are reasonably likely to materially affect the Company, its
business strategy and results of operations or financial condition, include (but are not limited to): data loss; a disruption to our
operations; a compromise or corruption of confidential or proprietary information; damage to our employee and business
relationships and reputation; increased burden of regulatory compliance; and/or litigation and liability. See our related risk
factors in “Item 1A. Risk Factors” for more information about the Company’s risks from cybersecurity threats and how such
threats may impact the Company’s business, operations, and financial results.

Governance

Our Board classifies cybersecurity and information technology infrastructure among the most significant potential risks to our
business in the Company’s enterprise risk management program. The Technology Committee, which consists of five
independent directors, is responsible for the oversight of the Company’s cybersecurity and technology-related risks and
management’s efforts to monitor and oversee those risks. The Technology Committee oversees these risks in conjunction with
the Audit Committee, which also consists entirely of independent directors, and regularly participates in joint meetings with the
Audit Committee to discuss these matters.

Our Senior Director of Information Security and Data Privacy, who has more than 20 years of experience in information
technology-related roles, including engineering, governance, and security, oversees our information security program and

26

matters of risk relating to cybersecurity. Members of our Information Technology team periodically provide risk reports to the
Board and its committees, including assessments of the Company’s cybersecurity risks, their potential impact on our business
operations, and management’s strategies to monitor and mitigate those risks. The committee chairs, in turn, report to the full
Board as part of our general risk management process.

27

Item 2.

Properties

We own a 78,000 square foot office building in Addison, Texas, which we use as our corporate headquarters and global support
center.

All company-owned restaurant real estate facilities are leased by us, typically under five- to ten-year leases with one or two
five-year renewal options, often containing rent escalation provisions, and generally requiring us to pay a proportionate share of
real estate taxes, insurance and common area and other operating costs in addition to base or fixed rent. All domestic and
international franchise restaurants are leased or owned directly by the respective franchisees.

Due to lower square footage requirements, our restaurants can be located in a variety of locations. They tend to be located
primarily in shopping centers, as in-line or end-cap locations. Our restaurants generally occupy approximately 1,700 square feet
of leased retail space. As of December 30, 2023, we and our franchisees operated 2,214 restaurants in 45 states and 11 countries
and U.S. territories.

Item 3.

Legal Proceedings

We are currently involved in various claims and legal actions that arise in the ordinary course of our business, including claims
and actions resulting from employment-related and franchise-related matters. None of these matters, some of which are covered
by insurance, has had a material effect on us, and, as of the date of this report, we are not party to any pending legal
proceedings that we believe would have a material adverse effect on our business, financial condition, results of operations or
cash flows. However, a significant increase in the number of these claims or an increase in amounts owing under successful
claims could materially and adversely affect our business, financial condition, results of operations or cash flows.

Item 4.

Mine Safety Disclosures

Not applicable.

28

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Our common stock trades on the NASDAQ Global Select Market under the symbol “WING”. As of February 20, 2024, there
were 132 stockholders of record of our common stock. This number excludes stockholders whose stock is held in nominee or
street name by brokers.

Dividends on Common Stock

On February 20, 2024, the Company’s board of directors declared a quarterly dividend of $0.22 per share of common stock, to
be paid on March 29, 2024 to stockholders of record as of March 8, 2024, totaling approximately $6.5 million.

We evaluate dividend payments on common stock within the context of our overall capital allocation strategy with our board of
directors on an ongoing basis, giving consideration to a number of factors including our current and forecasted earnings,
financial condition, the general economic and regulatory environment, cash requirements, cash surplus, legal requirements or
limitations, and other factors. There can be no assurance that we will continue to pay such dividends or as to the amount of any
such dividends if paid.

Recent Sales of Unregistered Securities

There were no sales of unregistered securities during the fiscal year ended December 30, 2023 that were not previously reported
on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

Issuer Purchases of Equity Securities

The following table sets forth information on our share repurchases of our common stock during the fourth quarter of 2023:

Period
October 1, 2023 - October 28, 2023

October 29, 2023 - November 25, 2023

November 26, 2023 - December 30, 2023

Total

Total Number of
Shares
Purchased(1)

Average Price
Paid Per Share(1)
—

— $

—

78,801 $

78,801 $

—

193.51

193.51

Total Number of Shares
Purchased as Part of
Publicly Announced Plans
or Programs (2)

Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs (2)

— $

—

—

—

78,801

125,000,000

78,801 $

125,000,000

(1) On August 23, 2023, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a
third-party financial institution to repurchase $125.0 million of the Company’s common stock. Pursuant to the terms of the
ASR Agreement, the Company paid the financial institution $125.0 million and, on August 25, 2023, the Company received
and retired 567,151 shares of its common stock. Final settlement of the ASR Agreement occurred on December 21, 2023,
and the Company received and retired an additional 78,801 shares of common stock. In connection with the ASR
Agreement, the Company received and retired a total of 645,952 shares of common stock at an average share price of
$193.51. The total number of shares repurchased under the ASR Agreement was based on a daily volume-weighted average
share price during the valuation period specified in the ASR Agreement, less a discount and subject to adjustments.

(2) On August 16, 2023, the Company’s Board of Directors approved a new share repurchase program with authorization to
purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase Authorization”). As of
December 30, 2023, $125.0 million remained available under the Share Repurchase Authorization.

29

Performance Graph

The following performance graph compares the dollar change in the cumulative stockholder return on our common stock with
the cumulative total returns of the NASDAQ Composite Index and the Standard & Poor’s 400 Restaurant Index (the “S&P 400
Restaurant Index”). This graph assumes a $100 investment in our common stock and in each of the foregoing indices on
December 29, 2018, and assumes the reinvestment of dividends, if any. The indices are included for comparative purposes only.
They do not necessarily reflect management’s opinion that such indices are an appropriate measure of the relative performance
of our common stock, and historical stock price performance should not be relied upon as an indication of future stock price
performance. This graph is “furnished” and not “filed” with the SEC and it is not “soliciting material,” and should not be
incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the
date hereof and irrespective of any general incorporation language in such filing.

Comparison of Cumulative Total Return

600

500

400

300

200

100

0

12/29/18

12/28/19

12/26/20

12/25/21

12/31/22

12/30/23

Wingstop Inc.

NASDAQ Composite

S&P 400 Restaurant

30

Item 6.

Reserved

Not applicable.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in
conjunction with the accompanying audited consolidated financial statements and notes. Forward-looking statements in this
MD&A are not guarantees of future performance and may involve risks and uncertainties that could cause actual results to
differ materially from those projected. Refer to “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this
report and “Item 1A. Risk Factors” for a discussion of these risks and uncertainties.

A comparison of our results of operations and cash flows for fiscal year 2022 compared to fiscal year 2021 can be found under
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 22, 2023.

We operate on a 52- or 53-week fiscal year ending on the last Saturday of each calendar year. Our fiscal quarters are
comprised of 13 weeks, with the exception of the fourth quarter of a 53-week year, which contains 14 weeks. Fiscal year 2023
contains 52 weeks, while fiscal year 2022 contains 53 weeks.

Overview

Wingstop is the largest fast casual chicken wings-focused restaurant chain in the world and has demonstrated strong, consistent
growth. As of December 30, 2023, we had a total of 2,214 restaurants in our system. Our restaurant base is 98% franchised,
with 2,165 franchised locations (including 288 international locations) and 49 company-owned restaurants as of December 30,
2023. We generate revenues by charging royalties, advertising fees and franchise fees to our franchisees and by operating a
number of our own restaurants.

We plan to grow our business by opening new franchised restaurants and increasing our same store sales, while leveraging our
franchise model to create shareholder value. Domestic same store sales have increased for 20 consecutive years beginning in
2004, which includes 5-year cumulative domestic same stores sales growth of 62.2% since the beginning of fiscal year 2019.
We believe our asset-light, highly-franchised business model generates strong operating margins and requires low capital
expenditures, creating shareholder value through strong and consistent operating cash flow and capital-efficient growth.

Change in Presentation

Beginning in the first quarter of 2023, gains and losses on disposal of assets are no longer presented as an adjustment to
EBITDA or Net income in our calculation of Adjusted EBITDA, Adjusted net income, and Adjusted earnings per diluted share.
EBITDA, Adjusted EBITDA, Adjusted net income, and Adjusted earnings per diluted share are non-GAAP measures and are
defined below. Prior period gains and losses on disposal of assets have been excluded from these measures to conform to the
current presentation. This reclassification had no impact on operating income, balance sheets or statements of cash flows.

Highlights for Fiscal Year 2023 Compared to Fiscal Year 2022(1)

•
•

•
•
•
•
•
•

•

•

System-wide sales increased 27.1% over the prior fiscal year to $3.5 billion;
System-wide restaurant count increased 13.0% over the prior fiscal year to a total of 2,214 worldwide locations, driven by
255 net unit openings;
Domestic same store sales increased 18.3% over the prior fiscal year;
Company-owned domestic same store sales increased 8.2% over the prior fiscal year;
Digital sales increased to 67.0% of system-wide sales;
Domestic AUV increased to $1.8 million;
Total revenue increased 28.7% over the prior fiscal year to $460.1 million;
Net income increased 32.5% over the prior fiscal year to $70.2 million, or $2.35 per diluted share, compared to $52.9
million, or $1.77 per diluted share in the prior fiscal year;
Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased 36.0% to $74.1 million,
or $2.48 per diluted share, compared to $54.5 million, or $1.82 per diluted share in the prior fiscal year; and
Adjusted EBITDA, a non-GAAP measure, increased 36.1% to $146.5 million, compared to adjusted EBITDA of $107.6
million in the prior fiscal year.

(1) The fiscal year ended December 31, 2022 benefited from a 53rd week as compared to fiscal 2023.

31

Key Performance Indicators

Key measures that we use in evaluating our restaurants and assessing our business include the following:

Number of restaurants. Management reviews the number of new restaurants, the number of closed restaurants, and the number
of acquisitions and divestitures of restaurants to assess net new restaurant growth, system-wide sales, royalty and franchise fee
revenue, and company-owned restaurant sales.

Restaurant count at December 25, 2021

Openings
Closures
Net purchase from (sold by) franchisees

Restaurant count at December 31, 2022

Openings
Closures
Net purchase from (sold by) franchisees

Restaurant count at December 30, 2023

(1) Includes U.S. territories.

Domestic
Company-owned
36
5
(1)
3
43
4
—
2
49

Domestic
Franchised

International
Franchised(1)

System-wide

1,498
187
(4)
(3)
1,678
202
(1)
(2)
1,877

197
45
(4)
—
238
59
(9)
—
288

1,731
237
(9)
—
1,959
265
(10)
—
2,214

System-wide sales. System-wide sales represents net sales for all of our company-owned and franchised restaurants (as reported
to better assess changes in our royalty revenue, our overall store
by franchisees). This measure allows management
performance, the health of our brand and the strength of our market position relative to competitors. Our system-wide sales
growth is driven by new restaurant openings as well as increases in same store sales.

Domestic average unit volume (“AUV”). Domestic AUV consists of the average annual sales of all restaurants that have been
open for a trailing 52-week period or longer. This measure is calculated by dividing sales during the applicable period for all
restaurants being measured by the number of restaurants being measured. Domestic AUV includes revenue from both
company-owned and franchised restaurants. Domestic AUV allows management to assess our domestic company-owned and
franchised restaurant economics. Changes in domestic AUV are primarily driven by increases in same store sales and are also
influenced by opening new restaurants.

Domestic same store sales. Domestic same store sales reflects the change in year-over-year sales for the same store base. We
define the same store base to include those restaurants open for at least 52 full weeks. This measure highlights the performance
of existing restaurants, while excluding the impact of new restaurant openings and permanent closures. We review same store
sales for domestic company-owned restaurants as well as system-wide domestic restaurants. Domestic same store sales growth
is driven by increases in transactions and average transaction size. Transaction size increases are driven by price increases or
favorable mix shift from either an increase in items purchased or shifts into higher priced items.

EBITDA and Adjusted EBITDA. We define EBITDA as net income before interest expense, net, income tax expense (benefit),
and depreciation and amortization. We define Adjusted EBITDA as net income before interest expense, net, income tax
expense (benefit), and depreciation and amortization, with further adjustments for losses on debt extinguishment and financing
transactions,
transaction costs, costs and fees associated with investments in our strategic initiatives, and stock-based
compensation expense. For a reconciliation of net income to EBITDA and Adjusted EBITDA and for further discussion of
EBITDA and Adjusted EBITDA as non-GAAP measures and how we utilize them, see footnote 2 below.

