Buffalo Wild Wings Inc. reported slower sales in March and early in the second quarter, sending the company’s stock down nearly 14 percent on Wednesday.
But the Minneapolis-based chain of sports-oriented casual-dining restaurants won’t get a boost from the upcoming Mayweather-Pacquiao boxing match.
The match will be held Saturday and is being billed as the fight of the century. However, restaurants are being charged $5,100 to broadcast the event, Buffalo Wild Wings executives said during its earnings call Tuesday.
Buffalo Wild Wings will only show the fight in a few company locations and in 70 franchised units, and in every case it is charging a cover fee.
“We did not feel comfortable with the cost,” chief operating officer James Schmidt said during the call. He also cited the timing of the fight, at 8 p.m. Central Time, right during the dinner hour on the West Coast.
Buffalo Wild Wings saw a double-digit same-store sales increase in the first half of the quarter due to strong sales during college football bowl games and the NFL playoffs. But the company finished the quarter with a 7-percent increase at corporate locations, suggesting a slowdown in February and March.
Company same-store sales rose 4.2 percent in the first four weeks of April, Buffalo Wild Wings said this week, and 1.8 percent at franchised units.
Sales were “softer than expected,” Jefferies analyst Alexander Slagle said in a note late Tuesday. He added that the decision to broadcast Saturday’s fight at only a handful of locations “was a surprise to us.”
In addition, the chain doesn’t have the benefit of a major sporting event this summer, like it did with the 2014 World Cup soccer tournament, which boosted sales last year.
“Sales comparisons will be more difficult, given the World Cup from last June,” Buffalo Wild Wings CEO Sally Smith said.
Executives said they are planning a World of Sports promotion this summer to highlight unique sports around the world. The chain will show the Women’s World Cup, and also run games in restaurants with prizes including a trip to see a rugby match in England and a trip to watch sumo wrestling in Japan.
Meanwhile, executives said Buffalo Wild Wings is working to add technology to its restaurants to improve speed of service. The chain has tabletop tablets in 80 percent of its restaurants, and the rollout should be complete this year.
Buffalo Wild Wings also plans to test technology that would enable customers to order their meals on the tablet, and is currently testing handheld devices to enable customers to pay more quickly.
Executives said the goal is to roll out ordering and payment technology in 2016. Smith said the company ultimately wants several solutions for faster payment.
“Guests want choice in payment, and we’re working to build out payment capabilities that will ultimately include several solutions for faster payment,” she said. “Our guests place great emphasis on speed of service.”
Such efforts could aid its new lunch program, B-Dubs Fast Break Lunch, which aims to get customers in and out in less than 40 minutes. Faster ordering and payment would help with that initiative.
Another concern is chicken wing prices. Buffalo Wild Wings’ net income rose only 2.6 percent in the first quarter, despite nearly 20-percent revenue growth, due in part to a 41-percent increase in the price of wings. The company paid $1.92 per pound for wings during the quarter, 56 cents higher than $1.36 last year, when prices were unusually low, executives said.
Wing prices are expected to moderate in the next couple of quarters, CFO Mary Twinem said, which should ease pressure on net income.
During the first quarter, consumers increasingly chose boneless wings. Buffalo Wild Wings said boneless wings accounted for 22 percent of sales during the quarter, while bone-in wings accounted for 21 percent of sales.
Boneless wings have become increasingly popular among customers, and are also better for restaurants, given the frequent, wild swings in prices for bone-in chicken wings.
Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze
