Casual restaurant chain Buffalo Wild Wings (NASDAQ:BWLD) claims to provide "the ultimate social experience for sports fans" and there seems to be some truth there. With its growing popularity, the chain has opened more than 835 restaurants in the past 12 years -- and it isn't done yet. It's harboring big ambitions and making equally big investments to realize them. Let's delve deeper to find out more about Buffalo's expansion plans.

Source: Buffalo Wild Wings.

Capex trends
In the last five years, Buffalo has been diverting more of its revenue into capital spending than bigger players like McDonalds, Starbucks, Yum! Brands, or Chipotle Mexican Grill, as it's been expanding rapidly.

Data source:, chart by author.

In 2011, the company made a big leap in capital expenditure and increased spending to $130 million from $73 million in 2010. Buffalo Wild Wings opened 50 new restaurants that year, which spurred a 29% year-over-year improvement in restaurant sales. Since then, capex has remained in the range of $130 million-$140 million. Between 2008 and 2013, Buffalo Wild Wings has grown its restaurant count at a CAGR of 12%. During the same period, revenue grew at a CAGR of 25%, and earnings at CAGR of 24%. 

Data source:, chart by author.

Buffalo Wild Wings has a three-pronged strategy for growth, and its focus areas are North America, international expansion, and developing emerging brands. For 2014, management wants to spend $146 million, excluding investments on emerging brands and new concepts. The company's chief financial officer, Mary J. Twinem, stated in the recently concluded second-quarter conference call, "We are investing for long-term growth and delivering impressive net earnings growth to Buffalo Wild Wings' shareholders." 

North America growth strategy
In the longer term, Buffalo Wild Wings expects to operate 1,700 restaurants in the U.S. and Canada, which will be a combination of both company-owned and franchised locations. It's actively identifying markets with bigger opportunities and suitable store locations that will allow profitable business growth. The size of the new stores would range between 4,000 and 7,500 square feet and accommodate 270 seats on an average. While Buffalo Wild Wings will look at both urban and rural areas for expansion, its primary focus will be suburban areas.

From time to time, Buffalo Wild Wings also acquires franchisee units that helps boost the number of company-owned restaurants at zero setting-up cost. As of last year, the company operated 434 owned restaurants and 559 franchisees in all. This year, it expects to open roughly 45 new company-owned restaurants, and license about 40 restaurants in the U.S. 

International growth strategy
So far, Buffalo Wild Wings has restricted its business only to the U.S. and Canada, but of late, it's become keen on branching out farther. It has agreements with five franchisees to open restaurants in Mexico, the Middle East, and the Philippines. The company is looking for suitable locations in India, South Korea, and Vietnam, and it also has Brazil and China on its radar. By this year's end, it expects to own and operate 10 restaurants outside North America. Buffalo Wild Wings wants to operate 400 restaurants in international destinations in seven to 10 years. 

Emerging brands growth strategy
Buffalo's third strategy is to invest in acquiring emerging restaurant brands and use them as an added vehicle of growth. It plans to look at five to seven concepts and see if any of them can be grown into a big brand like Buffalo Wild Wings.

For the new brands, initially, the company looks for concepts with national potential, which can provide guests with a unique dining experience, and inspire a loyal customer base. For concepts that meet these parameters, the next criteria include simple and franchise-able operations, an entrepreneurial management culture, and no direct competition to the core Buffalo Wild Wings brand. Attracted by the growth rate of fast-casual restaurants, Buffalo Wild Wing's is focusing on this segment and acquired minority stakes in PizzaRev, a Calif.-based pizza chain, and Rusty Taco, a Texas-based fast-casual restaurant chain. According to research firm Technomic, the fast-casual segment has grown at a CAGR of 11.2% in the last five years.

Putting the pieces together
Buffalo Wild Wings has scaled up its operations impressively since inception, delivering excellent revenue and earnings growth. It has no intention of slowing down and is focussed on expanding its flagship brand both nationally and internationally. Developing emerging brands is an additional ambition that the company has set. It's made stringent evaluation criteria for picking out new concepts with growth potential, and it would be very interesting to see how Buffalo Wild Wings progresses on this front.