What do full-service beer and wings have to do with fast-casual Mexican food? Absolutely nothing. However, unlikely contenders Buffalo Wild Wings (NASDAQ:BWLD) and Chipotle Mexican Grill (NYSE:CMG) may find themselves on the same battlefield when it comes to pizza.
What? A pizza war?
Yes, pizza. Although Buffalo Wild Wings does have a flatbread pizza on its menu, what I'm actually referring to is the company's "build-your-own artisanal pizza concept" called PizzaRev. Buffalo Wild Wings has thrown its hat into the fast-casual ring and is planning to expand its PizzaRev concept everywhere. Guests are able to "craft their own" personal pizza from 30+ ingredients and it's ready in less than three minutes.
Chipotle Mexican Grill has its own fast-casual pizza concept revving up for what it hopes is a national roll-out. It's called Pizzeria Locale. According to Steve Ells, co-CEO of Chipotle Mexican Grill, it shares its economic model with Chipotle.
Even with vastly different types of food, Ells believes that the company can leverage the management of the Pizzeria Locale chain because field managers within a geographic region can manage both chains at the same time. A manager can work with the Pizzeria Locale model in the same way that he or she manages Chipotle Mexican Grill.
Advantages of each
Both companies have their unique advantages as they roll out their pizza chains. For Chipotle Mexican Grill, it's kind of obvious. It knows fast-casual. It has vast experience in operations, logistics, and location scouting. It has the Chipotle Mexican Grill branding attached to it. When a Pizzeria Locale pops up in town and word gets out that it's owned by the Chipotle people, at least some loyal fans will be curious and give it a shot.
Will the Buffalo Wild Wings fans be equally tempted? Maybe. I just get the impression that Buffalo Wild Wings is just as much about the ambiance and experience as it is about the wings whereas with Chipotle Mexican Grill it's mostly about the food. No doubt Chipotle Mexican Grill is the one that gets more to-go orders.
According to a presentation back in May, Chipotle Mexican Grill claims that the pizzas at Pizzeria Locale only take two minutes to bake. They take three minutes at PizzaRev. That extra minute of savings may not sound like a lot, but that extra minute per person could make a huge difference for the line, especially at lunch.
A point for Buffalo Wild Wings is the possibility of cross-selling its products. I wouldn't expect a Chipotle burrito at Pizzeria Locale or pizza at Chipotle any time soon. However, it's not hard to imagine either PizzaRev pizza becoming available at Buffalo Wild Wings, or perhaps even more likely, Buffalo Wild Wings brand wings becoming available at PizzaRev. Why not? One thing's for sure -- wings and pizza have gone together since what seems like the birth of food itself.
Both Buffalo Wild Wings and Chipotle Mexican Grill have grown fantastically and continue to do so with amazing same-store sales and unit growth quarter after quarter after quarter. Their stock prices likewise have exploded and this has caused many to question their valuations. However, keep an eye on their pizza concepts.
Even most bears would probably admit that if these companies' pizza concepts prove to be even half as successful as their core concepts, this would be a game changer for both of their long-term valuations that would make their current prices look cheap.