Date: 11/3/2021 Form: 10-Q - Quarterly Report
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark one)
XQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 25, 2021
☐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)

Delaware47-3494862
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
15505 Wright Brothers Drive
Addison
Texas75001
(Address of principal executive offices)(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareWINGNASDAQ Global Select Market
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, 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 filerxAccelerated filer¨
Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   x No
On November 2, 2021 there were 29,825,763 shares of common stock outstanding.



TABLE OF CONTENTS
Page
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


3

PART I.     FINANCIAL INFORMATION
Item 1.     Financial Statements
WINGSTOP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in thousands, except share and par value amounts)
 September 25,
2021		 December 26,
2020
 (Unaudited) 
Assets 
Current assets 
Cash and cash equivalents$50,125 $40,858 
Restricted cash3,456 4,815 
Accounts receivable, net6,052 4,929 
Prepaid expenses and other current assets4,156 5,532 
Advertising fund assets, restricted25,013 16,486 
Total current assets88,802 72,620 
Property and equipment, net49,151 27,948 
Goodwill56,877 53,690 
Trademarks32,700 32,700 
Customer relationships, net10,626 11,600 
Other non-current assets22,243 13,007 
Total assets$260,399 $211,565 
Liabilities and stockholders' deficit
Current liabilities
Accounts payable$4,382 $3,658 
Other current liabilities29,914 26,729 
Current portion of debt— 3,600 
Advertising fund liabilities25,013 16,486 
Total current liabilities59,309 50,473 
Long-term debt, net469,084 466,933 
Deferred revenues, net of current27,154 24,962 
Deferred income tax liabilities, net6,475 4,480 
Other non-current liabilities12,509 6,027 
Total liabilities574,531 552,875 
Commitments and contingencies (see Note 8)
Stockholders' deficit
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,825,763 and 29,687,123 shares issued and outstanding as of September 25, 2021 and December 26, 2020, respectively
299 297 
Additional paid-in-capital1,067 421 
Retained deficit(315,326)(342,028)
Accumulated other comprehensive loss(172)— 
Total stockholders' deficit(314,132)(341,310)
Total liabilities and stockholders' deficit$260,399 $211,565 

See accompanying notes to consolidated financial statements.
4

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(amounts in thousands, except per share data)
(Unaudited)
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 September 25,
2021		September 26,
2020		September 25,
2021		September 26,
2020
Revenue:  
Royalty revenue, franchise fees and other$32,829 $28,806 $97,570 $80,863 
Advertising fees15,575 19,653 59,672 55,590 
Company-owned restaurant sales17,380 15,529 53,232 49,076 
Total revenue65,784 63,988 210,474 185,529 
Costs and expenses:  
Cost of sales (1)
15,206 11,804 42,692 36,367 
Advertising expenses16,232 20,240 61,560 57,660 
Selling, general and administrative15,020 16,542 44,872 42,155 
Depreciation and amortization2,061 2,334 5,379 5,287 
Gain on sale of restaurants and other expenses, net(3,567)(1,233)(3,567)(3,249)
Total costs and expenses44,952 49,687 150,936 138,220 
Operating income20,832 14,301 59,538 47,309 
Interest expense, net3,724 4,405 11,230 12,764 
Other income(22)— (22)— 
Income before income tax expense17,130 9,896 48,330 34,545 
Income tax expense (benefit)5,840 (185)12,568 4,829 
Net income$11,290 $10,081 $35,762 $29,716 
Earnings per share
Basic$0.38 $0.34 $1.20 $1.00 
Diluted$0.38 $0.34 $1.19 $1.00 
Weighted average shares outstanding
Basic29,799 29,642 29,748 29,572 
Diluted29,963 29,854 29,936 29,791 
Dividends per share$0.17 $0.14 $0.45 $0.36 
Other comprehensive income (loss)
Currency translation adjustment$(63)$— $(172)$— 
Other comprehensive income (loss)(63)— (172)— 
Comprehensive income$11,227 $10,081 $35,590 $29,716 

(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.


5

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Deficit
For the Thirty-Nine Weeks Ended September 26, 2020 and September 25, 2021
(amounts in thousands, except share data)
(Unaudited)
Common Stock
SharesAmount
Additional
Paid-In Capital
Retained DeficitAccumulated Other Comprehensive LossTotal Stockholders’ Deficit
Balance at December 28, 201929,457,228 $295 $552 $(210,275)$— $(209,428)
Net income— — — 8,096 — 8,096 
Shares issued under stock plans128,585 1 504 — — 505 
Tax payments for restricted stock upon vesting(2,419)— — (229)— (229)
Stock-based compensation expense— — 1,331 — — 1,331 
Dividends declared on common stock and equivalents— — (2,168)(1,055)— (3,223)
Balance at March 28, 202029,583,394 296 219 (203,463)— (202,948)
Net income— — — 11,539 — 11,539 
Shares issued under stock plans13,057 — 57 — — 57 
Tax payments for restricted stock upon vesting(104)— — (12)— (12)
Stock-based compensation expense— — 1,969 — — 1,969 
Dividends declared on common stock and equivalents— — (2,202)(1,075)— (3,277)
Balance at June 27, 202029,596,347 296 43 (193,011)— (192,672)
Net income— — — 10,081 — 10,081 
Shares issued under stock plans87,751 1 328 — — 329 
Tax payments for restricted stock upon vesting(633)— — (99)— (99)
Stock-based compensation expense— — 3,007 — — 3,007 
Dividends declared on common stock and equivalents— — (2,882)(1,301)— (4,183)
Balance at September 26, 202029,683,465 $297 $496 $(184,330)$— $(183,537)

