On Nov 29, Zacks Investment Research issued an updated report on the casual dining restaurant chain, Buffalo Wild Wings, Inc. BWLD.
The company posted mixed results for third-quarter 2016 on Oct 26. Earnings were in line with the Zacks Consensus Estimate, while revenues missed the same.
Prospects
Leveraging on its strong brand name, Buffalo Wild Wings is looking for new investment opportunities in the fast-growing small restaurant chains, in order to expand its business. Investments like R Taco and PizzaRev are part of its strategy to partner with emerging restaurant concepts and follow a solid growth plan for the same for the rest of 2016 and 2017.
Buffalo Wild Wings remains better positioned than many of its peers on the back of menu innovation, remodeling of existing locations, investment in guest experience, along with better food presentation and operational efficiency.
It is already seeing a rise in traffic on the back of initiatives such as the company’s new promotion “Half Price Wing Tuesdays” as well as its loyalty program “Blazin' Rewards”. Increased focus on better staffing and improving operational execution in the takeout area, as well as working with third-party delivery providers also bode well.
Further, the company plans to launch updated versions of its mobile app and online ordering platforms in the fourth quarter to improve the digital user experience. It has started to promote online and mobile ordering for takeout through website and social and digital advertising. The initial results were encouraging with an increase in average check.
Additionally, the company’s association with beverage chains and major sporting events has been increasing its brand awareness.
BUFFALO WLD WNG Price and Consensus
Concerns
Persistent earnings and revenue misses raise concerns for Buffalo Wild Wings’ future performance. In fact, though the company has been posting positive comps over the past few years, comps growth has come under pressure so far in 2016, further adding to the woes. Notably, the menu price increases made by it might also affect traffic trends in the near term.
Meanwhile, fluctuation in chicken prices – a key ingredient for the company – might hurt its profitability. Also, the costs related to company’s sales boosting initiatives and prevailing higher labor costs are likely to continue to hurt profits in the near term.
Moreover, while several other restaurateurs, including Yum! Brands, Inc. YUM, McDonald’s Corporation MCD and Papa John’s International, Inc. PZZA, have opened their outlets in the emerging markets, Buffalo Wild Wings seems to be slow in the bid to capture the potential of untapped markets.
Buffalo Wild Wings currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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