The Ledger
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Wingstop's private equity buyers diverted cash flow to avoid paying Swad's note
“Instead of using the money to make the payment to me for the company that I built, they took the money and they built corporate stores with it, which was adding to the intrinsic value of the company. They were bonusing themselves. If it ever looked like at the…”
Swad sued Wingstop's buyers to recover the $12 million owed on his note
“Well, me and that one lawyer, we sued him. And keep in mind, they owed me twelve million dollars. Okay, that's a lot of money to a young, young man from Ohio who started off at the dish machine, you know. So I sued him. I sued him for my money.”
Swad felt like a hypocrite scaling Wingstop because he was a vegetarian
“Keep in mind at this time, you know, I was feeling more and more like a hypocrite growing this company that sold nothing but chicken, not eating chicken myself, and knowing what the industry was like.”
Emotional buy-in near closing makes sellers vulnerable to unfavorable last-minute deal modifications
“The closer they get you to closing on a transaction like this, at this point, you're emotionally kind of already there. You're, you might even be spending the money, you know, in your mind. Oh, when I get that check, here's what I'm going to do first and all t…”
Neman: Wingstop added sandwiches to lower costs by purchasing whole birds
“Wingstop didn't introduce sandwiches until like two years ago. And by the way, the reason they did it was not from a customer perspective. It was from a supply chain perspective because they realized that if they introduce sandwiches, now they can buy whole bi…”
Swad settled the Wingstop lawsuit out of court and recovered every penny
“We ended up settling the We never went to court. I eventually got every penny.”
Swad sold Wingstop for $22 million, carrying a $12 million seller note
“Twenty million turned into twenty-two million. It's got, the deal got sweeter. But it would only give me ten million at closing, and that's, that was part of the reason that we bumped the price up by 10%. Then I would carry the note for 10 years on the twelve …”
Franchisors incur contingent liability if they select real estate for franchisees
“If you find the real estate for them, you pick up some contingent liability, almost assuring their success, and this is something I learned early on.”
Wing concepts scale globally because proprietary sauces differentiate standardized commodity chicken
“You're correct, and that's good for growing a company because you can buy chicken at a certain spec pretty much anywhere in the world. It's the sauce that makes the difference.”
An order of 10-piece wings cost $2.99 at Wingstop's 1994 launch
“When we opened the store, 10 piece, 10 piece wings was two 99.”
Swad retained 100% equity in Wingstop with no outside investors before selling
“Hundred percent owned it, a hundred percent.”
Swad paid 55 cents per pound for whole chicken wings in 1994
“I, when I first got into the Wing business. I was, I paid 55 cents a pound for whole wings.”
Wingstop franchises cost approximately $125,000 all-in to build and open in 1997
“But even saying all that, all in, you could open a store at that time for about a 125,000 dollars.”
Wingstop sold beer specifically to anchor an adult concept and higher prices
“And in the early stores too, I sold beer, but it was like three percent of the sales, but I put beer in the store to position the concept as an adult concept and not fast food. Because I wanted people to think of it as a place where it's okay to spend more mon…”
Nothing drives franchise sales more effectively than visibly successful existing franchisees
“And nothing sells franchises better Than successful franchisees.”
Wingstop acquired early customers by handing out samples to neighboring Blockbuster patrons
“Yeah, I thought that they would, it was a great food to go with movies, and I had people coming on the lot already, and that's why we sampled to them, you know, and a lot of our customers were developed from that, you know, and eventually, you know, Blockbuste…”
Swad's original company-owned Wingstop location eventually eclipsed $2 million in annual sales
“The store that I owned, it quickly continued to grow, eclipsed a million dollars in sales. By the time the franchising program was in full swing, the store was doing well over a million dollars a year, and eventually the store did over two million dollars a ye…”