6

Common Stock
SharesAmountAdditional
Paid-In Capital		Retained DeficitAccumulated Other Comprehensive LossTotal Stockholders’ Deficit
Balance at December 26, 202029,687,123 $297 $421 $(342,028)$— $(341,310)
Net income— — — 13,160 — 13,160 
Shares issued under stock plans60,958 1 155 — — 156 
Tax payments for restricted stock upon vesting(11,243)— — (1,862)— (1,862)
Stock-based compensation expense— — 2,316 — — 2,316 
Dividends declared on common stock and equivalents— — (2,866)(1,322)— (4,188)
Balance at March 27, 202129,736,838 298 26 (332,052)— (331,728)
Net income— — — 11,312 — 11,312 
Shares issued under stock plans6,613 — — — — — 
Tax payments for restricted stock upon vesting(76)— — (11)— (11)
Stock-based compensation expense— — 2,456 — — 2,456 
Dividends declared on common stock and equivalents— — (1,888)(2,275)— (4,163)
Currency translation adjustment— — — — (109)(109)
Balance at June 26, 202129,743,375 298 594 (323,026)(109)(322,243)
Net income— — — 11,290 — 11,290 
Shares issued under stock plans82,553 1 500 — — 501 
Tax payments for restricted stock upon vesting(165)— — (28)— (28)
Stock-based compensation expense— — 2,051 — — 2,051 
Dividends declared on common stock and equivalents— — (2,078)(3,562)— (5,640)
Currency translation adjustment— — — — (63)(63)
Balance at September 25, 202129,825,763 $299 $1,067 $(315,326)$(172)$(314,132)
See accompanying notes to consolidated financial statements.
7

WINGSTOP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(amounts in thousands)
(Unaudited)
 Thirty-Nine Weeks Ended
 September 25,
2021		September 26,
2020
Operating activities  
Net income$35,762 $29,716 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization5,379 5,287 
Deferred income taxes2,167 377 
Stock-based compensation expense6,823 6,307 
Gain on disposal of assets(3,567)(3,247)
Amortization of debt issuance costs1,056 1,228 
Changes in operating assets and liabilities:
Accounts receivable(1,123)(203)
Prepaid expenses and other assets(689)668 
Advertising fund assets and liabilities, net9,426 12,578 
Accounts payable and other current liabilities(2,224)(4,165)
Deferred revenue2,318 958 
Other non-current liabilities(1,283)(2,725)
Cash provided by operating activities54,045 46,779 
Investing activities
Purchases of property and equipment(16,543)(3,729)
Acquisitions of restaurants from franchisees(4,876)(5,635)
Proceeds from sales of assets7,207 4,800 
Payments for investments (Note 6)(4,163)— 
Cash used in investing activities(18,375)(4,564)
Financing activities
Proceeds from exercise of stock options657 891 
Borrowings of long-term debt— 16,000 
Repayments of long-term debt(2,400)(800)
Tax payments for restricted stock upon vesting(1,901)(340)
Dividends paid(14,690)(10,683)
Cash provided by (used in) financing activities(18,334)5,068 
Net increase in cash, cash equivalents, and restricted cash17,336 47,283 
Cash, cash equivalents, and restricted cash at beginning of period59,270 21,175 
Cash, cash equivalents, and restricted cash at end of period$76,606 $68,458 
Supplemental information:
Accrued capital expenditures$8,943 $— 
See accompanying notes to consolidated financial statements.

8
WINGSTOP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)

(1)    Basis of Presentation and Update to Significant Accounting Policies
Nature of operations. Wingstop Inc., together with its consolidated subsidiaries (collectively, "Wingstop” or the "Company”), is in the business of franchising and operating Wingstop restaurants. As of September 25, 2021, the Company had 1,461 domestic franchised restaurants and 180 international franchised restaurants. As of September 25, 2021, the Company owned and operated 32 restaurants.
Basis of presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC”) for interim financial information. Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States ("GAAP”) have been condensed or omitted. Balance sheet amounts are as of September 25, 2021 and December 26, 2020, and operating results are for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020.
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.
In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2020.
Fiscal year. The Company uses a 52- or 53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2021 and 2020 each have 52 weeks.
Cash, Cash Equivalents, and Restricted Cash. Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of September 25, 2021 and December 26, 2020 were as follows (in thousands):
September 25, 2021December 26, 2020
Cash and cash equivalents$50,125 $40,858 
Restricted cash3,456 4,815 
Restricted cash, included in Advertising fund assets, restricted23,025 13,597 
Total cash, cash equivalents, and restricted cash$76,606 $59,270 
Change in presentation. Beginning in the first quarter of 2021, headcount-related expenses that support our national advertising fund are presented within Advertising expenses on the Consolidated Statements of Comprehensive Income. Prior to the first quarter of 2021, these expenses were presented within Selling, general and administrative expenses. Prior period amounts have been reclassified to conform to the current presentation. This reclassification had no impact on operating income, balance sheets or statements of cash flows. Headcount related expenses associated with the national advertising fund were $2.0 million for each of the thirteen weeks ended September 25, 2021 and September 26, 2020, and were $5.9 million for each of the thirty-nine weeks ended September 25, 2021 and September 26, 2020.
Recently issued accounting pronouncements. We reviewed all 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
9
WINGSTOP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
of the exercise and vesting of stock options and restricted stock units, respectively, as determined using the treasury stock method.
Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):
Thirteen Weeks EndedThirty-Nine Weeks Ended
September 25,
2021		September 26,
2020		September 25,
2021		September 26,
2020
Basic weighted average shares outstanding29,799 29,642 29,748 29,572 
Dilutive shares164 212 188 219 
Diluted weighted average shares outstanding29,963 29,854 29,936 29,791 
For each of the thirteen weeks ended September 25, 2021 and September 26, 2020, equity awards representing approximately 400 shares were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.  
For the thirty-nine weeks ended September 25, 2021 and September 26, 2020, equity awards representing approximately 4,000 and 400 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive.
(3)    Dividends
The Company’s Board of Directors declared a quarterly dividend of $0.14 per share of common stock in each of the first two quarters, and a quarterly dividend of $0.17 per share of common stock in the third quarter, resulting in aggregate dividend payments of $13.4 million, or $0.45 per share of common stock, during the thirty-nine weeks ended September 25, 2021.

