Buffalo Wild Wings Conference Call Highlights

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Buffalo Wild Wings
BWLD
reported its third quarter earnings on Tuesday. Shares of the company jumped 15 percent. Below are some key highlights from its conference call: • Same-store sales increased 6% at company-owned restaurants and 5.7% at franchised locations. • Our strong same-store sales continued during the World Cup tournament, introducing the brand to new Guests. • Fantasy football draft parties helped maintain the sales momentum through the quarter. • Our restaurant teams were excited for the start of college and professional football and are delivering a great game day experience to our Guests. • Our cost of sales percentage was lower than in prior year driven by a decrease in the price per pound for traditional chicken wings and leverage from menu price increases taken over the last 12 months. • We're nearing completion of staffing of all of our company-owned Buffalo Wild Wings restaurants with Guest Experience Captains. • Our strong sales growth, lower food costs, and a lower effective tax rate more than offset the increased labor costs of the Guest Experience Captains producing net earnings growth of 21.7%. • As part of our capital strategy, we acquired three Buffalo Wild Wings franchised restaurants in Arizona during the third quarter. • In October, we completed the acquisition of 10 franchised locations in Florida. • Another acquisition of six units is expected to close in the fourth quarter. • Because these transactions are occurring late in the year, we anticipate they will have minimal impact to net earnings in 2014. • Internationally, a fourth franchised Buffalo Wild Wings opened in Mexico. • Development is moving along in Dubai, Saudi Arabia, and the Philippines. PizzaRev: • We continue to invest in small emerging brands and we opened our second PizzaRev location in Minnesota in August. • PizzaRev is growing both company-owned and franchised restaurants. • There are now 19 PizzaRevs. • We also took a majority position in Rusty Taco, a fast-casual concept founded in Dallas, Texas. • There are nine Rusty Taco locations in Texas, Minnesota, and Colorado. • We are excited to be part of the growth plans for both of these concepts. Financials: • Our revenue in the third quarter reached $373.5 million, increasing 18.3% over the same period last year. • System-wide sales at our company-owned and franchised restaurants were $812.3 million for the quarter, an increase of 16.2% over the third quarter of 2013. • Company-owned restaurant sales for the third quarter increased to $350.5 million and 18.5% increase over the same period in the prior year. • Same-store sales at company-owned Buffalo Wild Wings restaurants were 6% for the third quarter, with sales being strong throughout, compared to 4.8% for the same period last year. • Menu price increases and adjustments taken during the past 12 months at company-owned restaurants were about 1.9%. • We had 44 additional company-owned Buffalo Wild Wings restaurants in operation at the end of this quarter versus third quarter last year, a 10.6% unit increase. • Average weekly sales increased by 7.3% in the third quarter, 130 basis points higher than a same-store sales percentage. • The average weekly sales calculation benefited by 110 basis points from newly opened locations during the last 15 months. • Our royalty and franchise fee revenue for the third quarter grew 14.1% to $22.9 million versus $20.1 million last year with an additional 47 franchised Buffalo Wild Wings units. • Cost of sales for the third quarter was 29.1% of restaurant sales compared to 30% in third quarter last year. • Traditional wings were a $1.50 per pound in the third quarter, $0.21 or 12% lower than last year's average of $1.71. • Traditional wings were 21% of restaurant sales compared to 20% in the same period last year. • Boneless wings were 21% of restaurant sales, flat compared to last year. • In the fourth quarter, we expect to open 22 company-owned Buffalo Wild Wings restaurants, two of which are relocations of three older locations that will close. • Guidance: • We significantly increased the number of fantasy football draft parties held at our restaurants. • In the fourth quarter, we'll promote holiday gift card sales in restaurants, and Guests who purchase $25 gift cards will receive a Blazin' Bonus card. • We're also making investments beyond food and beverage innovation to deliver long-term sustained growth. • We'll complete the roll-out of Guest Experience Captains at company-owned restaurants in the fourth quarter. • Captains are essential to engaging with our Guests, making them feel welcome and customizing their experience, ensuring that Buffalo Wild Wings is their first choice for sports and entertainment. • By year-end, tabletop tablets will be at 75% of the Buffalo Wild Wings systems, including nearly all company-owned locations.
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Posted In: EarningsNews
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