Wingstop Inc. (NASDAQ:WING) is a fast-casual restaurant chain known for its chicken wings, operating primarily in the United States. It competes with other fast-food chains like Shake Shack Inc. (SHAK), Papa John's International, Inc. (PZZA), Jack in the Box Inc. (JACK), Planet Fitness, Inc. (PLNT), and Domino's Pizza, Inc. (DPZ). These companies are analyzed based on their Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) to assess capital efficiency.
Wingstop's ROIC of 19.42% compared to its WACC of 12.04% results in a ROIC to WACC ratio of 1.61. This indicates that Wingstop is generating returns that exceed its cost of capital, showcasing efficient capital utilization. However, when compared to its peers, Wingstop's efficiency is moderate. For instance, Jack in the Box boasts a remarkable ROIC to WACC ratio of 16.29, with a ROIC of 87.85% and a WACC of 5.39%.
Shake Shack, another competitor, has a ROIC of 1.12% and a WACC of 11.91%, resulting in a ROIC to WACC ratio of 0.09. This suggests that Shake Shack is not utilizing its capital as efficiently as Wingstop. Similarly, Planet Fitness has a ROIC to WACC ratio of 0.79, with a ROIC of 7.77% and a WACC of 9.82%, indicating less efficient capital use compared to Wingstop.
Papa John's, with a ROIC of 22.50% and a WACC of 7.64%, achieves a ROIC to WACC ratio of 2.94. This shows that Papa John's is more efficient in capital utilization than Wingstop. Domino's Pizza also outperforms Wingstop with a ROIC to WACC ratio of 7.13, driven by a ROIC of 53.32% and a WACC of 7.48%.