Subsequent to the third quarter, on November 2, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.17 per share of common stock for stockholders of record as of November 19, 2021. The regular quarterly dividend is to be paid on December 10, 2021, totaling approximately $5.1 million.
(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):
 
Fair Value
Hierarchy
 September 25, 2021December 26, 2020
  
Carrying
Value
 Fair Value
Carrying
Value
Fair Value
Securitized Financing Facility:
2020-1 Class A-2 Senior Secured Notes (1)
Level 2$477,600 $486,187 $480,000 $483,365 
(1) The fair value of the 2020-1 Class A-2 Senior Secured Notes was estimated using available market information.
The Company also measures certain non-financial assets (primarily long-lived assets, intangible assets, and goodwill) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment.
10
WINGSTOP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(5)    Income Taxes
Income tax expense (benefit) and the effective tax rate were $5.8 million and 34.1%, respectively, for the thirteen weeks ended September 25, 2021, and $(0.2) million and (1.9)%, respectively, for the thirteen weeks ended September 26, 2020. Income tax expense and the effective tax rate were $12.6 million and 26.0%, respectively, for the thirty-nine weeks ended September 25, 2021, and $4.8 million and 14.0%, respectively, for the thirty-nine weeks ended September 26, 2020.
Income tax expense (benefit) for the thirteen and thirty-nine weeks ended September 25, 2021 included $0.1 million and $0.6 million, respectively, in tax benefits resulting from the recognition of excess tax benefits from stock-based compensation, as compared to $2.9 million and $4.4 million in tax benefits for the thirteen and thirty-nine weeks ended September 26, 2020, respectively.
(6)    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. The fair value of the bonds approximates the current carrying value and was determined using level 3 inputs. 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 on the Consolidated Statements of Comprehensive Income.
(7)    Debt Obligations
Long-term debt consisted of the following components (in thousands):
September 25, 2021December 26, 2020
2020-1 Class A-2 Senior Secured Notes$477,600 $480,000 
Debt issuance costs, net of amortization(8,516)(9,467)
Total debt469,084 470,533 
Less: current portion of debt— (3,600)
Long-term debt, net$469,084 $466,933 
The Company’s outstanding debt consists of (i) Series 2020-1 2.84% Fixed Rate Senior Secured Notes, Class A-2 (the "2020 Class A-2 Notes”) issued by Wingstop Funding LLC (the "Issuer”), a limited-purpose, bankruptcy-remote, wholly owned indirect subsidiary of Wingstop Inc. and (ii) Series 2020-1 Variable Funding Senior Notes, Class A-1 (the "2020 Variable Funding Notes” and together with the Class A-2 Notes, the "2020 Notes”), which permit borrowings of up to a maximum principal amount of $50 million which may be used to borrow amounts on a revolving basis and to issue letters of credit.
As of September 25, 2021 and December 26, 2020, the Company had $477.6 million and $480.0 million of 2020 Class A-2 Notes outstanding, respectively. There were no borrowings outstanding under the 2020 Variable Funding Notes as of September 25, 2021 and December 26, 2020. Further, as of September 25, 2021 and December 26, 2020, $3.5 million and $4.9 million, respectively, of letters of credit were outstanding against the 2020 Variable Funding Notes, which relate primarily to interest reserves required under the base indenture and related supplemental indenture. There were no amounts drawn down on the letters of credit as of September 25, 2021 or December 26, 2020.
As of September 25, 2021, the Company’s leverage ratio under the 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 has elected to suspend payments following the principal payment made in the third quarter, and the entire outstanding balance of the Class A-2 notes has been classified as long-term debt.
The 2020 Notes were issued in a securitization transaction pursuant to which certain of the Company’s domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements and intellectual property, were contributed or otherwise transferred to the Issuer and certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as guarantors of the Notes and that have pledged substantially all of their assets.
11
WINGSTOP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(8)    Commitments and Contingencies
The Company is subject to legal proceedings, claims, and liabilities, such as employment-related claims and premises-liability 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 such actions is not likely to have a material adverse impact on the Company’s financial position, results of operations, or cash flows.
(9)    Stock-Based Compensation
During the thirty-nine weeks ended September 25, 2021, the Company granted stock options to purchase 42,703 shares of common stock and 23,191 restricted stock units ("RSUs”) to certain employees. The stock options vest in equal annual amounts over a three-year period subsequent to the grant date, and have a maximum contractual term of ten years. The stock options were granted with a weighted-average exercise price of $129.11 per share and had a weighted-average grant-date fair value of $42.51 per share. The RSUs granted to certain employees generally vest in equal annual amounts over a three-year period, subsequent to the grant date and had a weighted-average grant-date fair value of $135.51 per unit.
In addition, the Company granted 32,733 performance stock units ("PSUs”) to certain employees during the thirty-nine weeks ended September 25, 2021. Of the total PSUs granted, 25,623 PSUs are subject to a service condition and a performance vesting condition based on return on incremental invested capital ("ROI PSUs”). The ROI PSUs are generally eligible to cliff-vest approximately three years from the grant date, and the maximum vesting percentage that could be realized for each of the ROI PSUs is 250% based on the level of performance achieved for the awards. The remaining 7,110 PSUs granted are subject to a service condition and a performance vesting condition based on the number of net new restaurants opened over the performance period ("NNR PSUs”). The NNR PSUs vest in equal annual amounts over a three-year period, and the maximum vesting percentage that could be realized for each of the NNR PSUs is 100% based on the level of performance achieved for the awards. The PSUs had a weighted-average grant-date fair value of $131.16 per unit. 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 based on the outcome.

Total compensation expense related to all share-based awards was $6.8 million and $6.3 million for the thirty-nine weeks ended September 25, 2021 and September 26, 2020, respectively, and was included in Selling, general and administrative ("SG&A”) expense in the Consolidated Statements of Comprehensive Income.
(10)    Revenue from Contracts with Customers
The following table represents a disaggregation of revenue from contracts with customers for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020 (in thousands):
Thirteen Weeks EndedThirty-Nine Weeks Ended
September 25, 2021September 26, 2020September 25, 2021September 26, 2020
Royalty revenue$30,039 $26,007 $89,262 $72,761 
Advertising fees and related income15,575 19,653 59,672 55,590 
Franchise fees902 1,151 2,961 2,914 

