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Marcato Pounds The Table On Buffalo Wild Wings, Calls For 5 Drastic Changes

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Marcato Pounds The Table On Buffalo Wild Wings, Calls For 5 Drastic Changes

Marcato Capital Management is blaming Buffalo Wild Wings (NASDAQ: BWLD) management for its failure to reach an understanding on enhancing the shareholder value. The investment firm indicated that it has been holding discussions privately with the company and found lackluster responses.

Marcato disclosed its stake in Buffalo Wild Wings for the first time on July 25 with the filing of acquiring 950,000 shares or 5.1 percent stake. Currently, the company is holding about a 5.2 percent stake. Earlier, CNBC's Kate Kelly reported that the restaurant firm and the fund were engaged in friendly discussions. The report said that the fund sought more franchising of the restaurants.

Related Link: BMO Leaves Buffalo Wild Wings Analyst Day Bullish, Raises Price Target

On Wednesday, Marcato filed a Schedule 13D with the SEC, suggesting five steps Buffalo Wild Wings should take in order to achieve its full potential. The fund expressed confidence that the company is in a strong position to not only compete but also succeed in the future if it could take these corrective steps quickly and efficiently.

5 Suggested Steps

1. Fresh Talent: The fund wants fresh talent on both the board and management levels, while maintaining open communication with lead shareholders. Any changes without shareholder involvement would be termed as hostile.

2. Operational Focus: Marcato urged for an increased focus on operational areas like quality of food, pricing and value perception, food cost optimization, technology implementation, labor engineering and speed of service.

3. Drivers: The fund seeks stronger focus on the biggest earnings drivers and avoidance of wild bets.

4. Accountability: Citing the lagging tendencies of past priorities, Marcato suggested more stringent accountability.

5. Disciplined Capital Allocation: The fund wants an effective tool to compare the managerial decisions and forecasts. It wants Buffalo Wild Wings to follow a disciplined capital allocation program.

Since the news of Marcato's stake broke out on July 25, shares of the company advanced about 16 percent. On Wednesday, Buffalo shares were up 2.15 percent at $164.80 at time of writing.

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Latest Ratings for BWLD

DateFirmActionFromTo
Nov 2017Maxim GroupDowngradesBuyHold
Nov 2017UBSDowngradesBuyNeutral
Nov 2017Deutsche BankDowngradesBuyHold

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