Please ensure Javascript is enabled for purposes of website accessibility

Why Buffalo Wild Wings Stock Fell 15% in July

By Anders Bylund – Aug 1, 2017 at 10:50AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fewer customers are buying cheaper menu items, and chicken wings are getting expensive. That's not an easy riddle for this casual-dining chain.

What happened

Shares of Buffalo Wild Wings (BWLD) fell 15.2% in July 2017, according to data from S&P Global Market Intelligence.

So what

The operator and franchisor of the chain of family friendly sports bars was already walking uphill as it prepared to release second-quarter results on July 26, trading down 3% due to widespread signs of trouble in the casual dining sector. The report itself didn't help matters as B-dubs delivered earnings of $0.66 on an even $500 million in top-line sales but analysts had been looking for $1.05 per share and $513 million, respectively. The stock closed the next day another 10.2% lower.

A plate of Buffalo chicken wings, celery, and ranch dressing.

Image source: Getty Images.

Now what

These are difficult times for Buffalo Wild Wings and its sector peers.

In the words of B-dubs CEO Sally Smith, the low earnings were caused by "a decline over prior year, driven by negative same-store sales, increased wing prices and a mix shift toward our value offerings."

In other words, fewer people are showing up at Buffalo Wild Wings restaurants, those who do make that trek are likely to pick lower-priced menu items, and ingredient prices are rising at the same time. That's a difficult triple whammy.

The company is fighting these difficult trends by improving B-dubs' mobile ordering apps, simplifying the takeout experience, and running highly targeted discount events. Smith is on her way out after 21 years in the corner office, under heavy pressure from activist investors.

For the first time in years, I'm not even curious about buying Buffalo Wild Wings. The company needs to sort out its management/activist tension while also dealing with a brutal market environment. There are no easy answers, and the stock could very well continue to fall from here.

Anders Bylund has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Buffalo Wild Wings. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.