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 thirteen and thirty-nine weeks ended September 25, 2021 was included in the deferred revenue balance as of December 26, 2020. Approximately $10.3 million and $9.8 million of deferred revenue as of September 25, 2021 and December 26, 2020, respectively, relates to restaurants that have 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 7.3 years. The Company did not have any material contract assets as of September 25, 2021.
12
WINGSTOP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(11)    Acquisitions and Refranchising of Company-owned Restaurants
During the third fiscal quarter 2021, the Company completed the sale of six company-owned restaurants in the Colorado market to an existing franchisee for aggregate proceeds of $7.2 million. In connection with the sale of the restaurants, the Company recorded a $3.6 million pre-tax gain on the sale of the related assets and liabilities, which was net of an $80,000 reduction in goodwill. The net gain on these store sales was recorded in Gain on sale of restaurants and other expenses, net in the Company’s Consolidated Statements of Comprehensive Income as of September 25, 2021.
In the third fiscal quarter 2021, the company acquired three existing restaurants from franchisees. The combined purchase price was $4.9 million and was funded by cash flow from operations. The following table summarizes the preliminary allocations of the purchase price to the estimated fair value of assets acquired and liabilities assumed at the date of the acquisition (in thousands):
Purchase Price Allocation
Working capital$61 
Property and equipment148 
Reacquired franchise rights1,400 
Goodwill3,267 
Operating lease right-of-use assets1,526 
Operating lease liabilities(1,526)
Total purchase price$4,876 
The estimates of fair value are preliminary, and are therefore subject to further refinement. 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 unit growth opportunities. All of the goodwill from the acquisition 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 restaurant on our consolidated financial statements.

13

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the financial condition and results of operations of Wingstop Inc. (collectively with its direct and indirect subsidiaries on a consolidated basis, "Wingstop,” the "Company,” "we,” "our,” or "us”) should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Quarterly Report”) and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 26, 2020 (our "Annual Report”). The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Special Note Regarding Forward-Looking Statements,” below and "Risk Factors” on page 11 of our Annual Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
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 years 2021 and 2020 each contain 52 weeks.
Overview
Wingstop is the largest fast casual chicken wings-focused restaurant chain in the world, with over 1,600 locations worldwide. We are dedicated to serving the world flavor through an unparalleled guest experience and offering of classic wings and thighs, boneless wings and tenders, 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 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.
Change in presentation
Beginning in the first quarter of 2021, headcount-related expenses that support our national advertising fund are presented within Advertising expenses on the Consolidated Statements of Comprehensive Income. Prior to the first quarter of 2021, these expenses were presented within SG&A expenses. Prior period amounts have been reclassified to conform to the current presentation. This reclassification had no impact on operating income, balance sheets or statements of cash flows.
14

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.
Thirteen Weeks EndedThirty-Nine Weeks Ended
September 25,
2021		September 26,
2020		September 25,
2021		September 26,
2020
Domestic Franchised Activity:
Beginning of period1,415 1,244 1,327 1,200 
Openings44 34 132 79 
Closures(1)(1)(1)(4)
Acquired by Company(3)(5)(3)(5)
Re-franchised by Company6 5 6 7 
Restaurants end of period1,461 1,277 1,461 1,277 
Domestic Company-Owned Activity:
Beginning of period34 30 32 31 
Openings1 1 3 2 
Closures— — — — 
Acquired by Company3 5 3 5 
Re-franchised to franchisees(6)(5)(6)(7)
Restaurants end of period32 31 32 31 
Total Domestic Restaurants1,493 1,308 1,493 1,308 
International Franchised Activity:
Beginning of period175 162 179 154 
Openings10 10 16 18 
Closures(5)(1)(15)(1)
Restaurants end of period180 171 180 171 
Total System-wide Restaurants1,673 1,479 1,673 1,479 
System-wide sales. System-wide sales represents net sales for all of our company-owned and franchised restaurants. This measure allows management to better assess changes in our royalty revenue, our overall store 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 company-owned and franchised restaurant economics. Our domestic AUV growth is primarily driven by increases in same store sales and is 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 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.
15

 
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 refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense. Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in methods of calculation. 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 refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and related tax adjustments. 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.
The following table sets forth our key performance indicators for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020 (in thousands, except unit data):
Thirteen Weeks EndedThirty-Nine Weeks Ended
September 25, 2021September 26, 2020September 25, 2021September 26, 2020
Number of system-wide restaurants open at end of period1,673 1,479 1,673 1,479 
System-wide sales (1)
$594,300 $509,155 $1,742,829 $1,448,108 
Domestic restaurant AUV$1,579 $1,435 $1,579 $1,435 
Domestic same store sales growth3.9 %25.4 %8.1 %22.5 %
Company-owned domestic same store sales growth(0.2)%15.2 %2.9 %15.3 %
Total revenue$65,784 $63,988 $210,474 $185,529 
Net income$11,290 $10,081 $35,762 $29,716 
Adjusted EBITDA (2)
$21,399 $18,409 $68,195 $55,654 
Adjusted net income (3)
$8,579 $9,144 $33,051 $27,247 
(1) The percentage of system-wide sales attributable to company-owned restaurants was 2.9% and 3.2% for the thirteen weeks ended September 25, 2021 and September 26, 2020, respectively, and was 3.1% and 3.4% for the thirty-nine weeks ended September 25, 2021 and September 26, 2020, respectively. The remainder was generated by franchised restaurants, as reported by our franchisees.
(2) EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, 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, or as an alternative to cash flow 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, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ 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.
16

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. In addition, the instruments governing our indebtedness use EBITDA (with additional adjustments) to measure our compliance with covenants, such as our fixed charge coverage, lease adjusted leverage, and debt incurrence. 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;
•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 supplementally. As noted in the table below, Adjusted EBITDA includes adjustments for transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense. It is reasonable to expect that this item will occur in future periods. However, 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.
17

The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020 (in thousands):
Thirteen Weeks EndedThirty-Nine Weeks Ended
September 25,
2021		September 26,
2020		September 25,
2021		September 26,
2020
Net income$11,290 $10,081 $35,762 $29,716 
Interest expense, net3,724 4,405 11,230 12,764 
Income tax expense (benefit)5,840 (185)12,568 4,829 
Depreciation and amortization2,061 2,334 5,379 5,287 
EBITDA$22,915 $16,635 $64,939 $52,596 
Additional adjustments:
Gain on disposal of assets (a)
(3,567)(1,233)(3,567)(3,249)
Stock-based compensation expense (b)
2,051 3,007 6,823 6,307 
Adjusted EBITDA$21,399 $18,409 $68,195 $55,654 
(a) Represents a gain resulting from the re-franchise of company-owned restaurants to a franchisee which is included in Gain on sale of restaurants and other expenses, net in the Consolidated Statements of Comprehensive Income.
(b) Includes non-cash, stock-based compensation.

