Why You Should Be Wild About Buffalo Wild Wings

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Often these days it can seem almost painful to open up an earnings report from a casual-dining restaurant. While the economy continues to struggle one of the first and easiest places for consumers to cut back is on dining. After digesting reports from Brinker International (NYSE: EAT  ) , Chipotle Mexican Grill (NYSE: CMG  ) , and now Buffalo Wild Wings (NASDAQ: BWLD  ) , it's becoming easier to decide where to park your long-term restaurant investing dollars.

Buffalo Wild Wings results
On Feb. 4, Buffalo Wild Wings reported fiscal fourth-quarter results. Total revenue climbed 12.4% to $341.5 million. Same-store sales popped 5.2% at company-owned locations and 3.1% at franchise locations. Net earnings rocketed 24.9% to $20.8 million or $1.10 per share. 

This was a 13-week quarter compared to a 14-week quarter, or the numbers get otherwise even more pronounced. Excluding the extra week, revenue and earnings soared 22% and 59.6%, respectively. Same-store sales were up near 4.7% across the board. You could have sworn you were reading the growth report of a hot social media site instead of a restaurant chain.

Chief executive Sally Smith credited the success with new portion sizes, new design, new beer, and new locations. The success didn't end with Christmas at the wing chain. Smith mentioned that the company-owned stores tacked on another 4.8% in comparable sales growth in the first five weeks of 2014 whereas they slipped back by 0.2% last year. She expects this same-store sales momentum to continue throughout the year and is calling for a 20% increase in earnings per share for 2014 to $4.55 per share.

Where it starts getting wild
The individual restaurants on average and the entire chain are doing very well. That much is obvious. What's particularly wild, though, is the chain only has barely more than 1,000 very popular locations. That comes out to on average only 20 per state and even less when you consider that a few are international. In short, there appears to be ample room for vast expansion.

During the conference call, the company reiterated its plan to build out 1,700 locations in the U.S. and Canada alone. This doesn't even include international locations, and Buffalo Wild Wings opened its first location in Mexico two months ago. Smith mentioned about Mexico, "Sales are robust, which gives us confidence that the brand travels well." The company plans to open a location in Dubai this year. Don't be surprised to see growth continue well passed 1,700 locations domestically as well. Let's face it: beer, wings, and football represent a local experience with friends. There has got to be many more than 1,700 local regions filled with people who would enjoy the experience.  

Chipotle Mexican Grill and Brinker International
Chipotle Mexican Grill's results remind us that Buffalo Wild Wings' quarter wasn't necessarily a fluke in an otherwise weak dining market. At this chain, sales took off by 20.7%, same-store sales rose an eye-popping 9.3%, and net income exploded 29.8% while seeing a decent increase in guest traffic. CEO Steve Ells stated, "For the foreseeable future, however, our growth will be driven primarily by opening Chipotle restaurants in the United States." Customers are still willing to open their purses and wallets in increasing numbers at the right places such as Chipotle Mexican Grill and Buffalo Wild Wings.

Meanwhile, at Brinker International, its report was more in-line with what's more common lately among restaurant chains. Its sales inched up 2.3%, while systemwide domestic sales ticked up an anemic 0.3%. For December alone, things at Brinker International turned much worse. Same-store sales fell 4.9%, while guest traffic plunged 6.8% for the chain. Brinker International blamed "more severe weather" for the shortfall. Was it that or was everybody ditching Chili's and heading over to Buffalo Wild Wings and Chipotle Mexican Grill instead?

Foolish final thoughts
Fools looking for a rapid growth story that still has much of its growth should consider taking a peek at Buffalo Wild Wings. Between growing locations and growing sales and profits at each location, the majority of its long-term annual earnings growth is likely ahead of it. Buffalo Wild Wings has 2014 P/E of roughly 30, which doesn't seem bad considering the opportunity for expansion. It might be worth waiting to see if the stock price gets a decent pullback for a long-term entry.

The Motley Fool's Top Stock for 2014
There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 10, 2014, at 12:15 PM, MVPanther wrote:

    Why is there such a disparity between company owned stores and franchise stores? Same store sales increases of 5.2% vs. 3.1%. I would be concerned if I was a franchise owner, as an investor is this meaningful?

    All of these type of articles always seem to start by referencing the poor state of the economy, but there is always a 45 min wait for a table when I want to take the family out to eat!!

    And since I'm being critical - the 1700 locations in the US & Canada . . . . I think some of those must count as international locations.

    Come on . . . let's do a bit of proof reading before throwing these articles up for all to see!

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2831242, ~/Articles/ArticleHandler.aspx, 9/2/2015 3:14:03 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Nickey Friedman

Nickey is a select freelancer for the Fool. She writes about food & beverage, dry bulk shipping, and whatever else floats her boat. After selling four successful restaurants, she turned in her knives for a pen and now puts her passion for food, hospitality, and transportation in writing. You can send email to her at

Today's Market

updated Moments ago Sponsored by:
DOW 16,245.49 187.14 1.17%
S&P 500 1,937.36 23.51 1.23%
NASD 4,702.15 66.04 1.42%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/2/2015 2:54 PM
BWLD $192.96 Up +1.91 +1.00%
Buffalo Wild Wings CAPS Rating: ****
CMG $719.67 Up +12.96 +1.83%
Chipotle Mexican G… CAPS Rating: ***
EAT $52.86 Up +0.68 +1.30%
Brinker Internatio… CAPS Rating: ***