Buffalo Wild Wings Inc. has taken a minority-ownership position in PizzaRev, a fast-casual pizza chain with three units.
Terms of the investment were not disclosed.
The Minneapolis-based casual-dining operator of 900wing restaurants had revealed in its past few quarterly earnings calls that it was looking to invest some of its free cash flow into a noncompeting restaurant chain that it viewed as a potential national franchised brand.
“Over the past year, Buffalo Wild Wings has been investigating emerging restaurant concepts with high growth potential as we continue to build our dynamic company,” Kathy Benning, executive vice president of global marketing, brand and business development, said in a statement. “Along with chicken wings, pizza is one of America’s most popular foods, and we believe that PizzaRev has great potential for continued growth and success.”
Los Angeles-based PizzaRev was founded in 2012 by former entertainment industry executives Irv Zuckerman and Rodney Eckerman. The concept is built around a stone-hearth oven that cooks pizzas in about three minutes. Customers walk a service line where they can pick as many toppings for their pizzas as they like while still paying one set price.
“The PizzaRev team is thrilled to have Buffalo Wild Wings as an investor in our business, given its strong track record and stellar reputation within the industry,” Eckerman said in a statement.
In a research note, securities analyst David Tarantino of Robert W. Baird & Co. said the decision to take a minority, rather than majority, ownership position in PizzaRev could allow Buffalo Wild Wings to make similar investments in other growth vehicles.
“Management seems open to making additional investments of this nature, with Buffalo Wild Wings potentially providing more than one emerging growth concept with access to the company’s capital and expertise,” Tarantino wrote. “Remarks suggested Buffalo Wild Wings could be willing to increase its investment to a majority-control position in one or more brands that show promising growth potential, with an eye toward extending the long-term growth profile of Buffalo Wild Wings.”
He added, “We believe the initial approach of making a small minority investment in another concept is low-risk in nature and should not pose a significant distraction for management in the short run.”
Buffalo Wild Wings operates or franchises restaurants in 49 states and Canada and earlier this year announced plans to open in Mexico by year-end.