Buffalo Wild Wings Is a Better Version of Olive Garden's Parent

Is Buffalo Wild Wings the next Olive Garden?

Buffalo Wild Wings wants to become a company of 3,000 restaurants worldwide, Photo: Mike Mozart/Flickr.

When Buffalo Wild Wings (NASDAQ: BWLD  ) announced the purchase of a majority stake in fast-casual chain Rusty Taco on Monday, it marked an important step toward fulfilling its most ambitious goal. Specifically, as B-Dubs' CEO Sally Smith put it, that goal is "to build a portfolio of diversified brands for long-term sustained growth."

In other words, Buffalo Wild Wings wants to become a stronger version of Olive Garden's parent company.

How do I mean? With 837 locations at the end of last quarter, Olive Garden operates as the flagship subsidiary of Darden Restaurants (NYSE: DRI  ) . And before Darden completed the $2.1 billion sale of its 706-restaurant Red Lobster business to Golden Gate Capital last month, it operated a huge casual restaurant portfolio of 2,207 locations, split between eight brands. The others are LongHorn Steakhouse, The Capital Grille, Yard House, Bahama Breeze, Seasons 52, and Eddie V's.

For perspective, Buffalo Wild Wings' vision is to ultimately become a company of 3,000 restaurants worldwide, or nearly triple the 1,025 locations it sported at the end of June. And in the same way Olive Garden acts as Darden's flagship chain, Buffalo Wild Wings will undoubtedly remain the centerpiece of its own growing restaurant portfolio. To be sure, management has also set a goal of growing to 1,700 Buffalo Wild Wings restaurants in North America alone over the next 10 years. 

Why B-Dubs will be bigger, better, and more versatile
For investors, here's where Buffalo Wild Wings' story gets really interesting. Rather than focus entirely on the casual and fine-dining segments as Darden has done, Buffalo Wild Wings is hedging its bets by investing in the early stages of promising fast-casual concepts. And why not? According to the NPD Group, fast-casual restaurant traffic growth has easily outpaced the broader restaurant industry for each of the past five years.

Buffalo Wild Wings' diversification efforts began with the early 2013 purchase of a minority stake in fast-casual chain PizzaRev  -- the "Subway of Pizza," as some call it -- which currently operates just 17 locations. Terms of the original deal weren't disclosed, but Buffalo Wild Wings has already opened two company-owned PizzaRev locations in Minnesota, and added $3 million to its minority investment last quarter.

Buffalo Wild Wings PizzaRev

It takes less than three minutes for PizzaRev to cook hungry patrons' hand-crafted pies, Credit: PizzaRev.

That said, PizzaRev will also face competition from other chains like Pizzeria Locale, which was launched late last year by fast-casual extraordinaire Chipotle Mexican Grill (NYSE: CMG  ) .

But Buffalo Wild Wings wasn't about to take Chipotle's move sitting down. After the company announced its majority stake in Rusty Taco, Buffalo Wild Wings' Chief Strategy Officer Kathy Benning noted, "We specifically were looking for a taco-type concept ... that could work across the country."

Sit down and stay awhile
Don't for a second think Buffalo Wild Wings has any intention of letting up now. According to Smith, the company has "probably looked at 200-plus" concepts so far, and plans to invest in up to seven more over the next five years. In addition to Buffalo Wild Wings' own cash position, it has a $100 million unsecured line of credit available to make good on that promise.

As a long-term Buffalo Wild Wings shareholder, I can hardly wait to see what's next.

Consider this the next time you reach for the check
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Read/Post Comments (0) | Recommend This Article (6)

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.

Be the first one to comment on this article.

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: 3087006, ~/Articles/ArticleHandler.aspx, 8/31/2015 1:04:40 AM

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...

Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

Today's Market

updated 2 days ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

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

8/28/2015 4:00 PM
BWLD $194.06 Down -1.58 -0.81%
Buffalo Wild Wings CAPS Rating: ****
CMG $721.20 Down -5.97 -0.82%
Chipotle Mexican G… CAPS Rating: ***
DRI $69.05 Up +0.20 +0.29%
Darden Restaurants… CAPS Rating: ***