Buffalo Wild Wings carries sales momentum into 2Q

Leaders of Buffalo Wild Wings Inc. cited several factors for its more than 70-percent gain in net income in the first quarter, including corporate restaurant development, favorable food costs, and same-store sales increases of 6.6 percent at company-owned locations and 5 percent at franchised outlets.

Executives added that sales-driving initiatives like the chain’s new service format, new wing sauce flavors and incremental sporting events would build more momentum for sales this year — and that momentum has already began to build.

The Minneapolis-based chain achieved same-store sales growth in the first quarter with only a slight increase in menu prices — only 2.1 percent higher than during the year-earlier period. Officials pointed to a favorable sports calendar and gains from its Guest Experience service model, in which “Guest Experience Captains” float throughout the dining room and assist servers, for driving the chain’s increases in traffic and average check.

“I think in March Madness we hit on some nice advertising,” chief operating officer Jim Schmidt said during the company’s earnings call. “We had some great exposure to the ‘overtime’ advertising that we did during the tournament. … Almost two-thirds of our [company-owned] restaurants have Guest Experience Captains, and we definitely think that is having an impact.”

The Winter Olympics also delivered a modestly beneficial lift to the brand’s results, officials said.

Second-quarter surge

Chief financial officer Mary Twinem noted that Buffalo Wild Wings’ same-store sales actually accelerated through the first four weeks of the current second quarter, when adjusting for the calendar shift of Easter. The recently completed first quarter had a 0.6-percent benefit to same-store sales from the holiday moving out of the quarter — and, more importantly for Buffalo Wild Wings, due to the NCAA basketball tournament.

Through the first four weeks of the second quarter, same-store sales rose 5.7 percent at company-owned units and 4.4 percent at franchised restaurants, including a 0.9-percent headwind from Easter falling on April 20 of this year. Excluding the Easter impact, the brand’s comparable sales to date in the second quarter were running at 6.6 percent for company-owned units and 5.3 percent at franchised locations, compared with 6 percent and 4.4 percent, respectively, in the first quarter.

Schmidt said the playoffs for the National Basketball Association and the National Hockey League “got off to a good start,” and drove traffic early in the second quarter.

Chief executive Sally Smith pointed to the upcoming World Cup in June as another sporting event that ought to help Buffalo Wild Wings drive traffic in the second quarter. The chain will partner with Budweiser and Heineken to develop two new interactive games that can be played either online or in the restaurants.

“It’s been four years [since the last World Cup], and we are certainly a different company than we were four years ago,” Smith said. “We think we have that same opportunity that we have had with March Madness or the Super Bowl or [college football] bowl games. … We really look forward to being able to take advantage of what we offer our guests in terms of viewing … but definitely focus on soccer.”

Growing as planned

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Smith and her fellow executives also updated investors on growth initiatives laid out earlier this month at Buffalo Wild Wings’ Investor Day conference.

Smith said the company expects international franchisees to open nine restaurants this year in Mexico, Saudi Arabia, the United Arab Emirates and the Philippines.

“We are in active discussions with potential franchise partners in other countries,” Smith added. “The international opportunity for Buffalo Wild Wings is just beginning, and we believe that we will achieve 400 international Buffalo Wild Wings restaurants in the next 10 years.”

Of the guest-facing technology set to roll out systemwide over the next few years — including a digital loyalty program planned for the second half of 2015 — tablet computers are being tested at the most restaurants. Schmidt noted that the tablets currently allow guests to play trivia, poker and music, but the chain will soon begin a test for tableside ordering and payment on the tablets later this year.

“What I can tell you though is we’ve seen a dramatic increase in the usage of the new BuzzTime tablets versus the old BuzzTime tablets and how long it gets utilized while in the restaurants,” Schmidt said. “So that does tell us that I think as we add functionality, we believer there is a real opportunity for them to enhance our guest experience and ultimately drive traffic.”

The company provided no further detail about possible targets for its intended acquisition of emerging franchise brands, other than to reiterate that it had a $100 million unsecured line of credit through January 2016 that could help fund another acquisition like one executed last year for a minority stake in PizzaRev.

As of the end of the first quarter ended March 30, Buffalo Wild Wings operated 443 company-owned restaurants and franchised another 569 locations in the United States and Canada.

Contact Mark Brandau at [email protected].
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