Buffalo Wild Wings Inc. said on Wednesday that its profits fell 11.6 percent in the third quarter ended Sept. 27, despite higher revenues, as a franchisee acquisition and higher costs took a toll on earnings.
The company said that net earnings fell to $19.2 million in the period, or $1 per share, from $21.8 million, or $1.14 per share in the same quarter a year ago.
Executives blamed a combination of higher costs and the acquisition of 41 franchised units in Texas, New Mexico and Hawaii.
“Cost of sales and labor as a percentage of restaurant sales were higher compared to the prior year and, with the additional depreciation, amortization and other expenses related to the recently completed franchisee acquisition, our earnings per diluted share decreased year-over-year to $1,” Buffalo Wild Wings CEO Sally Smith said in a statement.
Labor costs, which have been a problem at Buffalo Wild Wings due to staff additions and minimum wage increases, were 32.2 percent of sales, compared with 31.9 percent a year ago. Cost of sales, which includes food and paper, rose to 29.4 percent of sales, from 29.1 percent.
Depreciation and amortization rose to 7.4 percent of sales, from 6.6 percent last year.
Same-store sales increased 3.9 percent at company-owned restaurants in the quarter and 1.2 percent at franchised locations. Company executives said that a calendar shift left them with one less week of football and fewer pay-per-view events, which impacted sales by 80 basis points.
Still, executives said that same-store sales have risen 2.8 percent at company locations and 0.8 percent at franchised outlets in the first four weeks of the fourth quarter thus far, far below the 5.4-percent and 5.1-percent increases, respectively, a year ago.
Buffalo Wild Wings stock fell more than 12 percent in after-hours trading.
Revenues at the company, however, increased 22 percent, to $455.5 million in the quarter, from $373.5 million a year ago.
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