(3) 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 thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020 (in thousands):

Thirteen Weeks EndedThirty-Nine Weeks Ended
September 25,
2021		September 26,
2020		September 25,
2021		September 26,
2020
Numerator:
Net income$11,290 $10,081 $35,762 $29,716 
Adjustments:
Gain on disposal of assets, net (a)
(3,567)(1,233)(3,567)(3,249)
Tax effect of adjustments (b)
856 296 856 780 
Adjusted net income$8,579 $9,144 $33,051 $27,247 
Denominator:
Weighted-average shares outstanding - diluted29,963 29,854 29,936 29,791 
Adjusted earnings per diluted share$0.29 $0.31 $1.10 $0.91 
(a) Represents a gain resulting from the re-franchise of company-owned restaurants to a franchisee which is included in Gain on sale of restaurants and other expenses, net in the Consolidated Statements of Comprehensive Income.
(b) Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax rate of 24% for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020, which includes provisions for U.S. federal income taxes, and assumes the respective statutory rates for applicable state and local jurisdictions.

18

Results of Operations
Thirteen Weeks Ended September 25, 2021 compared to Thirteen Weeks Ended September 26, 2020
The following table sets forth our results of operations for the thirteen weeks ended September 25, 2021 and September 26, 2020 (dollars in thousands):
Thirteen Weeks EndedIncrease / (Decrease)
September 25,
2021		September 26,
2020		$%
Revenue:
Royalty revenue, franchise fees and other$32,829 $28,806 $4,023 14.0 %
Advertising fees15,575 19,653 (4,078)(20.8)%
Company-owned restaurant sales17,380 15,529 1,851 11.9 %
Total revenue65,784 63,988 1,796 2.8 %
Costs and expenses:
Cost of sales (1)
15,206 11,804 3,402 28.8 %
Advertising expenses16,232 20,240 (4,008)(19.8)%
Selling, general and administrative15,020 16,542 (1,522)(9.2)%
Depreciation and amortization2,061 2,334 (273)(11.7)%
Gain on sale of restaurants and other expenses, net(3,567)(1,233)(2,334)189.3 %
Total costs and expenses44,952 49,687 (4,735)(9.5)%
Operating income20,832 14,301 6,531 45.7 %
Interest expense, net3,724 4,405 (681)(15.5)%
Other income(22)— (22)100.0 %
Income before income tax expense17,130 9,896 7,234 73.1 %
Income tax expense (benefit)5,840 (185)6,025 (3,256.8)%
Net income$11,290 $10,081 $1,209 12.0 %
(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.

Total revenue. During the thirteen weeks ended September 25, 2021, total revenue was $65.8 million, an increase of $1.8 million, or 2.8%, compared to $64.0 million in the comparable period in 2020. Royalty revenue, franchise fees and other increased $4.0 million primarily due to domestic same store sales growth of 3.9% as well as 193 net franchise restaurant openings since September 26, 2020. Advertising fees decreased $4.1 million due to a $6.9 million rebate of advertising surplus that was returned to franchisees during the third quarter of 2021 in an effort to mitigate increased food and labor costs. This was partially offset by an increase in advertising fees related to the 16.7% increase in system-wide sales in the thirteen weeks ended September 25, 2021 compared to the thirteen weeks ended September 26, 2020. Company-owned restaurant sales increased $1.9 million primarily due to the acquisition of three franchised restaurants in the third quarter of 2021 and the opening of three new company-owned restaurants since the prior year comparable period.
Cost of sales. During the thirteen weeks ended September 25, 2021, cost of sales was $15.2 million, an increase of $3.4 million, or 28.8%, compared to $11.8 million in the comparable period in 2020. Cost of sales as a percentage of company-owned restaurant sales was 87.5% in the thirteen weeks ended September 25, 2021, compared to 76.0% in the comparable period in 2020.