Adjusted Net Income and Adjusted Earnings Per Diluted Share. We define Adjusted net income as net income adjusted for
losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our
strategic initiatives, and related tax adjustments that management believes are not indicative of the Company’s core operating
results or business outlook over the long-term. We define Adjusted earnings per diluted share as Adjusted net income divided
by weighted average diluted share count. For a reconciliation of net income to Adjusted net income and for further discussion
of Adjusted net income and Adjusted earnings per diluted share as non-GAAP measures and how we utilize them, see footnote
3 below.

32

The following table sets forth our key performance indicators for the fiscal years ended December 30, 2023 and December 31,
2022 (in thousands, except unit data):

Number of system-wide restaurants at period end
System-wide sales(1)
Domestic AUV
Domestic same store sales growth(2)
Company-owned domestic same store sales growth(2)
Total revenue

Net income
Adjusted EBITDA(3)
Adjusted net income(4)

Year ended

December 30, 2023

December 31, 2022

2,214

3,482,370

1,827

18.3 %

8.2 %

460,055

70,175

146,484

74,089

$

$

$

$

$

$

$

$

$

$

$

$

1,959

2,738,920

1,606

3.4 %

1.0 %

357,521

52,947

107,644

54,466

(1) The percentage of system-wide sales attributable to company-owned restaurants was 2.8% and 2.9% for the fiscal years
ended December 30, 2023 and December 31, 2022, respectively. The remainder was generated by franchised restaurants, as
reported by our franchisees.

(2) Fiscal 2022 included a 53rd week; same store sales percentages were calculated excluding the 53rd week.

(3) EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in
accordance with, accounting principles generally accepted in the United States (“GAAP”). EBITDA and Adjusted EBITDA
should not be considered as an alternative to net income or any other performance measure derived in accordance with
GAAP. These should not be viewed as an alternative to cash flows from operating activities as a measure of our liquidity.

We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not
be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA
and Adjusted EBITDA in the same manner. We present EBITDA and Adjusted EBITDA because we consider them to be
important supplemental measures of our performance and believe they are frequently used by securities analysts, investors,
investors’
and other interested parties in the evaluation of companies in our industry. Management believes that
understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for
comparing our ongoing results of operations. Many investors are interested in understanding the performance of our
business by comparing our results from ongoing operations on a period-over-period basis and would ordinarily add back
non-cash expenses such as depreciation and amortization, as well as items that are not part of normal day-to-day operations
of our business.

Management uses EBITDA and Adjusted EBITDA:

•

•

•

•

•

as a measurement of operating performance because they assist us in comparing the operating performance of our
restaurants on a consistent basis, as they remove the impact of items not directly resulting from our core operations;

for planning purposes, including the preparation of our internal annual operating budget and financial projections;

to evaluate the performance and effectiveness of our operational strategies;

to evaluate our capacity to fund capital expenditures and expand our business; and

to calculate incentive compensation payments for our employees, including assessing performance under our annual
incentive compensation plan and determining the vesting of performance-based equity awards.

By providing these non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure,
we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting
investors in evaluating how well we are executing our strategic initiatives. EBITDA and Adjusted EBITDA have limitations
as analytical tools and should not be considered in isolation, or as an alternative to, or a substitute for net income or other
financial statement data presented in our consolidated financial statements as indicators of financial performance. Some of
the limitations are:

•

such measures do not reflect our cash expenditures or future requirements for capital expenditures or contractual
commitments;

33

•

•

•

•

•

such measures do not reflect changes in, or cash requirements for, our working capital needs;

such measures do not reflect the interest expense or the cash requirements necessary to service interest or principal
payments on our debt;

such measures do not reflect our tax expense or the cash requirements to pay our taxes;

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often
have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and

other companies in our industry may calculate such measures differently than we do, limiting their usefulness as
comparative measures.

Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash
available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our
GAAP results and using these non-GAAP measures only as performance measures and only supplementally. As noted in the
table below, Adjusted EBITDA includes adjustments for losses on debt extinguishment and financing transactions,
transaction costs, costs and fees associated with investments in our strategic initiatives, and stock-based compensation
expense. We believe these adjustments are appropriate because the amounts recognized can vary significantly from period to
period, do not directly relate to the ongoing operations of our restaurants, and complicate comparisons of our internal
operating results and operating results of other restaurant companies over time. Each of the normal recurring adjustments
and other adjustments described in this paragraph and in the reconciliation table below help management measure our core
operating performance over time by removing items that are not related to day-to-day operations.

The following table reconciles net income to EBITDA and adjusted EBITDA for the fiscal years ended December 30, 2023
and December 31, 2022 (in thousands):

Net income

Interest expense, net

Income tax expense

Depreciation and amortization

EBITDA

Additional adjustments:
Loss on debt extinguishment and financing transactions (a)
Consulting fees (b)
Stock-based compensation expense (c)
Adjusted EBITDA

Year ended

December 30,
2023

December 31,
2022

70,175

$

18,227

24,135

13,239

125,776

$

—

5,150

15,558
146,484

$

52,947

21,230

16,369

10,899

101,445

1,124

875

4,200
107,644

$

$

$

(a) Represents costs and expenses related to our 2022 securitized financing facility and payment of a special dividend, as well
as the extinguishment of our 2020 variable funding note facility; all transaction costs are included in Loss on debt
extinguishment and financing transactions during the year ended December 31, 2022, with the exception of $310,000 that is
included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

(b) Represents non-recurring consulting fees that are not part of our ongoing operations and are incurred to execute discrete,
project-based strategic initiatives, which are included in Selling, general and administrative on the Consolidated Statements
of Comprehensive Income. Fiscal year 2022 includes approximately $0.5 million of third-party consulting fees incurred
relating to a strategic initiative to consider the development of a business plan and financial model for potential vertical
integration of a poultry complex, which review was completed in fiscal year 2022. Fiscal years 2023 and 2022 include
approximately $5.2 million and $0.4 million, respectively, in consulting fees relating to a comprehensive review of our long-
term growth strategy for our domestic business to explore potential future initiatives, and which review was completed in
fiscal year 2023. Given the magnitude and scope of these two strategic review initiatives that are not expected to recur in the

34

foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiatives not
reflective of the ongoing costs to operate its business.

(c) Includes non-cash, stock-based compensation, net of forfeitures.

(4) Adjusted net income and adjusted earnings per diluted share are supplemental measures of operating performance that do not
represent and should not be considered alternatives to net income and earnings per share, as determined by GAAP. These
measures have not been prepared in accordance with Article 11 of Regulation S-X promulgated under the Securities Act.
Management believes adjusted net income and adjusted earnings per diluted share supplement GAAP measures and enable
management to more effectively evaluate the Company’s performance period-over-period and relative to competitors.

The following table reconciles net income to adjusted net income and calculates adjusted earnings per diluted share for the
fiscal years ended December 30, 2023 and December 31, 2022 (in thousands):

Numerator:

Net income

Adjustments:

Loss on debt extinguishment and financing transactions (a)
Consulting fees (b)
Tax effect of adjustments (c)
Adjusted net income

Denominator:

Weighted-average shares outstanding - diluted

Adjusted earnings per diluted share

Year Ended

December 30,
2023

December 31,
2022

70,175 $

52,947

—

5,150

(1,236)

74,089 $

29,856

2.48 $

1,124

875

(480)

54,466

29,963

1.82

$

$

$

(a) Represents costs and expenses related to our 2022 securitized financing facility and payment of a special dividend, as well
as the extinguishment of our 2020 variable funding note facility; all transaction costs are included in Loss on debt
extinguishment and financing transactions during the year ended December 31, 2022, with the exception of $310,000 that is
included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

(b) Represents non-recurring consulting fees that are not part of our ongoing operations and are incurred to execute discrete,
project-based strategic initiatives, which are included in Selling, general and administrative on the Consolidated Statements
of Comprehensive Income. Fiscal year 2022 includes approximately $0.5 million of third-party consulting fees incurred
relating to a strategic initiative to consider the development of a business plan and financial model for potential vertical
integration of a poultry complex, which review was completed in fiscal year 2022. Fiscal years 2023 and 2022 include
approximately $5.2 million and $0.4 million, respectively, in consulting fees relating to a comprehensive review of our long-
term growth strategy for our domestic business to explore potential future initiatives, and which review was completed in
fiscal year 2023. Given the magnitude and scope of these two strategic review initiatives that are not expected to recur in the
foreseeable future, the Company considers the incremental consulting fees incurred with respect to the initiatives not
reflective of the ongoing costs to operate its business.

(c) Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax
rate of 24% for the periods ended December 30, 2023 and December 31, 2022, which includes provisions for U.S. federal
income taxes, and assumes the respective statutory rates for applicable state and local jurisdictions.

35

Results of Operations

Year ended December 30, 2023 compared to year ended December 31, 2022

The following table sets forth certain income and expense items included in the Consolidated Statements of Comprehensive
Income for fiscal year 2023 and fiscal year 2022 (in thousands, except for percentages):

Year ended

Increase / (Decrease)

December 30,
2023

December 31,
2022

$

%

Revenue:

Royalty revenue, franchise fees and other

$

207,077

$

158,614

$

48,463

Advertising fees

Company-owned restaurant sales

Total revenue

Costs and expenses:
Cost of sales (1)
Advertising expenses

Selling, general and administrative

Depreciation and amortization

Loss on disposal of assets

Total costs and expenses

Operating income

Interest expense, net

Loss on debt extinguishment and financing transactions

Other (income) expense

Income before income tax expense

Income tax expense

Net income

157,138

95,840

460,055

70,646

166,583

96,898

13,239

95

347,461

112,594

18,227

—

57

94,310

24,135

119,011

79,896

357,521

63,395

123,069

67,061

10,899

1,164

265,588

91,933

21,230

814

573

69,316

16,369

38,127

15,944

102,534

7,251

43,514

29,837

2,340

30.6 %

32.0 %

20.0 %

28.7 %

11.4 %

35.4 %

44.5 %

21.5 %

(1,069)

(91.8)%

81,873

20,661

30.8 %

22.5 %

(3,003)

(14.1)%

(814)

(516)

(100.0)%

(90.1)%

24,994

7,766

36.1 %

47.4 %

32.5 %

$

70,175

$

52,947

$

17,228

(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, but excludes

depreciation and amortization, which are presented separately.

Revenue

During fiscal year 2023, total revenue was $460.1 million, an increase of $102.5 million, or 28.7%, compared to $357.5 million
in the prior fiscal year.

Royalty revenue, franchise fees and other increased $48.5 million, of which $25.6 million was due to domestic same store sales
growth of 18.3%, and $16.5 million was due to net new franchise development since December 31, 2022. Other revenue
increased by $4.2 million primarily due to an increase in vendor rebates. These increases were partially offset by approximately
$3.0 million in royalties from the 53rd week in the prior fiscal year.

Advertising fees increased $38.1 million, of which $34.6 million was due to a 27.1% increase in system-wide sales during fiscal
year 2023, and $6.2 million was due to an increase in the national advertising fund contribution rate to 5% from 4% effective
the first day of the fiscal second quarter 2022. These increases were partially offset by approximately $2.7 million in
advertising fees from the 53rd week in the prior fiscal year.

Company-owned restaurant sales increased $15.9 million primarily due to an increase of $10.3 million related to the increase in
the number of company-owned restaurants as compared to the prior fiscal year, as well as an increase of $7.1 million related to
company-owned same store sales growth of 8.2%, which was driven by an increase in transactions. These increases were
partially offset by approximately $1.5 million in sales from the 53rd week in the prior fiscal year.

36

Cost of sales

Food, beverage and packaging costs
Labor costs
Other restaurant operating expenses
Vendor rebates
Total cost of sales

Year ended

December 30,
2023

As a % of
company-owned
restaurant sales

Year ended

December 31,
2022

As a % of
company-owned
restaurant sales

$

$

31,697
22,963
18,314
(2,328)
70,646

33.1 % $
24.0 %
19.1 %
(2.4)%
73.7 % $

30,579
19,234
15,380
(1,798)
63,395

38.3 %
24.1 %
19.3 %
(2.3)%
79.3 %

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 33.1% in fiscal year 2023
compared to 38.3% in the prior fiscal year. The decrease is primarily due to a 27.1% decrease in the cost of bone-in chicken
wings as compared to the prior year period.

