Buffalo Wild Wings (NASDAQ:BWLD) shareholders are still reeling after their stock took a 13% hit following the restaurant chain's second-quarter results, reported July 29. Though strong FIFA World Cup traffic helped B-Dubs beat expectations on both its top and bottom lines, its freshly raised full-year net earnings guidance left the market wanting more.
But Buffalo Wild Wings stock's slight year-to-date drop doesn't mean the popular beer, wings, and sports-centric chain is struggling. To the contrary, here are three reasons Buffalo Wild Wings stock could possibly rise from here.
(American) football season
First, American football season is upon us, and Buffalo Wild Wings couldn't be more excited. Nearly all of Buffalo Wild Wings' more than 1,025 restaurants are in the U.S., so American football is arguably its biggest annual driver. It should come as no surprise, then, that Buffalo Wild Wings CEO Sally Smith often describes football season as "our favorite time of the year."
B-Dubs' football season starts with preparations for fantasy football draft parties through the Sept. 4, 2014, NFL regular season opener. What's more, since Buffalo Wild Wings ditched Coca-Cola for Pepsi late last year -- and keeping in mind PepsiCo is currently paying the NFL roughly $90 million per year as part of an exclusive sponsorship agreement that runs through 2022 -- Smith said that this season they plan to "increase promotion of fantasy draft parties through our partnership with Pepsi and their affiliation with the NFL."
On Sept. 2, Buffalo Wild Wings is also introducing a new gaming platform called Game Break as an app for Android, iOS and, of course, its own incredibly entertaining new tablets. Game Break will start by featuring three football-centric games, including an exclusive title with real-time questions about the actual football games diners are watching. In addition to driving repeat traffic to B-Dubs locations, this entertainment differentiator should drive positive comps by keeping engaged diners at their tables spending money on beer -- which Smith called a "cornerstone of our brand" -- and other higher-margin alcohol sales for longer periods of time.
Ongoing menu innovation
Next, while its staples remain beer, wings, and sports, Buffalo Wild Wings is doing everything in its power to drive comparable-restaurant sales growth by keeping diners on their toes -- in a good way -- with other menu innovations.
Perhaps most notably, that includes the "B-Dubs Sauce Lab," which gives customers the chance to try and rate limited-time flavors like Salted Caramel BBQ, Classic Margarita, and the painfully hot Ghost Pepper. For wing connoisseurs who enjoy the atmosphere, these temporary treats drive sales by practically begging repeat visits.
In celebration of last July's successful launch of Game Changer ale, brewed by Redhook, Buffalo Wild Wings also recently introduced a "Game Changer brat," featured on its current menu panel. What's more, they're increasingly marketing unique cocktails, including the "Beermosa" and "Mountain Dew Rum Runner."
In the end, whether you personally enjoy every change or not, Buffalo Wild Wings' habit of playfully tweaking its menu is key to its long-term success.
Mouthwatering worldwide expansion
Finally, don't forget that Buffalo Wild Wings earlier this year outlined long-term plans for operating 3,000 restaurants worldwide, nearly triple its current total.
But that goal will take some time to come to fruition. To be sure, Buffalo Wild Wings "only" expects to open 85 total new locations in 2014, including 40 franchises and 45 company-owned restaurants. Of those, seven to nine new restaurants are expected to come from franchisees outside the U.S. and Canada, and they're looking to add new franchise partners to further accelerate international growth going forward. For perspective, earlier this year management stated they believe Buffalo Wild Wings will have 400 international locations within the next 10 years.
That's also leaving aside the potential for Buffalo Wild Wings' recent investments in PizzaRev, which effectively expands its brand by duplicating a Chipotle Mexican Grill-esque fast-casual dining style. PizzaRev continues to expand its franchising across the U.S., and Buffalo Wild Wings opened its first company-owned PizzaRev location in Minnesota in May.
Better yet, management hinted at the future by noting in last quarter's conference call: "[W]e continue to explore other investment candidates to build a portfolio of diversified brands for long-term sustained growth."
Don't get me wrong: As a Buffalo Wild Wings shareholder, I know it's never fun to see any stock drop significantly over a short period of time. But largely thanks to the three catalysts I described above, I remain convinced Buffalo Wild Wings stock still represents a compelling buy for patient, long-term investors.