19

The table below presents the major components of cost of sales (dollars in thousands):
Thirteen Weeks Ended
September 25, 2021September 26, 2020
In dollarsAs a % of company-owned restaurant salesIn dollarsAs a % of company-owned restaurant sales
Cost of sales:
Food, beverage and packaging costs$8,353 48.1 %$5,655 36.4 %
Labor costs4,269 24.6 %3,944 25.4 %
Other restaurant operating expenses2,980 17.1 %2,512 16.2 %
Vendor rebates(396)(2.3)%(307)(2.0)%
Total cost of sales$15,206 87.5 %$11,804 76.0 %
Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 48.1% in the thirteen weeks ended September 25, 2021, compared to 36.4% in the comparable period in 2020. The increase was primarily due to a 48.9% increase in the cost of bone-in chicken wings as compared to the prior year period, in which we experienced unusually significant deflation in the cost of bone-in chicken wings.
Labor costs as a percentage of company-owned restaurant sales were 24.6% for the thirteen weeks ended September 25, 2021, compared to 25.4% in the comparable period in 2020. The decrease as a percentage of company-owned restaurant sales was primarily due to incentive pay provided to team members in response to the COVID-19 pandemic during the prior year period. This was partially offset by a highly competitive labor market that resulted in increases in company-owned restaurant wages and hiring and training costs during the thirteen weeks ended September 25, 2021.
Other restaurant operating expenses as a percentage of company-owned restaurant sales were 17.1% for the thirteen weeks ended September 25, 2021, compared to 16.2% in the comparable period in 2020. The increase as a percentage of company-owned restaurant sales was primarily a result of pre-opening expenses related to our investment in opening company-owned restaurants in Manhattan, as well as repairs and maintenance in our company-owned restaurants. These increases were partially offset by a decrease in advertising contributions, due to a rebate of national advertising surplus received during the thirteen weeks ended September 25, 2021.
Advertising expenses. During the thirteen weeks ended September 25, 2021, advertising expenses were $16.2 million, a decrease of $4.0 million compared to $20.2 million in the comparable period in 2020. 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). During the thirteen weeks ended September 25, 2021, SG&A expense was $15.0 million, a decrease of $1.5 million compared to $16.5 million in the comparable period in 2020. The decrease in SG&A expense was primarily due to a decrease of $3.4 million in variable-based compensation expense, inclusive of stock-based compensation expense, and $0.5 million related to COVID-19 and support provided to international franchisees in the prior year comparable period. These decreases were partially offset by an increase in headcount-related expenses of $1.2 million to support the growth in our business, as well as an increase of $0.8 million in travel expenses.
Depreciation and amortization. During the thirteen weeks ended September 25, 2021, depreciation expense was $2.1 million, a decrease of $0.3 million compared to $2.3 million in the comparable period in 2020.
Interest expense, net. During the thirteen weeks ended September 25, 2021, interest expense, net was $3.7 million, a decrease of $0.7 million compared to $4.4 million of interest expense, net in the comparable period in 2020. The decrease was due to the refinancing of our securitized financing facility on October 30, 2020, which increased our outstanding debt by $162.4 million and reduced our interest rate from 4.97% to 2.84%.
Income tax expense. During the thirteen weeks ended September 25, 2021, we recognized income tax expense of $5.8 million yielding an effective tax rate of 34.1%, compared to an effective tax rate of (1.9)% in the prior year period. The increase in the effective tax rate was primarily due to the impact of nondeductible expenses for executive compensation, as well as the impact of excess tax benefits associated with stock options exercised in the prior year comparable period.
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Thirty-Nine Weeks Ended September 25, 2021 compared to Thirty-Nine Weeks Ended September 26, 2020
The following table sets forth our results of operations for the thirty-nine weeks ended September 25, 2021 and September 26, 2020 (dollars in thousands):
Thirty-Nine Weeks EndedIncrease / (Decrease)
September 25,
2021		September 26,
2020		$%
Revenue:
Royalty revenue, franchise fees and other$97,570 $80,863 $16,707 20.7 %
Advertising fees59,672 55,590 4,082 7.3 %
Company-owned restaurant sales53,232 49,076 4,156 8.5 %
Total revenue210,474 185,529 24,945 13.4 %
Costs and expenses:
Cost of sales (1)
42,692 36,367 6,325 17.4 %
Advertising expenses61,560 57,660 3,900 6.8 %
Selling, general and administrative44,872 42,155 2,717 6.4 %
Depreciation and amortization5,379 5,287 92 1.7 %
Gain on sale of restaurants and other expenses, net(3,567)(3,249)(318)9.8 %
Total costs and expenses150,936 138,220 12,716 9.2 %
Operating income59,538 47,309 12,229 25.8 %
Interest expense, net11,230 12,764 (1,534)(12.0)%
Other income(22)— (22)100.0 %
Income before income tax expense48,330 34,545 13,785 39.9 %
Income tax expense12,568 4,829 7,739 160.3 %
Net income$35,762 $29,716 $6,046 20.3 %
(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.

Total revenue. During the thirty-nine weeks ended September 25, 2021, total revenue was $210.5 million, an increase of $24.9 million, or 13.4%, compared to $185.5 million in the comparable period in 2020. Royalty revenue, franchise fees and other increased $16.7 million primarily due to domestic same store sales growth of 8.1% as well as 193 net franchise restaurant openings since September 26, 2020. Advertising fees increased $4.1 million due to the 20.4% increase in system-wide sales in the thirty-nine weeks ended September 25, 2021 compared to the thirty-nine weeks ended September 26, 2020. This was partially offset by a $6.9 million rebate of advertising surplus that was returned to franchisees during the third quarter of 2021 in an effort to mitigate increased food and labor costs. Company-owned restaurant sales increased $4.2 million primarily due to company-owned same store sales growth of 2.9%, which was driven by an increase in transaction size. Also contributing to the increase was the acquisition of three franchised restaurants in the third quarter of the current year and the opening of three new company-owned restaurants since the prior year comparable period, resulting in additional sales of $2.4 million.
Cost of sales. During the thirty-nine weeks ended September 25, 2021, cost of sales was $42.7 million, an increase of $6.3 million, or 17.4%, compared to $36.4 million in the comparable period in 2020. Cost of sales as a percentage of company-owned restaurant sales was 80.2% in the thirty-nine weeks ended September 25, 2021, compared to 74.1% in the comparable period in 2020.