Labor costs as a percentage of company-owned restaurant sales were 24.0% in fiscal year 2023 compared to 24.1% in the prior
fiscal year. The decrease is primarily due to sales leverage related to the company-owned domestic same store sales increase of
8.2%, offset by an increase in company-owned restaurant wages.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 19.1% in fiscal year 2023
compared to 19.3% in the prior fiscal year. The decrease is primarily related to a decrease in pre-opening expenses as compared
to the prior year fiscal period, offset by an increase in the national advertising fund contribution rate to 5% from 4% effective
the first day of the fiscal second quarter 2022.

Advertising expenses

Advertising expenses were $166.6 million, an increase of $43.5 million, compared to $123.1 million in fiscal year 2022.
Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to
the actual timing of the related advertising spend.

Selling, general and administrative (“SG&A”)

SG&A was $96.9 million in fiscal year 2023, an increase of $29.8 million, or 44.5%, compared to $67.1 million in the prior
fiscal year. The prior fiscal year was impacted by the benefit of $5.4 million in forfeited stock awards, offset by additional
expenses of approximately $1.0 million in expenses related to the 53rd week. In fiscal year 2023, incentive compensation and
performance-based stock compensation expense increased $9.3 million primarily related to the Company’s current fiscal year
performance, professional and consulting fees increased $7.2 million associated with the Company’s strategic initiatives, and
headcount related expenses increased $4.1 million to support the growth in our business.

Depreciation and amortization

Depreciation and amortization was $13.2 million in fiscal year 2023, an increase of $2.3 million, or 21.5%, compared to $10.9
million in the prior fiscal year. The increase in depreciation and amortization was primarily due to capital expenditures related
to our technology investments, partially offset by an estimated $0.3 million related to the 53rd week in the prior fiscal year.

Interest expense, net

Interest expense, net was $18.2 million in fiscal year 2023, a decrease of $3.0 million, or 14.1%, compared to $21.2 million in
the prior fiscal year. The decrease was due to $3.9 million of additional interest income earned during fiscal year 2023, as well
as approximately $0.4 million in interest expense related to the 53rd week in the prior fiscal year. These decreases were partially

37

offset by an increase in interest expense related to the securitized financing transaction completed on March 9, 2022, which
increased our outstanding debt by $250 million.

Loss on debt extinguishment and financing transactions

Loss on debt extinguishment and financing transactions was $0.8 million during fiscal year 2022 due to costs and fees
associated with the extinguishment of our 2020 variable funding note facility on March 9, 2022.

Income tax expense

The effective tax rate in fiscal year 2023 was 25.6%, compared to an effective tax rate of 23.6% in the prior fiscal year. The
increase in the effective tax rate was primarily due to the impact of tax benefits associated with stock awards forfeited during
fiscal year 2022.

Liquidity and Capital Resources

General. Our primary sources of liquidity and capital resources are cash provided from operating activities, cash and cash
equivalents on hand, and borrowings available under our securitized financing facility. Our primary requirements for liquidity
and capital are working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements,
and dividend payments. Historically, we have operated with minimal positive working capital or with negative working capital.
We generally utilize available cash flows from operations to invest in our business, service our debt obligations, and pay
dividends.

Our primary sources of short-term and long-term liquidity are expected to be cash flows from operations and available
borrowings under our 2022 Variable Funding Notes (defined below). As of December 30, 2023, the Company had $119.7
million of cash and cash equivalents on its balance sheet, including advertising fund cash and cash equivalents.

Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with our
securitized financing facility including our 2022 Variable Funding Notes, will be sufficient to meet our capital expenditure,
working capital and debt service requirements for at least the next twelve months and the foreseeable future.

The following table shows summary cash flows information for fiscal years 2023 and 2022 (in thousands):

Net cash provided by (used in):

Operating activities

Investing activities

Financing activities
Net change in cash, cash equivalents and restricted cash

Year ended

December 30,
2023

December 31,
2022

$

$

121,601

$

(52,153)

(155,487)

(86,039) $

76,238

(28,683)

103,254
150,809

Operating activities. Our cash flows from operating activities are principally driven by sales at both franchise restaurants and
company-owned restaurants, as well as franchise fees. We collect franchise royalties from our franchise owners on a weekly
basis. Restaurant-level operating costs at our company-owned restaurants, unearned franchise fees, and corporate overhead
costs also impact our cash flows from operating activities.

Net cash provided by operating activities was $121.6 million in fiscal year 2023, an increase of $45.4 million from cash
provided by operating activities of $76.2 million in the prior fiscal year. The increase is primarily due to an increase in
operating income, as well as changes in Ad Fund cash and cash equivalents, directly related to the timing of payments for
expenses incurred for national advertising.

Investing activities. Our net cash used in investing activities was $52.2 million in fiscal year 2023, an increase of $23.5 million,
from $28.7 million in fiscal year 2022. The increase in cash used in investing activities was primarily due to an increase in
purchases of property and equipment during the current fiscal year, as well as an increase in restaurant acquisition costs as
compared to the prior fiscal year.

Financing activities. Our net cash used in financing activities was $155.5 million in fiscal year 2023, primarily related to the
repurchase of $125.0 million in common stock under our ASR Agreement, dividend payments of $24.9 million, and repayment
of long-term debt of $3.7 million. Cash provided by financing activities of $103.3 million in fiscal year 2022 was primarily

38

related to the net cash provided by additional borrowings under our 2022 Class A-2 Notes (as defined below) of $250 million,
partially offset by the payment of a special dividend in connection with the securitized financing transaction totaling $119.5
million, as well as deferred financing and other debt related costs incurred of $5.4 million.

Securitized financing facility. On March 9, 2022, the Company completed a securitized financing transaction, pursuant to which
Wingstop Funding LLC (the “Issuer”), a limited purpose, bankruptcy-remote, indirect wholly owned subsidiary of the
Company, issued $250 million of its Series 2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2
Notes”). The Issuer also entered into a revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1
(the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits
borrowings of up to a maximum principal amount of $200 million, subject to certain borrowing conditions, a portion of which
may be used to issue letters of credit. The Company’s existing revolving financing facility of Series 2020-1 Class A-1 Notes
was terminated in connection with the transaction. The proceeds from the securitized financing transaction were used to pay
related transaction fees and expenses, strengthen the Company's liquidity position and for general corporate purposes, which
included a return of capital to the Company’s stockholders.

In addition to the 2022 Notes, the Company’s outstanding debt consists of its existing Series 2020-1 2.84% Fixed Rate Senior
Secured Notes, Class A-2 (the “2020 Notes”). No borrowings were outstanding under the 2022 Variable Funding Notes as of
December 30, 2023.

Dividends. We paid quarterly cash dividends of $0.19 per share of common stock in each of the first two quarters of 2023, and
quarterly cash dividends of $0.22 per share of common stock in both the third and fourth quarters of 2023, resulting in
aggregate quarterly dividend payments of $24.4 million in fiscal year 2023. On February 20, 2024, the Company’s board of
directors approved a dividend of $0.22 per share, to be paid on March 29, 2024 to stockholders of record as of March 8, 2024,
totaling approximately $6.5 million.

We do not currently expect the restrictions in our debt instruments to impact our ability to make regular quarterly dividends
pursuant to our quarterly dividend program. However, any future declarations of dividends, as well as the amount and timing of
such dividends, is 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.

Share Repurchase Program. On August 16, 2023, the Company’s Board of Directors approved a new share repurchase program
with authorization to purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase
Authorization”).

On August 23, 2023, the Company entered into the ASR Agreement with a third-party financial institution to repurchase
$125.0 million of the Company’s common stock as part of the Share Repurchase Authorization. Under the ASR Agreement, the
Company paid the financial institution $125.0 million in cash and received and retired a total of 645,952 shares of common
stock at an average share price of $193.51. Final settlement of the ASR Agreement occurred on December 21, 2023. The total
number of shares repurchased under the ASR Agreement was based on a daily volume-weighted average share price during the
valuation period specified in the ASR Agreement, less a discount and subject to adjustments. As of December 30, 2023,
$125.0 million remained available under the Share Repurchase Authorization.

Contractual Obligations

Our cash requirements greater than twelve months from contractual obligations and commitments include:

Debt Obligations and Interest Payments. Refer to “Note 11 - Debt Obligations” of the Notes to the Consolidated Financial
Statements for further information of our obligations and the timing of expected payments.

Operating Leases. Refer to “Note 12 - Leases” of the Notes to the Consolidated Financial Statements for further information of
our obligations and the timing of expected payments.

Indemnifications. We are parties to certain indemnification obligations to third parties in the ordinary course of business. We
believe the probability of incurring an actual liability under such indemnifications is sufficiently remote so that no liability has
been recorded.

39

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, and expenses. These estimates may require application of management’s most
difficult, subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in
subsequent periods. While we apply our judgment based on assumptions believed to be reasonable under the circumstances,
actual results could vary from these assumptions. It is possible that materially different amounts would be reported using
different assumptions. Our most significant accounting policies and estimates are more fully described in “Note 1 - Basis of
Presentation and Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial Statements.
However, we believe the accounting policies described below are particularly important to the portrayal and understanding of
our financial position and results of operations.

Revenue Recognition

Revenues consist primarily of royalties, national advertising fund contributions, initial and renewal franchise fees, and upfront
fees from development agreements and international territory agreements. The Company's performance obligations under its
franchise agreements consist of (a) a franchise license, (b) pre-opening services, such as training, and (c) ongoing services, such
as management of Ad Fund contributions, development of training materials and menu items, and restaurant monitoring. These
performance obligations are highly interrelated, so they are not considered to be individually distinct and therefore are
accounted for as a single performance obligation, which is satisfied by providing a right to use the Company's intellectual
property over the term of each franchise agreement. Franchise fee, development fee and international territory fee payments
received by the Company before the restaurant opens are recorded as deferred revenue in the Consolidated Balance Sheets.

Royalties, including franchisee contributions to the Ad Fund, are calculated as a percentage of franchise restaurant sales over
the term of the franchise agreement. Initial and renewal franchise fees are payable by the franchisee prior to the restaurant
opening or at the time of a renewal of an existing franchise agreement. The Company's franchise agreement royalties, inclusive
of Ad Fund contributions, represent sales-based royalties that are related entirely to the Company's performance obligation
under the franchise agreement and are recognized as franchised restaurant sales occur, payable weekly. Additionally, initial and
renewal franchise fees are recognized as revenue on a straight-line basis over the term of the respective agreement. The
Company's performance obligation under development agreements and international territory agreements generally consists of
an obligation to grant exclusive development rights over a stated term. These development rights are not distinct from franchise
agreements, so upfront fees paid by franchisees for development rights are apportioned to each franchised restaurant opened
and accounted for as an initial franchise fee.

Item 7A.

Quantitative and Qualitative Disclosures of Market Risks

Commodity Price Risk. We are exposed to market risks from changes in commodity prices. Many of the food products
purchased by us are affected by weather, production, availability, and other factors outside our control. Although we attempt to
minimize the effect of price volatility by negotiating fixed price contracts for the supply of key ingredients, there are no
established fixed price markets for bone-in chicken wings, and as a result we are subject to prevailing market conditions. Bone-
in chicken wings accounted for approximately 16.8% and 23.1% of our company-owned restaurant costs of sales in fiscal years
2023 and 2022. A hypothetical 10.0% increase in the bone-in chicken wing costs in fiscal year 2023 would have increased
company-owned restaurant costs of sales by approximately $1.2 million during the year. We do not engage in speculative
financial transactions nor do we hold or issue financial instruments for trading purposes.

Interest Rate Risk. Our long-term debt, including current portion, consisted entirely of the $720.9 million incurred under the
2022 Notes and 2020 Notes as of December 30, 2023 (excluding unamortized debt
issuance costs). The Company’s
predominantly fixed-rate debt structure has reduced its exposure to interest rate increases that could adversely affect its earnings
and cash flows, but the Company remains exposed to changes in market interest rates reflected in the fair value of the debt and
to the risk that the Company may need to refinance maturing debt with new debt at a higher rate. The Company is exposed to
interest rate increases under the 2022 Variable Funding Notes; however, the Company had no outstanding borrowings under its
2022 Variable Funding Notes as of December 30, 2023.

