The company released its earnings report for the fourth quarter of 2016 on Thursday, recording an impressive 20.3% increase in sales compared to Q4 2015.
Net income climbed 13% to $US4.3 million ($US0.15 per diluted share) from $US3.8 million ($US0.13 per diluted share).
However, earnings still beat analyst expectations only marginally, while the impressive sales growth figure missed. Shares are down about 1.3% on Friday.
In the earnings call following the results, Michael F. Mravle, chief financial officer of Wingstop, pointed particularly to cost pressures that have troubled the company.
“Cost of sales increased to $US7 million from $US5.6 million in the prior year fourth quarter. As a percentage of company-owned restaurant sales, cost of sales increased 590 basis points to 76.1% from 70.2%,” he said.
In particular, he pointed to two factors that led to margin pressure: higher chicken wing prices and higher labour costs. “The increase was driven primarily by 13.1% inflation from bone-in chicken wings, a 4% in the average size of the chicken wings and continued labour investments in roster sizes and staffing.”