21

The table below presents the major components of cost of sales (dollars in thousands):
Thirty-Nine Weeks Ended
September 25, 2021September 26, 2020
In dollarsAs a % of company-owned restaurant salesIn dollarsAs a % of company-owned restaurant sales
Cost of sales:
Food, beverage and packaging costs$23,680 44.5 %$17,085 34.8 %
Labor costs11,771 22.1 %12,156 24.8 %
Other restaurant operating expenses8,428 15.8 %8,164 16.6 %
Vendor rebates(1,187)(2.2)%(1,038)(2.1)%
Total cost of sales$42,692 80.2 %$36,367 74.1 %
Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 44.5% in the thirty-nine weeks ended September 25, 2021, compared to 34.8% in the comparable period in 2020. The increase was primarily due to a 46.4% increase in the cost of bone-in chicken wings as compared to the prior year period, in which we experienced unusually significant deflation in the cost of bone-in chicken wings.
Labor costs as a percentage of company-owned restaurant sales were 22.1% for the thirty-nine weeks ended September 25, 2021, compared to 24.8% in the comparable period in 2020. The decrease as a percentage of company-owned restaurant sales was primarily due to incentive pay provided to team members in response to the COVID-19 pandemic during the prior year period, partially offset by a highly competitive labor market that resulted in increases in company-owned restaurant wages and hiring and training costs during the thirty-nine weeks ended September 25, 2021.
Other restaurant operating expenses as a percentage of company-owned restaurant sales were 15.8% for the thirty-nine weeks ended September 25, 2021, compared to 16.6% in the comparable period in 2020. The decrease as a percentage of company-owned restaurant sales was primarily due to a decrease in delivery fees and security fees, partially offset by an increase in pre-opening expenses related to our investment in opening company-owned restaurants in Manhattan.
Advertising expenses. During the thirty-nine weeks ended September 25, 2021, advertising expenses were $61.6 million, an increase of $3.9 million compared to $57.7 million in the comparable period in 2020. 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). During the thirty-nine weeks ended September 25, 2021, SG&A expense was $44.9 million, an increase of $2.7 million compared to $42.2 million in the comparable period in 2020. The increase in SG&A expense was primarily due to an increase of $3.2 million in headcount related expenses to support the growth in our business, inclusive of stock-based compensation expense, an increase of $2.1 million in professional fees to support the Company’s strategic initiatives, and an increase of $0.6 million in travel expense. These increases were partially offset by a decrease of $1.7 million in variable-based compensation expense, $1.0 million related to a donation made in the prior year period to the National Restaurant Employee Relief Fund to support restaurant workers in times of need, and $0.5 million related to COVID-19 and support provided to international franchisees in the prior year comparable period.
Depreciation and amortization. During the thirty-nine weeks ended September 25, 2021, depreciation expense was $5.4 million, an increase of $0.1 million compared to $5.3 million in the comparable period in 2020.
Interest expense, net. During the thirty-nine weeks ended September 25, 2021, interest expense, net was $11.2 million, a decrease of $1.5 million compared to $12.8 million of interest expense, net in the comparable period in 2020. The decrease in interest expense, net was due to the refinancing of our securitized financing facility on October 30, 2020, which increased our outstanding debt by $162.4 million and reduced our interest rate from 4.97% to 2.84%.
Income tax expense. During the thirty-nine weeks ended September 25, 2021, we recognized income tax expense of $12.6 million yielding an effective tax rate of 26.0%, compared to an effective tax rate of 14.0% in the prior year period. The increase in the effective tax rate was primarily due to the impact of nondeductible expenses for executive compensation, as well as the impact of excess tax benefits associated with stock options exercised in the prior year comparable period.
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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 proceeds from the incurrence of debt. Our primary requirements for liquidity and capital are working capital and general corporate needs. Historically, we have operated with minimal positive working capital or with negative working capital. We have in the past, and may in the future, refinance our existing indebtedness with new debt arrangements and/or equity issuances and utilize a portion of funds to return capital to our stockholders. We believe our sources of liquidity and capital will be sufficient to finance our continued operations and growth strategy for at least the next twelve months.
The following table shows summary cash flows information for the thirty-nine weeks ended September 25, 2021 and September 26, 2020 (in thousands):
Thirty-Nine Weeks Ended
September 25,
2021		September 26,
2020
Net cash provided by (used in):
Operating activities$54,045 $46,779 
Investing activities(18,375)(4,564)
Financing activities(18,334)5,068 
Net change in cash and cash equivalents$17,336 $47,283 
Operating activities. Our cash flow from operating activities are principally driven by sales at both franchise restaurants and company-owned restaurants, as well as franchise and development fees. We collect franchise royalties from our franchise owners on a weekly basis. Restaurant-level operating costs at our company-owned restaurants, unearned franchise and development fees, and corporate overhead costs also impact our cash flow from operating activities.
Net cash provided by operating activities was $54.0 million in the thirty-nine weeks ended September 25, 2021, an increase of $7.3 million from cash provided by operating activities of $46.8 million in the thirty-nine weeks ended September 26, 2020. The increase is the result of increased operating income associated with the increased sales over the prior period, partially offset by the timing of changes in working capital.
Investing activities. Our net cash used in investing activities was $18.4 million in the thirty-nine weeks ended September 25, 2021, an increase of $13.8 million from cash used in investing activities of $4.6 million in the thirty-nine weeks ended September 26, 2020. The increase in cash used in investing activities was primarily due to an increase in capital expenditures related to our investments in technology and the remodel of our corporate headquarters building, as well as a payment of $4.2 million related to a foreign investment in LPH (see Note 6 in the accompanying notes to our unaudited consolidated financial statements included elsewhere in this Quarterly Report).
Financing activities. Our net cash used in financing activities was $18.3 million in the thirty-nine weeks ended September 25, 2021, a change of $23.4 million from cash provided by financing activities of $5.1 million in the thirty-nine weeks ended September 26, 2020. The change was primarily due to borrowings under our 2018 Variable Funding Notes (as defined below) of $16.0 million in the thirty-nine weeks ended September 26, 2020, which is partially offset by an increase in the amount of dividends paid as compared to the prior year period.
Securitized financing facility. On October 30, 2020, the Company completed a transaction to refinance its existing securitized financing facility with a new securitized financing facility, pursuant to which Wingstop Funding LLC (the "Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of the Company, issued $480.0 million of its Series 2020-1 2.84% Fixed Rate Senior Notes, Class A-2 (the "2020 Class A-2 Notes”). The Issuer also entered into a revolving financing facility of Series 2020-1 Variable Funding Senior Notes, Class A-1 (the "2020 Variable Funding Notes,” and together with the 2020 Class A-2 Notes, the "2020 Notes”) which permits borrowings of up to a maximum principal amount of $50.0 million, which may be used to issue letters of credit. A portion of the proceeds of the 2020 Class A-2 Notes was used to repay the $332.8 million of principal outstanding on the existing Series 2018-1 4.97% Fixed Rate Senior Secured Notes, Class A-2 and Series 2018-1 Variable Funding Senior Secured Notes, Class A-1 (the "2018 Variable Funding Notes”) and to pay a special cash dividend of approximately $148.4 million to our stockholders in December 2020.

The 2020 Class A-2 Notes are generally subject to 1% annual amortization, bear interest at a fixed rate of 2.84% per annum, and have an anticipated repayment date of December 2027. During the third fiscal quarter of 2021, the Company had a leverage
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ratio under the Class A-2 Notes of less than 5.0x. Per the terms of the Company’s debt agreements, principal payments are not due until the repayment date as long as the Company maintains a leverage ratio of less than 5.0x. Accordingly, the Company has elected to suspend payments following the principal payment made in the third quarter of 2021.
Dividends. We paid a quarterly cash dividend of $0.14 per share of common stock in each of the first two quarters of 2021, and a quarterly cash dividend of $0.17 per share of common stock in the third quarter of 2021, resulting in aggregate dividend payments of $13.4 million, or $0.45 per share of common stock, during the thirty-nine weeks ended September 25, 2021. On November 2, 2021, the Company’s Board of Directors approved a dividend of $0.17 per share, to be paid on December 10, 2021 to stockholders of record as of November 19, 2021, totaling approximately $5.1 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, are 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 the Company and our stockholders.
Off-Balance Sheet Arrangements
The Company is required to provide standby letters of credit related to our securitized financing facility. Although the letters of credit are off-balance sheet, the obligations to which they relate are reflected as liabilities in the Consolidated Balance Sheet. Outstanding letters of credit totaled $3.5 million at September 25, 2021. We do not believe these arrangements have or are likely to have a material effect on our results of operations, financial condition, revenues or expenses, capital expenditures or liquidity.
Critical Accounting Policies and Estimates
Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting estimates are those that 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 critical accounting policies and estimates are identified and described in our annual consolidated financial statements and the related notes included in our Annual Report, and there have been no material changes since the filing of our Annual Report.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
Special 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 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, margins, profitability, 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 by identified by the use of forward-looking terminology, including the terms "may,” "will,” "should,” "expect,” "intend,” "plan,” "anticipate,” "believe,” "think,” "estimate,” "seek,” "predict,” "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. 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.
24