Item 8.

Financial Statements and Supplementary Data

Information with respect to this Item is set forth beginning on page F-1. See “Item 15. Exhibits and Financial Statement
Schedules” below.

40

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of the design and operation of our disclosure controls and procedures, pursuant to Rule 13a-15 under the Exchange Act, as of
the end of the period covered by this Annual Report on Form 10-K. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and
procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in
evaluating the benefits of possible controls and procedures relative to their costs.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of December 30, 2023 to provide reasonable assurance that information we are required to disclose
in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act)
that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

The management of Wingstop Inc. is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process to provide
reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting
principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal
control over financial reporting as of December 30, 2023. In making this assessment, we used the criteria set forth by the
Committee of Sponsoring Organizations of
the Treadway Commission in Internal Control-Integrated Framework
(2013). Based on such assessment our management has concluded that, as of December 30, 2023, our internal control over
financial reporting is effective based on those criteria.

KPMG LLP, an independent registered public accounting firm, has issued an attestation report, included herein, on the
effectiveness of our internal control over financial reporting as of December 30, 2023.

41

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Wingstop Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Wingstop Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 30,
2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 30, 2023, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 30, 2023 and December 31, 2022, the related
consolidated statements of comprehensive income, stockholders’ deficit, and cash flows for each of the years in the three-year
period ended December 30, 2023, and the related notes (collectively, the consolidated financial statements), and our report
dated February 21, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Dallas, Texas
February 21, 2024

42

Item 9B.

Other Information

During the quarter ended December 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1
trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

43

Item 10.

Directors, Executive Officers and Corporate Governance

PART III

Information required by this Item 10 will be included in our definitive Proxy Statement for the 2024 Annual Meeting of
Stockholders and such disclosure is incorporated herein by reference.

Item 11.

Executive Compensation

Information required by this Item 11 will be included in our definitive Proxy Statement for the 2024 Annual Meeting of
Stockholders and such disclosure is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this Item 12 will be included in our definitive Proxy Statement for the 2024 Annual Meeting of
Stockholders and such disclosure is incorporated herein by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Information required by this Item 13 will be included in our definitive Proxy Statement for the 2024 Annual Meeting of
Stockholders and such disclosure is incorporated herein by reference.

Item 14.

Principal Accounting Fees and Services

The Company’s independent registered public accounting firm is KPMG LLP. Information required by this Item 14 will be
included in our definitive Proxy Statement for the 2024 Annual Meeting of Stockholders and such disclosure is incorporated
herein by reference.

44

PART IV

Item 15.

Exhibits and Financial Statement Schedules

(a)

Financial Statements

Refer to Index to Financial Statements appearing on Page F-1.

(b)

Financial Statement Schedules

No financial statement schedules are provided because the information called for is not required or is shown in
the financial statements or the notes thereto.

(c)

Exhibits

The exhibits listed below are filed or incorporated by reference as a part of this report.

Exhibit No. Description
3.1

Amended and Restated Certificate of Incorporation of Wingstop Inc., as amended through June 15, 2020, filed as
Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 27, 2020 (File
No. 001-37425) and incorporated herein by reference.

3.2

4.1

4.2

4.3

4.4

4.5

10.1

10.2

10.3†

10.4†

10.5†

Amended and Restated Bylaws of Wingstop Inc., effective as of December 1, 2022, filed as Exhibit 3.1 to the
Company’s Current Report on Form 8-K (File No. 001-37425) on December 2, 2022 and incorporated herein by
reference.

Form of Stock Certificate for Common Stock, filed as Exhibit 4.1 to the Company’s Registration Statement on
Form S-1/A (Registration No. 333-203891) on June 2, 2015 and incorporated herein by reference.
Second Amended and Restated Base Indenture, dated as of March 9, 2022, by and between Wingstop Funding
LLC, as Issuer, and Citibank, N.A., as Trustee and Securities Intermediary, filed as Exhibit 4.2 to the Company’s
Current Report on Form 8-K (File No. 001-37425) on March 10, 2022 and incorporated herein by reference.

Series 2020-1 Supplement to Base Indenture, dated as of October 30, 2020, by and between Wingstop Funding
LLC, as Issuer of the Series 2020-1 fixed rate senior secured notes, Class A-2, and Series 2020-1 variable
funding senior secured notes, Class A-1, and Citibank, N.A., as Trustee and Series 2020-1 Securities
Intermediary, filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 001-37425) on
November 2, 2020 and incorporated herein by reference.
Series 2022-1 Supplement to Base Indenture, dated as of March 9, 2022, by and between Wingstop Funding
LLC, as Issuer of the Series 2022-1 fixed rate senior secured notes, Class A-2, and Series 2022-1 variable
funding senior secured notes, Class A-1, and Citibank, N.A., as Trustee and Series 2022-1 Securities
Intermediary, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 001-37425) on March
10, 2022 and incorporated herein by reference.

Description of Wingstop Inc. Common Stock, filed as Exhibit 4.4 to the Company’s Annual Report on Form 10-
K for the fiscal year ended December 25, 2021 (File No. 001-37425) and incorporated herein by reference.
Amended and Restated Guarantee and Collateral Agreement, dated as of October 30, 2020, by and among
Wingstop Guarantor LLC and Wingstop Franchising LLC, each as a Guarantor, in favor of Citibank, N.A., as
Trustee, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-37425) on November
2, 2020 and incorporated herein by reference.

Amended and Restated Management Agreement, dated as of October 30, 2020, by and among Wingstop
Funding LLC, Wingstop Franchising LLC, Wingstop Guarantor LLC, Wingstop Restaurants Inc., as Manager,
and Citibank, N.A., as Trustee, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No.
001-37425) on November 2, 2020 and incorporated herein by reference.

Wingstop Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.18 to the Company’s
Registration Statement on Form S-1/A (Registration No. 333-203891) on June 2, 2015 and incorporated herein
by reference.

Amendment One to the Wingstop Inc. 2015 Omnibus Incentive Compensation Plan, effective as of June 11,
2015, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June
27, 2015 (File No. 001-37425) and incorporated herein by reference.

Amendment Two to the Wingstop Inc. 2015 Omnibus Incentive Compensation Plan, effective as of August 3,
2017, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2017 (File No. 001-37425) and incorporated herein by reference.

45

10.6†

10.7†

10.8†

10.9†

10.10†

10.11†

10.12†

10.13†

10.14†

10.15

21.1*

23.1*

31.1*

31.2*

32.1**

32.2**

97.1*†

Amended and Restated Form of Performance-based Restricted Stock Unit Award Agreement under the
Wingstop Inc. 2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended March 28, 2020 (File No. 001-37425) and incorporated
herein by reference.

Amended and Restated Form of Service-based Restricted Stock Unit Award Agreement under the Wingstop Inc.
2015 Omnibus Incentive Compensation Plan, filed as Exhibit 10.14 to the Company’s Annual Report on Form
10-K for the fiscal year ended December 28, 2019 (File No. 001-37425) and incorporated herein by reference.

Amended and Restated Form of Restricted Stock Award Agreement under the Wingstop Inc. 2015 Omnibus
Incentive Compensation Plan, filed as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the
fiscal year ended December 28, 2019 (File No. 001-37425) and incorporated herein by reference.

Amended and Restated Form of Stock Option Award Agreement under the Wingstop Inc. 2015 Omnibus
Incentive Compensation Plan, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended March 28, 2020 (File No. 001-37425) and incorporated herein by reference.

Wingstop Inc. Amended and Restated Executive Severance Plan, effective May 26, 2022, filed as Exhibit 10.1 to
the Company’s Current Report on Form 8-K (File No. 001-37425) on May 27, 2022 and incorporated herein by
reference.

Form of Wingstop Inc. Executive Severance Plan Participation Agreement, filed as Exhibit 10.2 to the
Company’s Current Report on Form 8-K (File No. 001-37425) on May 27, 2022 and incorporated herein by
reference.

Form of Indemnification Agreement, filed as Exhibit 10.16 to the Company’s Registration Statement on Form
S-1/A (Registration No. 333-203891) on June 2, 2015 and incorporated herein by reference.
Wingstop Inc. Employee Stock Purchase Plan, filed as Exhibit 10.4 to the Company’s Quarterly Report on Form
10-Q for the quarterly period ended March 30, 2019 (File No. 001-37425) and incorporated herein by reference.
Offer Letter between Wingstop Inc. and Michael J. Skipworth, dated April 25, 2022, filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K (File No. 001-37425) on April 29, 2022 and incorporated herein by
reference.

Class A-1 Note Purchase Agreement, dated as of March 9, 2022, by and among Wingstop Funding LLC, as
Issuer, each of Wingstop Guarantor LLC and Wingstop Franchising LLC, each as a Guarantor, Wingstop
Restaurants Inc., as Manager, the conduit investors party thereto, the financial institutions party thereto, certain
funding agents, Morgan Stanley Asset Funding Inc., as Administrative Agent and Morgan Stanley Bank, N.A.,
as L/C Provider, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-37425) on
March 10, 2022 and incorporated herein by reference.

List of Subsidiaries of Wingstop Inc.

Consent of KPMG LLP, independent registered public accounting firm.

Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
Wingstop Inc. Clawback Policy.

101.INS*

Inline XBRL Instance Document (XBRL tags are embedded within the Inline XBRL document).

101.SCH*

Inline XBRL Taxonomy Extension Schema Document.

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

___________________
* Filed herewith.
** The certifications attached as Exhibits 32.1 and 32.2 furnished herewith are not deemed “filed” with the SEC and are not to
be incorporated by reference into any filing of Wingstop Inc. under the Securities Act or the Exchange Act, whether made
before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in
such filing except to the extent the registrant specifically incorporates it by reference.
† Indicates management contract or compensatory plan or arrangement.

46

Item 16.

Form 10-K Summary

None.

47

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

Signatures

Wingstop Inc.

/s/ Michael J. Skipworth

Michael J. Skipworth

President and Chief Executive Officer
(Principal Executive Officer)

February 21, 2024

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Name

Title

Date

/s/ Michael J. Skipworth
Michael J. Skipworth

President and Chief Executive Officer, Director
(Principal Executive Officer)

February 21, 2024

/s/ Alex R. Kaleida
Alex R. Kaleida

Chief Financial Officer
(Principal Financial and Accounting Officer)

February 21, 2024

/s/ Lynn Crump-Caine
Lynn Crump-Caine

/s/ Krishnan Anand
Krishnan Anand

/s/ David L. Goebel
David L. Goebel

/s/ Michael J. Hislop
Michael J. Hislop

/s/ Kate S. Lavelle
Kate S. Lavelle

/s/ Kilandigalu M. Madati
Kilandigalu M. Madati

/s/ Wesley S. McDonald
Wesley S. McDonald

/s/ Anna M. Smith
Anna M. Smith

Chair of the Board

February 21, 2024

Director

Director

Director

Director

Director

Director

Director

48

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID 185)

Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022

Consolidated Statements of Comprehensive Income for the fiscal years ended December 30, 2023, December 31,
2022, and December 25, 2021

Consolidated Statements of Stockholders’ Deficit for the fiscal years ended December 30, 2023, December 31, 2022,
and December 25, 2021

Consolidated Statements of Cash Flows for the fiscal years ended December 30, 2023, December 31, 2022, and
December 25, 2021

Notes to Consolidated Financial Statements for the fiscal years ended December 30, 2023, December 31, 2022, and
December 25, 2021

2

4

5

6

7

8

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Wingstop Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Wingstop Inc. and subsidiaries (the Company) as of
December 30, 2023 and December 31, 2022, the related consolidated statements of comprehensive income, stockholders’
deficit, and cash flows for each of the years in the three-year period ended December 30, 2023, and the related notes
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 30, 2023 and December 31, 2022, and the results of its
operations and its cash flows for each of the years in the three-year period ended December 30, 2023, in conformity with U.S.
generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 30, 2023, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 21, 2024 expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the sufficiency of audit evidence obtained over royalty revenue and advertising fees

As discussed in Notes 1 and 17 to the consolidated financial statements, the Company recognized $186.5 million of royalty
revenue and $157.1 million of advertising fees for the year ended December 30, 2023. Royalty revenue and advertising
fees are calculated as a percentage of franchise restaurant sales over the term of the franchise agreement.

