QUOTE AND NEWS
Benzinga  Apr 3  Comment 
In a report published Thursday, Wunderlich Securities analyst Robert M. Derrington reiterated a Buy rating and $165.00 price target on Buffalo Wild Wings (NASDAQ: BWLD). In the report, Wunderlich Securities noted, “We continue to rate Buffalo...
Benzinga  Apr 1  Comment 
Shares of Buffalo Wild Wings (NASDAQ: BWLD) are trading higher by 2.1 percent to $152.14 in Tuesday's trading following a CNBC interview with CEO Sally Smith and bullish comments from Wunderlich. Highlights from the CNBC interview include...
CNBC  Apr 1  Comment 
CNBC's Jim Cramer says Main Street gets Buffalo Wild Wings but Wall Street doesn't, and shares his take on Marriott's acquisition of Protea and Priceline.com's prospects.
TheStreet.com  Mar 21  Comment 
NEW YORK (TheStreet) -- TheStreet's Jim Cramer sees an important corollary between March Madness -- the NCAA college basketball tournament -- and food.Specifically, the food offered by Buffalo Wild Wings -- beer and wings, said Cramer, co-manager...
CNNMoney.com  Mar 20  Comment 
Domino's, Papa John's and Buffalo Wild Wings soar as hoops fans gear up for the NCAA. But their valuations may be the real March Madness.
Benzinga  Mar 10  Comment 
In a report published Monday, Miller Tabak + Co. senior analyst Stephen Anderson downgraded Buffalo Wild Wings (NASDAQ: BWLD) from Buy to Hold and raised the fair value estimate from $148.00 to $155.00. Anderson noted that Buffalo Wild Wings...
TheStreet.com  Mar 6  Comment 
NEW YORK (TheStreet) -- According to TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, people have doubted Sally Smith, CEO of Buffalo Wild Wings , for way too long.  "I'm tired of it," he said. "That's one of the reasons...
SeekingAlpha  Feb 19  Comment 
ByAsean Century: Executive summary: The former President & CEO of McDonald's U.S.A. is now the interim CEO of Famous Dave's of America. Look for continued expansion and the development of a fast-casual concept. With only 194...
TheStreet.com  Feb 6  Comment 
NEW YORK (TheStreet) -- CHANGE IN RATINGS Arlington Asset was downgraded to hold at TheStreet Ratings.Akamai was upgraded at Credit Suisse to neutral from underperform. Twelve-month price target is $47.50. Company should continue to deliver...
TheStreet.com  Feb 6  Comment 
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener. NEW YORK (TheStreet) -- Here are some of the hot stocks Jim Cramer talked about on Wednesday's "Mad Money" on CNBC: BWLD data by...




 

Buffalo Wild Wings, Inc. (NASDAQ:BWLD) operates a series of sports bar restaurants across the U.S., but with heavy concentration in Ohio. The company is best known for its chicken wings, which customers can customize with 14 different flavors to choose from. In 2009, the company generated $539 million in revenue and $30.7 million in net income.[1]

Chicken prices are rising because corn, which is a major ingredient in chicken feed, has become more expensive. Buffalo Wild Wings is sensitive to the price of chicken feed - in 2009, the price for chicken wings increased from $1.22 per pound to $1.70 per pound, leading to a 30.4% increase in cost of sales for the year.

Additionally as a sports bar, Buffalo Wild Wing's sales are tied to professional athletics' calendar - the company's earnings have generally been lower during the second quarter, when there are few big sports events.

