Buffalo Wild Wings (BWLD) has been subjected to volatility on commodity costs as wing prices increased rapidly and suddenly, and BWLD is managing the price increase by launching initiatives to improve in-restaurant service and increase menu prices up to 6%, says Stephen Anderson of Miller Tabak + Co., LLC.
“They don’t contract for wings; they buy them in the spot market, so they are more subject to volatility on commodity costs…They have a couple of initiatives to improve their in-restaurant service, but I think as they try to adjust staffing levels that’s going to be a drag on margins at least through the next one to two quarters,” Anderson said.
Anderson says commodity costs will remain a factor throughout the sector, but restaurants can manage the volatility with judicious, gradual price increases. With Buffalo Wild Wings‘ scramble to put together a 6% menu price increase, there is a concern that the company may lose their value proposition in the casual dining sector, Anderson says.
“That is one of the reasons why Buffalo Wild Wings‘ growth has been so dramatic in recent years; they certainly cater to the wings, beer and sports crowd, but I think they developed a secondary audience of young families with kids — the Little League families, if you will — who have found it a less expensive alternative than even the traditional midscale bar and grill names. I think others like Chili’s (EAT) are starting to capitalize on value; they’ve reduced costs to the point where now Chili’s — Brinker International — and more recently Red Robin (RRGB) are able to compete on price,” Anderson said.
Buffalo Wild Wings (BWLD) Maintains 20% Unit Level EBITDA Profitability with $300 Sales per Square Foot
March 12, 2013
McDonald’s Corporation (MCD) Chicken Wing Offering Expected to be Short-Lived
March 14, 2013
Man Wing Chung: Expert Money Manager Advice for 2023
March 02, 2023
Matrix Service Company’s (MTRX) Infrastructure Service Backlog Increases as the Oil and Gas Chain Restructures
November 26, 2012
Too Old to be Wild?
November 29, 2007