We identified the evaluation of the sufficiency of audit evidence obtained over royalty revenue and advertising fees as a
critical audit matter. This evaluation required subjective auditor judgement due to the highly automated nature of certain
processes to record revenue that involve interfacing data across multiple IT systems. The complexity of the IT environment
required the involvement of IT professionals with specialized skills and knowledge.

The following are the primary procedures performed to address this critical audit matter. We applied auditor judgement to
determine the nature and extent of procedures to be performed over the processing and recording of revenue, including the

F-2

determination of IT systems for which those procedures were performed. We evaluated the design and tested the operating
effectiveness of certain internal controls related to the processing and recording of revenue. We involved IT professionals
with specialized skills and knowledge who assisted in testing certain general IT and automated internal controls over IT
systems used for the processing and recording of revenue. We compared revenue recognized to cash received for royalty
revenue and advertising fees. We confirmed with a sample of franchisees regarding the amount of royalties and advertising
fees that they owed to the Company. In addition, we evaluated the overall sufficiency of the audit evidence obtained over
royalty revenue and advertising fees by assessing the results of procedures performed.

/s/ KPMG LLP

We have served as the Company’s auditor since 2019.

Dallas, Texas
February 21, 2024

F-3

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in thousands, except share and par value data)

December 30,
2023

December 31,
2022

Assets

Current assets

Cash and cash equivalents

Restricted cash

Accounts receivable, net

Prepaid expenses and other current assets

Advertising fund assets, restricted

Total current assets

Property and equipment, net

Goodwill

Trademarks

Customer relationships, net

Other non-current assets

Total assets

Liabilities and stockholders' deficit

Current liabilities

Accounts payable

Other current liabilities

Current portion of debt

Advertising fund liabilities

Total current liabilities

Long-term debt, net

Deferred revenues, net of current

Deferred income tax liabilities, net

Other non-current liabilities

Total liabilities

Commitments and contingencies (see Note 13)
Stockholders' deficit

Common stock, $0.01 par value; 100,000,000 shares authorized; 29,337,920 and
29,932,668 shares issued and outstanding as of December 30, 2023 and
December 31, 2022, respectively

Additional paid-in-capital

Retained deficit

Accumulated other comprehensive loss

Total stockholders' deficit
Total liabilities and stockholders' deficit

See accompanying notes to consolidated financial statements.

F-4

$

$

$

$

90,216

$

11,444

12,408

4,948

25,328

144,344

91,292

67,708

32,700

7,740

34,041
377,825

$

4,725

$

40,951

—

25,328

71,004

712,327

30,145

3,721

17,994

835,191

184,496

13,296

9,461

4,252

15,167

226,672

66,851

62,514

32,700

9,015

26,438
424,190

5,219

34,726

7,300

15,167

62,412

706,846

27,052

4,180

14,561

815,051

293

2,676

(459,994)

(341)

(457,366)
377,825

$

300

2,797

(393,321)

(637)

(390,861)
424,190

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(amounts in thousands, except per share data)

Revenue:

Royalty revenue, franchise fees and other
Advertising fees
Company-owned restaurant sales

Total revenue
Costs and expenses:
Cost of sales (1)
Advertising expenses
Selling, general and administrative
Depreciation and amortization

Loss on disposal of assets

Total costs and expenses

Operating income
Interest expense, net
Loss on debt extinguishment and financing transactions
Other (income) expense
Income before income tax expense
Income tax expense
Net income

Earnings per share

Basic
Diluted

Weighted average shares outstanding

Basic
Diluted

Dividends per share

Other comprehensive income (loss)
Currency translation adjustment

Other comprehensive income (loss)

Comprehensive income

Fiscal Year Ended

December 30,
2023

December 31,
2022

December 25,
2021

$

$

$
$

$

$

$

207,077
157,138
95,840
460,055

70,646
166,583
96,898
13,239

95
347,461
112,594
18,227
—
57
94,310
24,135
70,175

2.36
2.35

$

$

$
$

158,614
119,011
79,896
357,521

63,395
123,069
67,061
10,899

1,164
265,588
91,933
21,230
814
573
69,316
16,369
52,947

1.77
1.77

$

$

$
$

130,676
81,529
70,297
282,502

57,416
83,989
62,895
7,943

(3,497)
208,746
73,756
14,984
—
(135)
58,907
16,249
42,658

1.43
1.42

29,769
29,856

29,893
29,963

29,769
29,944

0.82

$

4.72

$

0.62

296
296
70,471

$

$

(381) $
(381)
52,566

$

(256)
(256)
42,402

(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes
depreciation and amortization, which are presented separately.

See accompanying notes to consolidated financial statements.

F-5

Accumulated
Other
Comprehensive
Loss

—

—

—

—

—

—

(256)

(256)

—

—

—

—

—

(381)

(637)

—

—

—

—

—
—

296

(341)

Total
Stockholders’
Deficit
(341,310)

42,658

748

(1,915)

9,631

(19,081)

(256)

(309,525)

52,947

3,315

(315)

4,200

(141,102)

(381)

(390,861)

70,175

951

(2,480)

15,558

(24,729)
(126,276)

296

(457,366)

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Deficit
(amounts in thousands, except share data)

Common Stock

Shares
29,687,123

Amount
297

Additional
Paid-In Capital
421

Balance at December 26, 2020

Net income

Shares issued under stock plans
Tax payments for restricted stock
upon vesting

Stock-based compensation expense
Dividends declared on common
stock and equivalents

Currency translation adjustment

—

161,873

(11,542)

—

—

—

—

2

—

—

—

—

Balance at December 25, 2021

29,837,454

299

Net income

Shares issued under stock plans
Tax payments for restricted stock
upon vesting

Stock-based compensation expense
Dividends declared on common
stock and equivalents

Currency translation adjustment

—

97,281

(2,067)

—

—

—

—

1

—

—

—

—

Retained
Deficit
(342,028)

42,658

—

(1,915)

—

—

746

—

9,631

(10,335)

(8,746)

—

463

—

3,314

—

4,200

—

(310,031)

52,947

—

(315)

—

(5,180)

(135,922)

—

—

Balance at December 31, 2022

29,932,668

300

2,797

(393,321)

Net income

Shares issued under stock plans
Tax payments for restricted stock
upon vesting

Stock-based compensation expense
Dividends declared on common
stock and equivalents
Purchases of common stock

Currency translation adjustment

—

65,779

(14,575)

—

—
(645,952)

—

—

—

—

—

—
(7)

—

—

951

70,175

—

—

(2,480)

15,558

—

(16,239)
(391)

(8,490)
(125,878)

—

—

Balance at December 30, 2023

29,337,920

293

2,676

(459,994)

See accompanying notes to consolidated financial statements.

F-6

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(amounts in thousands)

Operating activities

Net income

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization

Deferred income taxes

Stock-based compensation expense

Loss (gain) on disposal of assets

Loss on debt extinguishment

Amortization of debt issuance costs

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other assets

Advertising fund assets and liabilities, net

Accounts payable and other current liabilities

Deferred revenue

Other non-current liabilities

Cash provided by operating activities

Investing activities

Purchases of property and equipment

Acquisitions of restaurants from franchisees

Proceeds from sales of assets

Payments for investments

Cash used in investing activities

Financing activities

Proceeds from exercise of stock options

Purchases of common stock
Borrowings of long-term debt

Repayments of long-term debt
Payment of deferred financing costs and other debt-related costs

Tax payments for restricted stock upon vesting

Dividends paid

Cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period

Supplemental information:

Accrued capital expenditures

Cash paid for interest
Cash paid for taxes

See accompanying notes to consolidated financial statements.

F-7

Fiscal Year Ended

December 30,
2023

December 31,
2022

December 25,
2021

$

70,175

$

52,947

$

42,658

13,239

(1,551)

15,558

95

—

2,043

10,899

(3,252)

4,200

1,164

814

1,939

(2,947)

(2,468)

599

10,093

10,634

3,593

70

584

5,048

5,102

(712)

(27)

7,943

2,953

9,631

(3,497)

—

1,401

(2,135)

(2,659)

(10,723)

(268)

3,386

188

121,601

76,238

48,878

(40,833)

(10,832)

320

(808)

(23,940)

(7,809)

4,063

(997)

(28,021)

(4,876)

7,207

(4,163)

(52,153)

(28,683)

(29,853)

951

(125,401)
—

(3,650)
—

(2,480)

3,315

—
250,000

(3,025)
(5,442)

(315)

(24,907)

(141,279)

(155,487)

103,254

(86,039)

205,715
119,676

2,963

22,740
27,918

150,809

54,906
205,715

7,273

20,480
13,584

$

$

$
$

$

$

$
$

$

$

$
$

748

—
—

(2,400)
—

(1,915)

(19,822)

(23,389)

(4,364)

59,270
54,906

5,074

15,035
10,423

WINGSTOP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(1)

Basis of Presentation and Summary of Significant Accounting Policies

Overview

Wingstop Inc., together with its consolidated subsidiaries (collectively, “Wingstop” or the “Company”), is in the business of
s
franchising and operating Wingstop restaurants. As of December 30, 2023, the Company had a total of 2,214 restaurants in it
l
system. The Company's restaurant base is 98% franchised, with 2,165 franchised restaurants (including 288 internationa
r
restaurants) and 49 company-owned restaurants as of December 30, 2023. The Company operates as a single segment fo
reporting purposes.

Summary of Significant Accounting Policies

(a)

Principles of Consolidation

.
The accompanying consolidated financial statements include the accounts of Wingstop Inc. and its wholly owned subsidiaries
All intercompany balances and transactions have been eliminated in consolidation.

(b)

Fiscal Year End

d
The Company uses a 52/53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2023, 2022, an
2021 included 52, 53, and 52 weeks, respectively. The 53rd week in fiscal 2022 fell in the fourth fiscal quarter.

(c)

Use of Estimates

s
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) require
d
management to make estimates and assumptions, primarily related to long-lived asset valuation, indefinite and finite live
k
intangible asset valuation, income taxes, investments, leases, stock-based compensation, contingencies, and common stoc
equity valuations. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses
during the period. Although management bases its estimates on historical experience and assumptions that are believed to be
reasonable under the circumstances, actual results could differ from those estimates.

(d)

Cash, Cash Equivalents, and Restricted Cash

s
The Company continually monitors its positions with, and the credit quality of, the financial institutions in which it maintain
its deposits and investments. As of December 30, 2023 and December 31, 2022, the Company maintained balances in various
cash accounts in excess of federally insured limits. All highly liquid instruments purchased with an original maturity of
three months or less are considered cash equivalents.

s
Restricted cash includes cash and cash equivalents held for future principal and interest payments as required by the Company'
s
debt agreements (see Note 11). The Company also has Advertising fund restricted cash, which can only be used for activitie
related to the promotion of the Wingstop brand.

F-8

Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets that are included in the Consolidated
Statements of Cash Flows as of December 30, 2023 and December 31, 2022 were as follows (in thousands):

Cash and cash equivalents

Restricted cash

Restricted cash, included in Advertising fund assets, restricted

Total cash, cash equivalents, and restricted cash

(e)

Accounts Receivable

December 30, 2023

December 31, 2022

$

$

90,216

$

11,444

18,016

119,676

$

184,496

13,296

7,923

205,715

Accounts receivable, net of allowance for doubtful accounts, consists primarily of accrued royalty fee receivables, collected
weekly in arrears, and vendor rebates. Management determines the allowance for doubtful accounts based on historical losses
and current economic conditions. On a continuing basis, management analyzes delinquent receivables, which are charged off
against the existing allowance account when determined to be uncollectible.

(f)

Inventories

Inventories, which consist of food and beverage products, paper goods, and supplies, are valued at the lower of cost (first-in,
first-out) or net realizable value.

(g)

Property and Equipment

Property and equipment is recorded at cost less accumulated depreciation. Property and equipment is depreciated based on the
straight-line method over the following estimated useful lives:

Property and Equipment

Estimated Useful Lives

Building

Leasehold and other improvements

Equipment, furniture and fixtures

Computer software

40 years

Lesser of 7 to 10 years or the expected lease term

3 to 7 years

3 years

At the time property and equipment are retired, the asset and accumulated depreciation are removed from the accounts, and any
resulting gain or loss is included in earnings. The Company expenses repair and maintenance costs that maintain the appearance
and functionality of the restaurant but do not extend the useful life of any restaurant asset. Improvements to leased properties
are depreciated over the shorter of their useful life or the lease term, which includes a fixed, non-cancelable lease term plus any
reasonably assured renewal periods. See Note 6 for additional information.

