Source: Buffalo Wild Wings.

Beer and chicken wings joint Buffalo Wild Wings (BWLD) has laid out an ambitious growth plan to triple its size in the coming years, one that will cement its position as a global go-to leader in sports bars. But there are substantial risks involved and, with a premium valuation already assigned by the market, investors may want to consider the potential for a stampede away from its stock.

With 1,000 locations spread across the U.S., Canada, and Mexico, B-Dubs is looking to  expand to 1,700 restaurants in 10 years' time. It has the ultimate goal of becoming a 3,000-unit behemoth, one that delves into brand extension beyond the confines of beer and wings, encourages customer loyalty through technology, and furthers its affinity with sports.

Buffalo Wild Wings reported earnings in February that, on the whole, represented a robust departure from much of the rest of the restaurant industry. Whereas fast-casual chains like Chipotle Mexican Grill and Panera Bread have been eating everyone's lunch, casual-dining concepts from Darden Restaurants' Olive Garden and Red Lobster to Ruby Tuesday are struggling with flagging demand.

Which is why B-Dubs' own results were notable. Revenues climbed more than 12%, to  $341.5 million, and same-store sales were up more than 5%, allowing net profits to surge 25% year over year. The casual-dining chain has been enjoying a phenomenal growth spurt during the past few years that it wants to build upon.

Source: Buffalo Wild Wings Analyst Day Presentation, April 2, 2014.

The plans to continue those trends can be largely broken down into four broad areas: 

  • Build out brand extensions like its recent partnership with PizzaRev.
  • Meld technology to the customer experience.
  • Go even more international.
  • Leverage its deal with PepsiCo and the NFL to market local opportunities.

The risks, however, should give investors pause. Although turning pizzerias into higher-end fast-casual restaurants is hot at the moment, it may be a fad that's already peaked. The market researchers at NPD Group are looking for pizza growth to slow from 3.7% in 2012 to 2.3% last year and just 1.9% this year. Aside from Yum! Brands KFC division having problems with its chicken business in China, its Pizza Hut chain is experiencing falling comps. Others, like Chipotle, are also looking to see what gains can be made out of the trend, so it's becoming a crowded niche; but Sbarro just went bankrupt, too.

Furthermore, while adding new technology -- like table-side tablets that allow for ordering and entertainment possibilities -- will create a more immersive customer experience, it's also true that, right now, it's a bit of a novelty, and the presence of such apps across retail is becoming much more commonplace. B-Dubs will be coupling that with a new "stadia" design for its restaurants that will mean significant up-front costs for what is largely cosmetic changes. Technology can't cover up a weak business model, though admittedly, Buffalo Wild Wings has not exhibited such weakness.

New stadia design. Source: Buffalo Wild Wings.

While the chicken wings king looks to grow internationally, will all of the components that have made it successful here in the U.S. really translate well in the Middle East and Asia? That's a large question mark for me, particularly because it's obviously a different sports culture elsewhere around the world. Having NFL players make local appearances may work here, but not so much elsewhere.

By and large, I appreciate Buffalo Wild Wings' expansive view of itself, because it shows a management that continuously looks to reinvent its business. There are positive attributes to each component of its plan, so it's not as though the company is running off the rails.

However, it carries a premium valuation and it resides in a dining niche that, while it's remained above the fray for a while, may not be able to avoid much longer the larger impacts that a weak economy is having on such chains. At eight times earnings, and trading at more than twice its sales, Buffalo Wild Wings can't afford to stumble at all while roaming the range of new possibilities.