Buffalo Wild Wings Delivers Spicy Profits

While many are saying the casual dining industry is in a soft spot, somebody forgot to tell Buffalo Wild Wings (NASDAQ: BWLD  ) . Buffalo Wild Wings reported jaw-dropping earnings results that joined the likes of Chipotle Mexican Grill (NYSE: CMG  ) and Sonic  (NASDAQ: SONC  ) , both of which also reported phenomenal results. Total revenue, same-store sales, and earnings all exploded for the beer and wings chain.

Results
Sales popped 27.9% to $315.8 million, and net earnings skyrocketed 66.9% to $17.9 million for Buffalo Wild Wings. Earnings per share leapt 65.4% to $0.95. Same-store sales jumped 4.8% for company-owned restaurants and 3.9% for franchises. That's quite an impressive showing across the board, especially at a time when others in the restaurant industry are struggling.

Now the fun part
Buffalo Wild Wings has a proven concept, so its mission is simple: expand, expand, expand. It increased the number of restaurants by 21% compared to last year, adding 105 company-owned and franchise restaurants. That growth continues to accelerate--another 44 restaurants are slated for the fourth-quarter alone. Buffalo Wild Wings is zeroing in on 1,000 total locations by the first quarter of 2014 and an eventual target of 1,700 restaurants. It's an amazing feat for Buffalo Wild Wings to be not only rapidly developing new restaurants, but also rapidly growing sales and profits at the restaurants it already has. What's in that wing sauce that's so addictive?

Not just wings
The economy may be weak, but clearly consumers are willing to spend if the food and experience are right. Chipotle distinguishes itself as a step above the "typical fast food experience." Despite its already large size, Chipotle increased revenue by 18%, EPS by 17.2%, and same-store sales by 6.2%, which shocked the Street and sent the stock up to new highs.  Clearly the economy is not stopping the lines from forming at Chipotle restaurants.  Look for more growth at Chipotle.

Sonic has a similar story to tell. Its same-store sales rose by 5.9%, similar to Chipotle. Shares of Sonic are also being driven to new highs. Whether it's hot wings, burritos, or burgers, consumers clearly are showing up in increasing numbers to the few restaurants that have the recipes they crave.  Just like Chipotle, look for more signs from Sonic in its press releases and conference calls that it's still not feeling economic pain.  If Sonic continues to do well despite the economy, Buffalo Wild Wings should be able to continue to spread its wings and fly. 

In its conference call, Buffalo Wild Wings detailed lots of ideas, changes, and promotions for 2014. It's hard to doubt a company that's been this successful so far, but it can always be a tad nerve wracking when a company tries to fix what isn't broken. It plans to spend more on advertising, and even open a couple of pizza locations next year. What the hey, Buffalo Wild Wings could afford to take a few small side gambles as long as it keeps its eye on the main ball of wings, beer, and sports, right?

Foolish way to wing it
With the football season upon us, people will be eating wings and guzzling beer in ever-increasing numbers. The positive momentum and success should help drive Buffalo Wild Wings to even greater sales and profits. With shares of the stock trading near all-time highs, prudent investors may hope and wait for a pullback before ordering up a batch of shares. Watch the same-store sales with each report to be assured that Buffalo Wild Wings still has sauce worth dipping into.

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