(h)

Impairment or Disposal of Long-Lived Assets

Property and equipment and finite-life intangible assets are reviewed for impairment periodically and whenever events or
changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company’s assessment of
recoverability of property and equipment and finite-lived intangible assets is performed at the component level, which is
generally an individual restaurant and requires judgment and an estimate of future restaurant generated cash flows. The
Company’s estimates of fair values are based on the best information available and require the use of estimates, judgments, and
projections. The Company did not record any impairment losses on long-lived assets in fiscal years 2023, 2022, or 2021.

(i)

Goodwill and Indefinite-Lived Intangible Assets

The Company’s indefinite-lived intangible assets consist of goodwill and trademarks, which are not subject to amortization. We
generally record goodwill in connection with the acquisition of restaurants from franchisees. On an annual basis (October 1st of
each fiscal year) and whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable,
the Company reviews the recoverability of goodwill and indefinite-lived intangible assets. No indications of impairment were
identified during fiscal years 2023, 2022, or 2021.

F-9

It is possible that changes in circumstances or changes in management’s judgments, assumptions, and estimates could result in
an impairment charge of a portion or all of its goodwill or other intangible assets.

(j)

Foreign Currency Translation

The foreign currency translation adjustment included in the Consolidated Statements of Comprehensive Income represents the
unrealized impact of translating our foreign investment. This amount is not included in Net income and would only be realized
upon disposition of our investment. The related Accumulated other comprehensive loss is presented in the Consolidated
Balance Sheets.

(k)

Revenue Recognition

Revenues consist primarily of royalties, national advertising fund (the "Ad Fund") contributions (advertising fees), initial and
renewal franchise fees, and upfront fees from development agreements and international territory agreements. The Company's
performance obligations under its franchise agreements consist of (a) a franchise license, (b) pre-opening services, such as
training, and (c) ongoing services, such as management of the Ad Fund contributions, development of training materials and
menu items, and restaurant monitoring. These performance obligations are highly interrelated, so they are not considered to be
individually distinct and therefore are accounted for as a single performance obligation, which is satisfied by providing a right
to use the Company's intellectual property over the term of each franchise agreement. Franchise fee, development fee and
international territory fee payments received by the Company before the restaurant opens are recorded as deferred revenue in
the Consolidated Balance Sheets.

Royalties, including franchisee contributions to the Ad Fund, are calculated as a percentage of franchise restaurant sales over
the term of the franchise agreement. Initial and renewal franchise fees are payable by the franchisee prior to the restaurant
opening or at the time of a renewal of an existing franchise agreement. The Company's franchise agreement royalties, inclusive
of Ad Fund contributions, represent sales-based royalties that are related entirely to the Company's performance obligation
under the franchise agreement and are recognized as franchised restaurant sales occur, payable weekly. Additionally, initial and
renewal franchise fees are recognized as revenue on a straight-line basis over the term of the respective agreement. The
Company's performance obligation under development agreements and international territory agreements generally consists of
an obligation to grant exclusive development rights over a stated term. These development rights are not distinct from franchise
agreements, so upfront fees paid by franchisees for development rights are apportioned to each franchised restaurant opened
and accounted for as an initial franchise fee.

The Company records food and beverage revenues from company-owned restaurants upon sale to the customer. The Company
collects and remits sales, food and beverage, alcoholic beverage, and hospitality taxes on transactions with customers and
reports such amounts under the net method in its Consolidated Statements of Comprehensive Income. Accordingly, these taxes
are not included in gross revenue.

The Company records a liability in the period in which a gift card is sold. As gift cards are redeemed, the liability is reduced.
When gift cards are redeemed at a franchisee-operated restaurant, the revenue and related administrative costs are recognized
by the franchisee. The Company recognizes revenue and related administrative costs when gift cards are redeemed at company-
owned restaurants.

(l)

Consideration from Vendors

The Company has entered into food and beverage supply agreements with certain major vendors. Pursuant to the terms of these
arrangements, rebates are provided to the Company from the vendors based upon the dollar volume of purchases for company-
owned restaurants and franchised restaurants. These incentives are recognized as earned throughout the year and are classified
as a reduction in Cost of sales with any consideration received in excess of the total expense of the vendor’s products included
within Royalty revenue, franchise fees and other within the Consolidated Statements of Comprehensive Income. The incentives
recognized were approximately $17.7 million, $13.1 million, and $8.7 million, during fiscal years 2023, 2022, and 2021,
respectively, of which $2.3 million, $1.8 million, and $1.6 million was classified as a reduction in Cost of sales during fiscal
years 2023, 2022, and 2021, respectively.

(m)

Advertising Expenses

The Company administers the Ad Fund, for which a percentage of gross sales is collected from domestic restaurant franchisees
and company-owned restaurants to be used for various forms of advertising for the Wingstop brand. Effective the first day of
the fiscal second quarter of 2022, domestic franchisees’ contribution rates to the national advertising fund increased to 5%, up
from 4%, of gross sales. The national advertising fund contribution rate was 4% for fiscal year 2021.

F-10

The Company administers and directs the development of all advertising and promotion programs in the Ad Fund for which it
collects advertising contributions in accordance with the provisions of its franchise agreements. The Company has a contractual
obligation with regard to these advertising contributions. The Company consolidates and reports all assets and liabilities of the
Ad Fund as restricted assets of the Ad Fund and liabilities of the Ad Fund within current assets and current liabilities,
respectively, in the Consolidated Balance Sheets. The assets and liabilities of the Ad Fund consist primarily of cash,
receivables, accrued expenses, and other liabilities. Pursuant to the Company’s franchise agreements, use of Ad Fund
contributions is restricted to advertising, public relations, merchandising, similar activities, and administrative expenses to
increase sales and further enhance the public reputation of the Wingstop brand. The aforementioned administrative expenses
may also include personnel expenses and allocated costs incurred by the Company that are directly associated with
administering the Ad Fund, as outlined in the provisions of the applicable franchise agreements.

The Company expenses the production costs of advertising in the period in which the advertising first occurs. All other
advertising and promotional costs are expensed in the period incurred. When contributions to the Ad Fund exceed the related
advertising expenses, advertising costs are accrued up to the amount of the related contributions. Ad Fund contributions and
expenditures are reported on a gross basis on the Consolidated Statements of Comprehensive Income.

Advertising expenses incurred by company-owned restaurants are included within Cost of sales in the Consolidated Statements
of Comprehensive Income. Company-owned restaurants incurred advertising expenses of $4.9 million, $3.6 million, and $3.3
million in fiscal years 2023, 2022, and 2021, respectively.

(n)

Leases

The Company determines whether an arrangement is a lease at inception and leases restaurants and office space under operating
leases. Most lease agreements contain tenant improvement allowances, rent holidays, rent escalation clauses, and/or contingent
rent provisions. For leases with renewal periods at the Company’s option, the Company determines the expected lease period
based on whether the renewal of any options are reasonably certain at the inception of the lease. For purposes of measurement
and amortization of the right-of-use asset and associated lease liability over the terms of the leases, the Company uses the date it
takes possession of the leased space for construction purposes at the beginning of the lease term, which is generally two to three
months prior to a restaurant’s opening date. As most leases do not provide an implicit rate, the Company uses its incremental
borrowing rate based on the information available on the commencement date in determining the present value of lease
payments. The Company has lease agreements that contain both lease and non-lease components which are not separated.
Certain leases require the Company to pay a portion of real estate taxes, utilities, building operating expenses, insurance, and
other charges in addition to rent.

(o)

Stock-Based Compensation

The Company measures stock-based compensation cost at fair value on the date of grant for all share-based awards and
recognizes compensation expense over the service period that the awards are expected to vest. The Company has elected to
recognize compensation cost for graded-vesting awards subject only to a service condition over the requisite service period of
the entire award. For performance awards, the Company recognizes expense in the period in which vesting becomes probable.
The Company accounts for forfeitures as they occur.

(p)

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, a deferred tax asset or liability is
recognized for the estimated future tax effects attributable to temporary differences between the financial statement basis and
the tax basis of assets and liabilities as well as tax credit carry-forwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period of the
change. The Company files a consolidated federal income tax return including all of its wholly-owned subsidiaries.

Judgment is required in evaluating the Company’s uncertain tax positions and determining the Company’s income tax expense.
The Company assesses the income tax position and records the liabilities for all years subject to examination based upon
management’s evaluation of the facts, circumstances, and information available at the reporting date.

(q)

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”)
2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure. The ASU updates reportable
segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and

F-11

information used to assess segment performance. The ASU is effective for fiscal years beginning after December 15, 2023, with
early adoption permitted. We are currently evaluating the impact of adopting this ASU on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The
ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation
of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after
December 15, 2024, with early adoption permitted, and can be applied either prospectively or retrospectively. We are currently
evaluating the impact of adopting this ASU on our disclosures.

We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not
expected to have a significant impact on our consolidated financial statements.

(2)

Earnings Per Share

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of
shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could
occur if securities convertible into, or other contracts to issue, common stock were exercised or converted into common stock.
For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect
of the exercise and vesting of stock options and service-based and performance-based restricted stock units, respectively,
determined using the treasury stock method.

Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in
thousands):

Basic weighted average shares outstanding

Dilutive shares

Diluted weighted average shares outstanding

December 30,
2023

Fiscal Year

December 31,
2022

December 25,
2021

29,769

87

29,856

29,893

70

29,963

29,769

175

29,944

We had approximately 0, 19,000, and 3,000 equity awards outstanding at December 30, 2023, December 31, 2022, and
December 25, 2021, respectively, that were excluded from the dilutive earnings per share calculation because the effect would
have been anti-dilutive.

(3)

Stockholders’ Deficit

Dividends

In connection with the Company's regular dividend program, the Company declared and paid dividends of $24.4 million, or
$0.82 per common share, in fiscal year 2023, $21.5 million, or $0.72 per common share, in fiscal year 2022, and $18.5 million,
or $0.62 per common share, in fiscal year 2021.

Subsequent to the end of fiscal year 2023, on February 20, 2024, the Company’s board of directors declared a quarterly
dividend of $0.22 per share of common stock, to be paid on March 29, 2024 to stockholders of record as of March 8, 2024,
totaling approximately $6.5 million.

Separate from the Company's regular dividend program, the Company declared and paid special dividends of $119.5 million, or
$4.00 per share of common stock, in fiscal year 2022. No special dividends were declared or paid during fiscal years 2023 and
2021.

F-12

Share Repurchase Program

On August 16, 2023, the Company’s Board of Directors approved a new share repurchase program with authorization to
purchase up to $250.0 million of its outstanding shares of common stock (the “Share Repurchase Authorization”).

On August 23, 2023, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a
third-party financial institution to repurchase $125.0 million of the Company’s common stock as part of the Share Repurchase
Authorization. Under the ASR Agreement, the Company paid the financial institution $125.0 million in cash and received and
retired a total of 645,952 shares of common stock at an average share price of $193.51. Final settlement of the ASR occurred on
December 21, 2023. The total number of shares repurchased under the ASR Agreement was based on the daily volume-
weighted average share price during the valuation period specified in the ASR Agreement, less a discount and subject to
adjustments. As of December 30, 2023, $125.0 million remained available under the Share Repurchase Authorization.

(4)

Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction
between market participants at the measurement date and in the principal or most advantageous market for that asset or
liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value as follows:

Level 1 - Unadjusted quoted prices for identical instruments traded in active markets.

Level 2 - Observable market-based inputs or unobservable inputs corroborated by market data.

Level 3 - Unobservable inputs reflecting management’s estimates and assumptions.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their
short-term nature. Fair value of debt is determined on a non-recurring basis, which results are summarized as follows (in
thousands):

Securitized Financing Facility:
2020-1 Class A-2 Senior Secured Notes (1)
2022-1 Class A-2 Senior Secured Notes (1)
Investments in bonds of LPH (Note 10) (2)

December 30, 2023

December 31, 2022

Fair Value
Hierarchy

Carrying
Value

Fair Value

Carrying
Value

Fair Value

Level 2

Level 2

Level 3

$

$

$

472,800

248,125

3,557

$

$

$

423,823

222,370

4,306

$

$

$

475,200

249,375

3,196

$

$

$

406,462

215,709

3,906

(1) The fair value of the 2020-1 and 2022-1 Class A-2 Senior Secured Notes was estimated using available market information.