Company Overview

Buffalo Wild Wings operates 232 company owned restaurants and 420 franchised restaurants in 42 states. The firm's principal business is the casual restaurant business. The bulk of their revenues come from restaurant sales at their company-owned restaurants (91%). Food and nonalcoholic beverages accounted for 76% of restaurant sales, with the remaining 24% coming from alcoholic beverages. The menu item with the highest sales volume is chicken wings at 21% of total restaurant sales. Franchise fees and royalties are 9.3% of revenues.[2]

Business Growth

FY 2009 (ended December 27, 2009)[1]

  • Total revenue increased 27.6% to $539 million. $97.9 million was generated from the opening of 36 new company-owned franchises and 52 restaurants that did not meet the criteria for same-store sales. Same-store sales for the period increased 3.4%.
  • Net income grew 25.5% to $30.7 million. Cost of sales grew 30.4% primarily due to more restaurants being open. Chicken wing costs rose to $1.70 per pound, up from $1.22 per pound in the prior year.

Trends and Factors

Chicken Wing Prices Are Highly Volatile Which Leads To Uncertain Operating Earnings

Since chicken wings are the largest selling item on Buffalo Wild Wing's menu, accounting for 21% of restaurant sales, any changes in chicken wing prices have dramatic implications for the company's cost of goods sold. In 2009, the price of chicken wings increased to $1.70 per pound, up from $1.22 per pound in the previous year.[1] This 48 cent increase multiplied by the hundreds of thousands of pounds of chicken wings the company needs to operates means substantially higher costs and reduced profits. As a result, cost of sales increased 30.4% in 2009.

With Low Market Penetration, Growth Opportunities Are Abundant

The company operates 652 Buffalo Wild Wings restaurants in 42 states, 88 of which are located in Ohio. This leaves the opportunity for nationwide growth. The company hopes to expand its operations to over 1,000 restaurants nationwide. The company also wants to increase the number of company-owned restaurants -- in 2009 just over 30% of the restaurants were company owned. The company opened 36 restaurants in 2009 and plans to open 88 in 2010.

Seasonality of the Business Affects Revenues

Operating as a sports bar, Buffalo Wild Wings is largely sensitive to seasonal factors, most notably, the number of big sports events. It is for this reason that second quarter sales have generally been lower than other quarters'. In addition, this sensitivity to sports seasons leaves them susceptible to slower business when, for example, the teams in the Super Bowl are of little interest to the customers of Buffalo Wild Wings restaurants.

Competition

Buffalo Wild Wings competes primarily with local and regional sports bars and casual dining and quick casual establishments, as well as with quick service restaurants such as wing-based take-out concepts. Many of the company's direct and indirect competitors are well-established national, regional or local chains.

Main competitors include:

  • Brinker International (EAT)- Operates casual dining restaurants such as, Chili's Grill & Bar, Romano's Macaroni Grill, On The Border Mexican Grill & Cantina, and Maggiano's Little Italy, in 49 US states and several countries.
  • Ruby Tuesday (RT)- Operates casual dining restaurants under the Ruby Tuesday brand name in the U.S. and internationally.
  • BJ's Restaurants (BJRI)- Operates casual dining restaurants in the U.S. under the names, BJ's Restaurant and Brewery, BJ's Restaurant and Brewhouse, and BJ's Pizza and Grill.
  • Cheesecake Factory (CAKE)- Operates full service and casual dining restaurants in the U.S. under the names, The Cheesecake Factory, Grand Lux Cafe, and The Cheesecake Factory Express.
  • California Pizza Kitchen (CPKI)- Operates casual dining restaurants in the U.S. and internationally under the names, California Pizza Kitchen, California Pizza Kitchen ASAP, and L.A. Food Show.
  • Applebee's International (APPB)- Operates the largest casual dining restaurant chain under the name Applebee's Neighborhood Bar and Grill in the U.S. and internationally.
  • Darden Restaurants (DRI)- Operates restaurants under the names Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones, and Seasons 52 in the U.S. and Canada.
  • Hooters Restaurants (privately-held) - Operates casual dining restaurants in the U.S. and internationally. It is known by many for it's chicken wings.

References

  1. 1.0 1.1 1.2 BWLD 2009 10-K "Selected Financial Data" pg. 22
  2. BWLD 2009 10-K "Overview" pg. 23--24
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