*I originally start reading the S-1, then got busy so now I am reading the S-1/A.
1.Offers divers flavors and has strong brand. Social media savvy? I guess this could be a strength. They use hashtags to prove their point haha.
2. Experienced management team.over 20% operating income margin, 10% net income margin. These are good numbers for restaurants.
3. Bone-in chicken wing price risk. I guess they may not be so good at hedging as Fogo de Chao.Chicken cost represents 65% of all purchases.
4. Use of proceeds to repay debt...well, not the best usage of capital but it is a PE controlled company.
5. Wow, strong net income, almost 23%!
6. Oh, internal control weakness
7. According to Technomic, fast casual segment generated approximately $34.5 billion in sales in 2013.
8. WingStop has growth potential in the US and international, it is not saturated yet.
9. 30% goodwill, 70% leverage. At a quick glance, there does not seem to be a red flag.
Assessment:
Pros:
-Strong growth, revenue is growing quite fast without much impact on the margins.
-High net income.
-Seems to have some moat with its menu
Cons:
-The firm does not seem to be good at hedging its supply. With the recent avian flu, I expect that the increased costs will affect the profits, especially when chicken accounts 65% of all purchases.
-Not much moat. I can see gourmet chicken wing restaurants easily taking away market share. Or KFC stepping up the game.
I think the firm has some moat and growth but I need to do more due diligence. The avian flu will definitely impact the firm's bottom line. For research, I should go try some wings :D
*From WingStop S-1/A
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