(2) The fair value approximates discounted cash flows using current market rates for debt investments with similar maturities

and credit risk.

(5)

Accounts Receivable, net

Accounts receivable, net, consist of the following (in thousands):

Vendor rebates receivable

Royalties receivable

Other receivables, net

Accounts receivable, net

F-13

December 30,
2023

December 31,
2022

$

$

$

5,311

5,717

1,380

12,408

$

3,610

3,811

2,040

9,461

(6)

Property and Equipment

Property and equipment, net, consisted of the following (in thousands):

Building

Construction in progress

Equipment, furniture and fixtures
Leasehold and other improvements
Land

Property and equipment, gross

Less: accumulated depreciation

Property and equipment, net

December 30,
2023

December 31,
2022

15,769

46,675

41,268
26,599
2,828
133,139
(41,847)
91,292

$

15,769

23,008

33,406
23,295
2,828
98,306
(31,455)
66,851

$

Depreciation expense was $10.6 million, $8.7 million, and $5.6 million for the fiscal years ended December 30, 2023,
December 31, 2022, and December 25, 2021, respectively.

(7)

Intangible Assets and Goodwill

The Company’s goodwill and other intangible assets arose from Wingstop’s acquisition of the equity interests of Wingstop
Holdings, Inc. in April 2010, as well as the acquisition of restaurants from franchisees. Goodwill represents the excess of
purchase consideration transferred for the respective reporting unit over the fair value of the business at the time of the
acquisition.

The following is a summary of goodwill balances and activity (in thousands):

Balance, beginning of period

Acquisition of restaurants, net

Balance, end of period

December 30,
2023

December 31,
2022

$

$

62,514

5,194

67,708

$

$

56,877

5,637

62,514

Intangible assets, excluding goodwill, consisted of the following (in thousands):

Intangible assets:

Trademarks

Indefinite-lived assets

Customer relationships
Franchise rights (1)
Less: accumulated amortization

Definite-lived assets

Intangible assets, net

December 30,
2023

December 31,
2022

Weighted Average
Amortization Period
(in years)

$

$

32,700

$

32,700

26,300

14,168

(24,488)

15,980

48,680

$

32,700

32,700

26,300

9,038

(21,931)

13,407

46,107

20.0

6.2

16.7

(1) Included within Other non-current assets net of associated accumulated amortization within the Consolidated Balance Sheets.

F-14

Amortization expense for definite-lived intangibles was $2.7 million in fiscal year 2023, $2.2 million in fiscal year 2022, and
$2.3 million in fiscal year 2021. Estimated amortization expense, for the five succeeding fiscal years and the aggregate
thereafter is (in thousands):

Fiscal year 2024

Fiscal year 2025

Fiscal year 2026

Fiscal year 2027

Fiscal year 2028

Thereafter

Total

$

$

2,898

2,711

2,504

2,366

2,177

3,324

15,980

(8)

Prepaid Expenses and Other Current Assets and Other Current Liabilities

Prepaid expenses and other current assets consisted of the following (in thousands):

Prepaid expenses
Inventories
Other current assets
Total

Other current liabilities consisted of the following (in thousands):

Accrued payroll and incentive compensation
Current portion of deferred revenues
Taxes payable
Short term lease liability
Accrued interest
Gift card liability
Other accrued liabilities
Total

(9)

Income Taxes

December 30,
2023

December 31,
2022

3,567
535
846
4,948

December 30,
2023

14,331
4,846
2,948
2,380
1,702
1,926
12,818
40,951

$

$

$

$

2,735
389
1,128
4,252

December 31,
2022

8,733
4,476
6,401
2,283
1,711
1,565
9,557
34,726

$

$

$

$

Income tax expense for the fiscal years 2023, 2022, and 2021 consisted of the following (in thousands):

F-15

Current expense

Federal

State

Foreign

Deferred expense (benefit)

Federal

State

Income tax expense

December 30,
2023

Fiscal Year

December 31,
2022

December 25,
2021

$

$

19,398

$

15,909

$

4,586

610

(314)

(145)

3,384

328

(2,996)

(256)

24,135

$

16,369

$

10,432

2,601

263

2,994

(41)

16,249

A reconciliation of income tax at the U.S. federal statutory tax rate (using a statutory tax rate of 21%) to income tax expense for
fiscal years 2023, 2022, and 2021 in dollars is as follows (in thousands):

Expected income tax expense at statutory rate

$

Excess tax benefits from equity compensation

Non-deductible expenses

State tax expense, net of federal benefit

Foreign tax expense

Foreign tax and other tax credits

Increase in unrecognized tax benefit

Other

Income tax expense

December 30,
2023

19,777

$

(1,275)

3,106

3,164

610

(1,760)

398

115

Fiscal Year

December 31,
2022

December 25,
2021

14,556

$

12,370

(522)

935

2,090

328

(1,001)

337

(354)

(591)

1,880

2,091

263

(385)

296

325

$

24,135

$

16,369

$

16,249

The components of deferred tax assets (liabilities) were as follows (in thousands):

Deferred tax assets:
Deferred revenue
Accrued incentive compensation
Stock based compensation
Lease liabilities
Intangible assets
Other
Net operating loss carry-forwards and credits
Valuation allowance

Deferred tax liabilities:
Intangible assets
Right of use assets
Property and equipment

Net deferred tax liability

December 30, 2023

December 31, 2022

$

$

$

6,067
1,596
1,444
4,720
196
1,365
827
(577)
15,638

(10,397)
(4,464)
(4,498)
(19,359)
(3,721) $

6,352
891
1,345
3,863
76
2,493
1,061
(577)
15,504

(10,397)
(3,628)
(5,659)
(19,684)
(4,180)

The Company had a state net operating loss carry-forward of $23.3 million at December 30, 2023 and December 31, 2022. The
state net operating loss carry forwards begin to expire in 2030.

F-16

The Company had a valuation allowance of $0.6 million against its deferred tax assets as of December 30, 2023 and
December 31, 2022. In assessing whether a deferred tax asset will be realized, the Company considers whether it is more likely
than not that either some portion or all of the deferred tax assets will not be realized. The Company considers the reversal of
existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment.
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the
deferred tax assets are deductible, the Company believes it is more likely than not that it will realize a portion of the benefits of
the federal and state deductible differences.

The Company files income tax returns, which are periodically audited by various federal and state jurisdictions. The Company's
income tax returns prior to tax year 2018 are generally considered closed to examination by the applicable tax authorities.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance as of December 26, 2020

Additions for tax positions of prior years
Subtractions for tax positions of prior years
Additions for tax positions of current year
Subtractions for tax positions of current year

Balance as of December 25, 2021

Additions for tax positions of prior years
Subtractions for tax positions of prior years
Additions for tax positions of current year
Subtractions for tax positions of current year

Balance as of December 31, 2022

Additions for tax positions of prior years
Subtractions for tax positions of prior years
Additions for tax positions of current year
Subtractions for tax positions of current year

Balance as of December 30, 2023

$

$

794
—
(34)
295
—
1,055
—
(27)
270
—
1,298
—
(65)
468
—
1,701

As of December 30, 2023 and December 31, 2022, the accrued interest and penalties on the unrecognized tax benefits were $0.7
million and $0.5 million, respectively, excluding any related income tax benefits. The Company recorded accrued interest
related to the unrecognized tax benefits and penalties as a component of the provision for income taxes recognized in the
Consolidated Statement of Comprehensive Income.

At December 30, 2023 and December 31, 2022, the amount of unrecognized tax benefits was $1.7 million and $1.3 million,
respectively, which, if ultimately recognized, would reduce the Company’s effective tax rate.

(10)

Investments

In the second quarter of 2021, a wholly-owned subsidiary of the Company acquired a 20% non-controlling interest in
Wingstop’s United Kingdom master franchisee, Lemon Pepper Holdings Ltd. (“LPH”), for an aggregate amount of
$4.2 million. Substantially all of the investment consisted of bonds issued by a subsidiary of LPH, which are recorded on an
amortized cost basis. In addition, the Company received 20% of the outstanding stock, which will be accounted for using the
equity method of accounting, under which the Company’s share of the income of the investee will be recorded in Other income
(expense) on the Consolidated Statements of Comprehensive Income.

F-17

249,375

(10,429)

(7,300)

706,846

—
—
—
472,800
—
248,125
720,925

(11) Debt Obligations

Long-term debt consisted of the following components (in thousands):

2020-1 Class A-2 Senior Secured Notes

2022-1 Class A-2 Senior Secured Notes

Debt issuance costs, net of amortization

Less: current portion of debt

Long-term debt, net

December 30, 2023
472,800

$

December 31, 2022
475,200

248,125

(8,598)

—

$

712,327

$

As of December 30, 2023, the scheduled principal payments on debt were as follows (in thousands):

Fiscal year 2024
Fiscal year 2025
Fiscal year 2026
Fiscal year 2027
Fiscal year 2028
Thereafter
Total

Securitized Financing Facility

$

$

On March 9, 2022, the Company completed a securitized financing transaction, in which Wingstop Funding LLC, a limited
purpose, bankruptcy-remote, indirect wholly owned subsidiary of the Company (the “Issuer”), issued $250 million of its Series
2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2 Notes”). The Issuer also entered into a
revolving financing facility of Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,”
and together with the 2022 Class A-2 Notes, the “2022 Notes”), which permits borrowings of up to a maximum principal
amount of $200 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit. The
proceeds from the securitized financing transaction were used to pay related transaction fees and expenses, strengthen the
Company's liquidity position and for general corporate purposes, which included a return of capital to the Company’s
stockholders.

In addition to the 2022 Notes, the Company’s outstanding debt consists of its existing Series 2020-1 2.84% Fixed Rate Senior
Secured Notes, Class A-2 (the “2020 Notes”), which have an anticipated repayment date of December 2027. The Company’s
existing revolving financing facility of Series 2020-1 Class A-1 Notes was terminated in connection with the 2022 issuance. No
borrowings were outstanding under the 2022 Variable Funding Notes as of December 30, 2023.

The 2022 Notes were issued in a securitization transaction, which is guaranteed by certain limited-purpose, bankruptcy-remote,
wholly owned indirect subsidiaries of the Company and secured by a security interest in substantially all of their assets,
including certain domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements,
intellectual property, and vendor rebate contracts.

The 2022 Notes were issued pursuant to a base indenture and related supplemental indentures (collectively, the “Indenture”).
Interest and principal payments on the 2022 Class A-2 Notes are payable on a quarterly basis. The requirement to make such
quarterly principal payments on the 2022 Class A-2 Notes is subject to certain financial conditions set forth in the Indenture.
The legal final maturity date of the 2022 Notes is in March of 2052, but, unless earlier prepaid to the extent permitted under the
Indenture, the anticipated repayment date of the 2022 Class A-2 Notes is March 2029. If the Issuer has not repaid or refinanced
the 2022 Class A-2 Notes prior to the anticipated repayment date, additional interest will accrue on the 2022 Notes.

The 2022 Variable Funding Notes accrue interest at a variable rate based on (i) the prime rate, (ii) the overnight federal funds
rates, (iii) the secured overnight financing rate, or (iv) with respect to advances made by conduit investors, the weighted
average cost of, or related to, the issuance of commercial paper allocated to fund or maintain such advances, in each case plus
any applicable margin, as more fully set forth in the 2022 Variable Funding Note Purchase Agreement, dated March 9, 2022,
and the indenture supplement. Commitment fees and other usage fees apply to the 2022 Variable Funding Notes facility
depending on the type of borrowing requested. There is a 60-basis points draw fee on borrowings requested pursuant to the

F-18

terms of the 2022 Variable Fund Notes. Additionally, during a commitment availability period, there is a 30-basis point
commitment fee on the committed portion of the 2022 Variable Funding Notes.

The 2020 Notes and the 2022 Notes (together, the “Notes”) are subject to a series of covenants and restrictions customary for
transactions of this type, including (i) that the Issuer maintains specified reserve accounts to be used to make required payments
in respect of the Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified
amounts, including specified make-whole payments in the case of the Notes under certain circumstances, (iii) certain
indemnification payments in the event, among other things, that the assets pledged as collateral for the Notes are in stated ways
defective or ineffective, and (iv) covenants relating to recordkeeping, access to information, and similar matters. The Notes are
also subject to customary rapid amortization events provided for in the indenture, including events tied to failure to maintain
stated debt service coverage ratios, the sum of global gross sales for specified restaurants being below certain levels on certain
measurement dates, certain change of control and manager termination events, an event of default, and the failure to repay or
refinance the Notes on the applicable scheduled maturity date. The Notes are also subject to certain customary events of default,
including events relating to non-payment of required interest, principal or other amounts due on or with respect to the Notes,
failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations
and warranties, failure of security interests to be effective, and certain judgments. As of December 30, 2023, the Company was
in compliance with all financial covenants.