Such risks and other factors include those listed below and elsewhere in this report, that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements:    
•the impacts of the novel coronavirus (COVID-19) pandemic on our business;
•the response of governments and of our Company to the pandemic;
•our ability to effectively implement our growth strategy;
•risks associated with changes in food and supply costs;
•risks associated with the availability and cost of labor;
•our relationships with, and the performance of, our franchisees, as well as actions by franchisees that could harm our business;
•our ability to identify, recruit and contract with a sufficient number of qualified franchisees;
•risks associated with food safety, food-borne illness and other health concerns;
•our ability to successfully expand into new markets;
•our ability to effectively compete within our industry;
•risks associated with interruptions in our supply chain, including availability of food products;
•risks associated with our future performance and operating results falling below the expectations of securities analysts and investors;
•risks associated with data privacy, cyber security and the use and implementation of information technology;
•risks associated with our increasing dependence on digital commerce platforms and third-party delivery service providers;
•uncertainty in the law with respect to the assignment of liabilities in the franchise business model;
•risks associated with litigation against us or our franchisees;
•our ability to successfully advertise and market our business;
•risks associated with changes in customer preferences and perceptions;
•our ability to comply with government regulations relating to food products and franchising, including increased costs associated with new or changing regulations;
•risks associated with the geographic concentration of our business;
•our ability to maintain adequate insurance coverage for our business;
•risks associated with damage to our reputation or lack of acceptance of our brand in existing or new markets;
•risks associated with our expansion into international markets and foreign government restrictions on operations;
•our ability to comply with the terms of our securitized debt financing and generate sufficient cash flows to satisfy our significant debt service obligations thereunder;
•our ability to attract and retain our executive officers and other key employees; and
25

•our ability to protect our intellectual property, including trademarks and trade secrets.
The above list of factors is not exhaustive. Some of these and other factors are discussed in more detail under "Risk Factors” in our Annual 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 SEC. New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may affect us. 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.
26

Item 3.     Quantitative and Qualitative Disclosures About Market Risk
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, including inflation as compared to the prior year period. 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 fresh bone-in chicken wings, so we are subject to prevailing market conditions. Bone-in chicken wings accounted for approximately 35.1% and 26.2% of our company-owned restaurant cost of sales during the thirty-nine weeks ended September 25, 2021 and September 26, 2020, respectively. We anticipate that the increased demand and cost of bone-in chicken wings will continue throughout fiscal year 2021 due to several challenges, such as labor shortages, which currently impact the poultry industry. A hypothetical 10% increase in the bone-in chicken wing costs would have increased costs of sales by approximately $1.5 million during the thirty-nine weeks ended September 25, 2021. 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 $477.6 million incurred under the 2020 Notes as of September 25, 2021 (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 2020 Variable Funding Notes; however, the Company had no outstanding borrowings under its 2020 Variable Funding Notes as of September 25, 2021, net of letters of credit issued of $3.5 million.
27

Item 4.     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 our disclosure controls and procedures as of September 25, 2021, pursuant to Rule 13a-15 under the Exchange Act. 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 as of September 25, 2021, our disclosure controls and procedures are effective 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 the rules and forms of the SEC, 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 recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
28

PART II.     OTHER INFORMATION
Item 1.     Legal Proceedings
From time to time we may be involved in claims and legal actions that arise in the ordinary course of business. To our knowledge, there are no material pending legal proceedings to which we are a party or of which any of our property is the subject.
Item 1A. Risk Factors
A description of the risk factors associated with our business is contained in the "Risk Factors” section of our Annual Report.
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.     Defaults Upon Senior Securities
None.
Item 4.     Mine Safety Disclosures
Not applicable.
Item 5.     Other Information
None.
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Item 6.    Exhibits
Index to Exhibits
Exhibit No.Description
3.1
3.2
31.1*
31.2*
32.1**
32.2**
101 INS*Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its 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 as Inline XBRL and Contained in Exhibit 101)
* Filed herewith.
** Furnished, not filed.

30

Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Wingstop Inc.
(Registrant)
Date:November 3, 2021By:/s/ Charles R. Morrison
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date:November 3, 2021By:/s/ Alex R. Kaleida
Chief Financial Officer
(Principal Financial Officer)

31
Exhibit 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Charles R. Morrison, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Wingstop Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:November 3, 2021
By:/s/ Charles R. Morrison
Chairman and Chief Executive Officer
(Principal Executive Officer)



Exhibit 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Alex R. Kaleida, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Wingstop Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:November 3, 2021
By:/s/ Alex R. Kaleida
Chief Financial Officer
(Principal Financial Officer)


Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report on Form 10-Q for the period ended September 25, 2021 of Wingstop Inc. (the "Company”), as filed with the Securities and Exchange Commission on the date hereof (the "Report”), I, Charles R. Morrison, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:November 3, 2021
By:/s/ Charles R. Morrison
Chairman and Chief Executive Officer
(Principal Executive Officer)


Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report on Form 10-Q for the period ended September 25, 2021 of Wingstop Inc. (the "Company”), as filed with the Securities and Exchange Commission on the date hereof (the "Report”), I, Alex R. Kaleida, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date:November 3, 2021
By:/s/ Alex R. Kaleida
Chief Financial Officer
(Principal Financial Officer)