Shares of Wingstop plunged intraday Wednesday as the fast-food restaurant's third-quarter earnings missed forecasts, while Shake Shack delivered a quarterly beat, sending the burger and milkshake chain's shares rallying. Wingstop's earnings per share advanced to $0.88 for the three-month period ended Sept.
28, from $0.65 the year earlier, but fell short of the $0.95 average analyst estimate for GAAP EPS on Capital IQ. The company's stock plummeted nearly 20% intraday. Revenue for Wingstop rose to $162.5 million from $117.1 million year over year, surpassing the $159.9 million market expectations. Company-owned domestic same-store sales growth was at 7.3%, roughly halving from the prior quarter's pace and below the analysts' 11.1% estimate.
Domestic comparable sales were up 20.9%, but decelerated from nearly 29% growth in the second quarter. Top-line momentum "gives us the fuel in our advertising fund to work against a double-digit gap in brand awareness when benchmarked to more mature quick-service restaurant brands," Chief Financial Officer Alex Kaleida stated during an analyst conference call.
Wingstop maintained its full-year guidance for approximately 20% domestic same-store sales growth. In contrast, Shake Shack's revenue surged to $316.9 million for the three-month period ended Sept. 25, a rise from $276.2 million year over year, and exceeding the $316.1 million consensus mean. The burger chain's adjusted EPS climbed to $0.25 in the third quarter from $0.17 the year prior, beating the $0.19 street expectation.
Shares of Shake Shack rallied 12% intraday. Shake Shack's same-store sales growth reached 4.4% compared to the same quarter last year, above the 3.6% consensus estimate. Positive traffic was reflected in their sales, described as "a direct result of our sales-driving strategies and our consistent differentiated premium positioning which has allowed us to continue outperforming even in an uncertain macro environment," said Chief Executive Robert Lynch during a conference call. The company implemented a 1.5% menu price increase in October to offset ongoing inflation effects, allowing Shake Shack to "maintain the approximately 6% menu price for the remainder of the year," CFO Katherine Fogertey remarked.
For the following year, pricing is anticipated to decrease to around 4.5% in the first quarter, then to low single digits for the entire year. The restaurant-level profit margin stood at 21% of Shake Shack sales, 60 basis points higher than the previous year, marking the highest third-quarter margin since 2019 despite persistent inflationary pressures..