During the first quarter of 2022, as a result of the termination of the 2020 variable funding note facility, the Company recorded
a loss on debt extinguishment of $0.8 million related to the write-off of previously capitalized financing costs. Total debt
issuance costs incurred and capitalized in connection with the issuance of the 2022 Notes were $5.5 million.

As of December 30, 2023, the Company’s leverage ratio under the 2020 Class A-2 Notes and the 2022 Class A-2 Notes was
less than 5.0x. Per the terms of the Company’s debt agreements, principal payments can be suspended at the borrower’s election
until the repayment date as long as the Company maintains a leverage ratio of less than 5.0x. Accordingly, the Company elected
to suspend payments following the principal payment made in the second quarter of 2023, and the entire outstanding balance of
the 2020 Class A-2 Notes and the 2022 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026. The
2020 Class A-2 Notes and the 2022 Class A-2 Notes are generally subject to 1% annual amortization.

(12)

Leases

The Company determines whether an arrangement is a lease at inception. The Company has operating leases for retail space, as
well as equipment. The Company's leases have remaining terms of 10.0 years to 0.1 years, some of which include options to
extend the lease term for up to ten years. Lease terms may include options to renew when it is reasonably certain that the
Company will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or
material restrictive covenants.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the
information available on the commencement date in determining the present value of lease payments. The Company has lease
agreements that contain both lease and non-lease components. For real estate leases, the Company accounts for lease
components together with non-lease components (e.g., common-area maintenance).

Components of lease expense were as follows (in thousands):

Operating lease cost (1)
Variable lease cost (2)

Total lease cost

December 30,
2023

Year Ended

December 31,
2022

December 25,
2021

$

$

3,523

733

4,256

$

$

3,244 $

448

3,692 $

2,294

529

2,823

(1) Includes short-term leases, which are immaterial.
(2) Primarily related to adjustments for inflation, common area maintenance, and property tax.

F-19

Supplemental cash flow information related to leases is as follows (in thousands):

Operating cash flow information:

Cash paid for amounts included in the measurement of lease liabilities
Non-cash activity:
Right-of-use assets obtained in exchange for new operating lease
liabilities

$

$

December 30,
2023

Year Ended

December 31,
2022

December 25,
2021

3,348

6,346

$

$

3,543 $

2,923

3,923 $

12,107

Supplemental balance sheet information related to our operating leases is as follows (in thousands):

Right-of-use assets

Current lease liabilities

Balance Sheet Classification

Other non-current assets

Other current liabilities

Non-current lease liabilities

Other non-current liabilities

Year Ended

December 30,
2023

December 31,
2022

$

19,092 $

2,380

17,807

15,613

2,283

14,342

Weighted average lease term and discount rate information related to leases was as follows:

Weighted average remaining lease term of operating leases

Weighted average discount rate of operating leases

Maturities of lease liabilities by fiscal year are as follows (in thousands):

December 30,
2023

Year Ended

December 31,
2022

7.1 years

4.52 %

7.5 years

3.86 %

December 25,
2021
7.4 years

3.81 %

Fiscal year 2024

Fiscal year 2025

Fiscal year 2026

Fiscal year 2027

Fiscal year 2028

Thereafter

Total future minimum lease payments

Less: imputed interest

Total lease liabilities

(13) Commitments and Contingencies

$

$

3,606

3,537

3,175

2,789

2,690

7,546

23,343

(3,156)

20,187

The Company is subject to legal proceedings, claims, and liabilities, such as employment-related claims and other cases, which
arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of
ultimate liability with respect to those actions should not have a material adverse impact on financial position, results of
operations, or cash flows.

F-20

(14)

Employee Benefit Plan

The Company sponsors a 401(k) profit sharing plan for all employees who are eligible based upon age and length of service.
The Company made matching contributions of approximately $1.1 million, $0.9 million, and $0.7 million for fiscal years 2023,
2022, and 2021, respectively.

(15)

Stock-Based Compensation

The Wingstop Inc. 2015 Omnibus Equity Incentive Plan (as amended, the “2015 Plan”), was adopted in June 2015 and is the
only plan under which the Company currently grants awards. The 2015 Plan provides for the grant or award of stock options,
stock appreciation rights, restricted stock awards, restricted stock units, performance unit awards, performance share awards,
cash-based awards and other stock-based awards to employees, directors, and other eligible persons. Stock options issued under
the 2015 Plan expire ten years from the date of the grant. As of December 30, 2023, there were approximately 1.4 million
shares available for future grants under the 2015 Plan.

In the event of a change in control of the Company (as defined in the 2015 Plan) in connection with which the board of
directors or the Compensation Committee of the board of directors determines prior to such change in control that outstanding
awards will be honored or assumed or new rights substituted therefore (as required by the Plan), each outstanding award will
continue to vest in accordance with its terms. In the event the outstanding awards are not assumed or new rights substituted
therefore in connection with the transaction, the awards will become fully vested and, to the extent applicable, exercisable
immediately prior to the change in control and shall be exchanged for cash.

Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense
over the requisite employee service period. The Company recognized approximately $15.6 million, $4.2 million, and $9.6
million in stock compensation expense, net of forfeitures, for fiscal years 2023, 2022, and 2021, respectively, with a
corresponding increase to additional paid-in-capital. The Company recognized forfeitures of $1.3 million and $6.6 million for
fiscal years 2023 and 2022, respectively. Stock compensation expense is included in Selling, general and administrative in the
Consolidated Statements of Comprehensive Income. Assumptions made regarding forfeitures in determining the remaining
unamortized share-based compensation are re-evaluated periodically.

Stock Options

The following table summarizes stock option activity:

Stock options outstanding at December 31, 2022

Options granted

Options exercised

Options forfeited

Stock options outstanding at December 30, 2023

Stock options exercisable at December 30, 2023

Number of Shares
(in thousands)

Weighted Average
Exercise Price

Aggregate
Intrinsic Value
(in thousands)

Weighted Average
Remaining Term
(in years)

33
$
— $

(5) $

— $

28

17

$

$

112.28
—

79.85

—

117.77

104.31

$

$

$

884

3,940

2,521

8.2

7.4

7.0

The total intrinsic value of stock options exercised was $0.4 million, $1.1 million, and $0.6 million for fiscal years 2023, 2022,
and 2021, respectively. As of December 30, 2023, there was $0.3 million of total unrecognized stock compensation expense
related to non-vested stock options, which will be recognized over a weighted average period of approximately 0.9 years.

F-21

Restricted Stock Units

Restricted stock units are granted to employees and generally vest in equal annual amounts over a three year period. The fair
value of restricted stock units is based on the closing price on the date of grant.

The following table summarizes activity related to restricted stock units:

Nonvested restricted stock units at December 31, 2022

Units granted

Units vested

Units forfeited

Nonvested restricted stock units at December 30, 2023

Number of Shares
(in thousands)

Weighted Average Grant
Date Fair Value

$

63

49

(17)

(16)

79

$

120.12

174.57

124.79

152.99

146.03

As of December 30, 2023, total unrecognized compensation expense related to unvested restricted stock units was $7.7
million, which is expected to be recognized over a weighted-average period of 1.8 years. The weighted-average grant date fair
value of restricted stock units granted was $174.57, $116.30, and $138.38 in fiscal years 2023, 2022, and 2021, respectively.
The total fair value of restricted stock units that vested in fiscal years 2023, 2022, and 2021 was $2.1 million, $2.0 million, and
$1.9 million, respectively.

Performance Stock Units

Performance stock units (“PSUs”) represent a right to receive a certain number of shares of common stock based on the
achievement of company performance goals and continued employment during the vesting period. Performance stock units
cliff-vest at the end of a three year service period or vest in equal annual amounts over a three year period. Vested amounts may
range from 0% to a maximum of 250% of targeted amounts depending on the achievement of performance measures at the end
of each vesting period. Such performance measures are based on the Company meeting net new restaurant targets, return on
incremental investment targets, or sales targets for the vesting period. The fair value of PSUs is based on the closing price on
the date of grant. The compensation expense related to these PSUs is recognized over the vesting period when the achievement
of the performance conditions becomes probable. The total compensation cost for the PSUs is determined based on the most
likely outcome of the performance condition and the number of awards expected to vest.

The following table summarizes activity related to performance stock units:

Nonvested performance stock units at December 31, 2022

Units granted (a)
Units vested

Units forfeited

Nonvested performance stock units at December 30, 2023

Number of Shares
(in thousands)

Weighted Average Grant
Date Fair Value

65 $

59 $

(35) $

(8) $

81 $

122.75

145.15

88.00

154.28

151.03

(a) Includes 18,000 incremental PSUs earned with respect to the PSUs granted in fiscal year 2020 and vested in fiscal year 2023
at greater than 100% of target based on performance.

As of December 30, 2023, total unrecognized compensation expense related to unvested PSUs was $14.2 million, which is
expected to be recognized over a weighted average period of 1.4 years. The weighted-average grant date fair value of
performance stock units granted was $145.15, $127.20, and $96.16 in fiscal years 2023, 2022, and 2021, respectively. The total
fair value of performance stock units that vested in fiscal years 2023, 2022, and 2021 was $3.1 million, $1.7 million, and $6.6
million, respectively.

F-22

(16) Restaurant Transactions

The Company acquired three restaurants from franchisees during each of the fiscal years ended December 30, 2023,
December 31, 2022 and December 25, 2021. The total purchase prices are reflected in the table below and were all funded by
cash flows from operations.

The following table summarizes the allocations of the purchase prices to the estimated fair values of assets acquired and
liabilities assumed as a result of these acquisitions (in thousands):

Working capital

Property and equipment

Reacquired franchise rights

Goodwill

Total purchase price

December 30, 2023

December 31, 2022

December 25, 2021

Fiscal Year

$

$

— $

17 $

217

5,330

5,285

155

2,000

5,637

10,832 $

7,809 $

61

148

1,400

3,267

4,876

The results of operations of these restaurants are included in the Consolidated Statements of Comprehensive Income since the
date of acquisition. The acquisitions were accounted for as business combinations.

The excess of the purchase price over the aggregate fair value of assets acquired was allocated to goodwill and is attributable to
the benefits expected as a result of the acquisition, including sales and growth opportunities. All of the goodwill from the
acquisitions is expected to be deductible for federal income tax purposes.

Pro-forma financial information of the combined entities is not presented due to the immaterial impact of the financial results of
the acquired restaurants on our consolidated financial statements.

The fair value measurement of tangible and intangible assets and liabilities as of the acquisition date is based on significant
inputs not observed in the market and thus represents a Level 3 fair value measurement. Fair value measurements for reacquired
franchise rights were determined using the income approach. Fair value measurements for property and equipment were
determined using the cost approach.

(17) Revenue from Contracts with Customers

The following table represents a disaggregation of revenue from contracts with customers for the fiscal years 2023, 2022, and
2021 (in thousands):

Royalty revenue

Advertising fees

Franchise fees

December 30,
2023

Fiscal Year

December 31,
2022

$

186,455

$

142,900

$

157,138

5,064

119,011

4,357

December 25,
2021

119,396

81,529

4,020

Franchise fee, development fee, and international territory fee payments received by the Company are recorded as deferred
revenue on the Consolidated Balance Sheets, which represents a contract liability. Deferred revenue is reduced as fees are
recognized in revenue over the term of the franchise license for the respective restaurant. As the term of the franchise license is
typically ten years, substantially all of the franchise fee revenue recognized in the current fiscal year was included in the
deferred revenue balance as of December 31, 2022. Approximately $9.3 million and $7.7 million of deferred revenue as
of December 30, 2023 and December 31, 2022, respectively, relates to restaurants that were not yet opened, so the fees are not
yet being amortized. The weighted average remaining amortization period for deferred franchise and renewal fees related to
open restaurants is 7.1 years. The Company did not have any material contract assets as of December 30, 2023.

F-23