Buffalo Wild Wings' Latest Investments Could be a Boon for Business

Buffalo Wild Wings is making a big bet on emerging restaurant brands.

Sep 3, 2014 at 3:30PM

Buffalo Wild Wings (NASDAQ:BWLD) is on a roll these days, and its new plan to acquire emerging restaurant brands in the burgeoning fast-casual space could push the stock even higher. Shares have climbed more than 266% over the past five years to roughly $144 a pop today. Let's look at why Buffalo Wild Wings' latest investments could be a catalyst for the stock going forward.

Screen Shot

Source: Buffalo Wild Wings.

Investing in start-ups
Buffalo Wild Wings recently acquired a majority stake in Rusty Taco, a Dallas-based Mexican chain that serves made-to-order street-style tacos. Rusty Taco is the latest addition to Buffalo Wild Wings' growing portfolio of fast-casual start-ups. Less than two years ago, Buffalo Wild Wings also took a strategic position in PizzaRev, a chain that lets customers craft custom artisanal pizza in a Chipotle (NYSE:CMG)-style environment.

These strategic investments are particularly well timed, as Tex-Mex food and custom pizza are two of the hottest categories in fast-casual dining today. In fact, Chipotle set its sights beyond Mexican food last year when it launched the fast-casual eatery chain Pizzeria Locale.

Pizza Rev Pic

Source: Pizza Rev.

Buffalo Wild Wings isn't trying to directly compete with Chipotle with its recent investments in Rusty Taco and PizzaRev. Rather, these investments are part of the company's longer-term growth strategy. By bringing in small emerging brands, Buffalo Wild Wings gains an entry point into the fastest-growing segment of the restaurant industry today: fast casual.

The company isn't wasting any time executing this plan. Buffalo Wild Wings CEO Sally Smith said the company wants to acquire between three and five different emerging restaurant brands over the next few years.

The chicken wings and sports-focused chain currently operates 1,000 Buffalo Wild Wings restaurants in the United States. While management plans to add roughly 700 locations, there is a limited amount of growth possible before Buffalo Wild Wings saturates the U.S. market. Therefore, investing in small scale fast-casual chains such as Rusty Taco and PizzaRev gives Buffalo Wild Wings a new growth channel outside of its core business.

These investments are also smart moves for both emerging chains, which can leverage Buffalo Wild Wings' experience in growing a successful restaurant business. With the help of Buffalo Wild Wings, Rusty Taco and PizzaRev have the potential to become national restaurant chains.

Growing through franchises
Buffalo Wild Wings had 579 franchise-operated restaurants open at the end of its second quarter, more than half its total location count. The company is using this knowledge of franchising to help PizzaRev and Rusty Taco grow their businesses.

Buffalo Wild Wings opened its second PizzaRev franchise restaurant in Minneapolis last month. The pizza chain plans to open additional franchise locations in the following markets: Minnesota, Utah, Nebraska, South Dakota, Missouri, Texas, and Orange County and San Diego in California.

Buffalo Wild Wings has a similar arrangement with Rusty Taco. "We are delighted to be partnering with Buffalo Wild Wings and believe it can have an immediate impact in helping accelerate our growth," said Rusty Taco CEO Steve Dunn in a press release. The Tex-Mex upstart currently has two company-owned restaurants and seven franchised locations in three U.S. markets. You can expect many more franchised locations to pop up soon now that Buffalo Wild Wings has a majority stake in the company.

What it all means for Buffalo Wild Wings
Buffalo Wild Wings' investment in these start-up businesses is a smart long-term move that supports the company's drive to build a portfolio of emerging brands that could become national chains down the road. It also positions Buffalo Wild Wings as a more dynamic restaurant company by diversifying its revenue streams.

Why you may not be able to use your credit card to eat at Buffalo Wild Wings or elsewhere soon 
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.

Tamara Rutter has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings and Chipotle Mexican Grill. The Motley Fool owns shares of Buffalo Wild Wings and Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers