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Buffalo Wild Wings earnings fall in 2Q

Buffalo Wild Wings earnings fall in 2Q

Company cites a “challenging cost environment”

Net earnings fell 9.3 percent in the second quarter at Buffalo Wild Wings, Inc., as rising costs for chicken wings and labor offset higher sales, the company said Tuesday.

Net earnings fell to $21.5 million, or $1.12 per share, from $23.7 million, or $1.25, in the same period a year ago — even though revenue for the period rose 16.5 percent to $426.4 million, from $366 million, and same-store sales rose 4.2 percent at company-owned units, and 2.5 percent at franchisee locations.

“Solid sales performance in the second quarter was offset by a challenging cost environment,” Sally Smith, CEO of the Minneapolis-based chicken wing chain, said in a statement.

The biggest problem was chicken wings. The cost of a pound of traditional wings was 26 percent higher in the quarter, which ended June 28, Smith said. Chicken wings are a huge component of the chain’s overall food costs. The price of chicken wings has been volatile in recent years, driven by wide fluctuations in supply and demand.

Cost of sales rose 22 percent in the quarter to $117.8 million from $96.8 million.

Labor costs also increased, the company said, due largely to the addition of “Guest Experience Captains” at company-owned restaurants. The company has been using those captains to improve service. Labor costs in the quarter increased 20 percent to $129.3 million from $107.4 million.

The company said that same-store sales have remained at a similar pace in the third quarter. Same-store sales are up 4.8 percent so far at company-owned units in the first four weeks of the period, and 2 percent at franchisee units.

The 1,100-unit chain recently finalized a deal to buy 41 locations in Texas, New Mexico and Hawaii from a franchisee. That deal is expected to close next month.

Contact Jonathan Maze at [email protected].
Follow him on Twitter at @jonathanmaze

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