Buffalo Wild Wings (NASDAQ:BWLD), a Minneapolis-based restaurant chain, recently declared its fourth-quarter financial results and they were not impressive. Amid tough competition from its rivals such as Dine Equity (NYSE:DIN) and McDonald’s (NYSE:MCD), analysts were expecting better financial results, which the company failed to provide.
However, the company has a decent record of performance as its stock has gained more than 80% in the last year, but its fourth-quarter results can hurt its stock in the current fiscal year.
Reviewing the Performance
Buffalo’s revenue increased 12.4% year over year as sales at company-owned restaurants were up 13.1%. But analysts such as Jefferies’ Alexander Slagle are of the view that the company kept its forecast lower so as to easily outperform expectations, regardless of strong comp sales, low wing costs and efficient cost management. Buffalo, however, posted an impressive 24.9% increase in its net earnings. But, analysts were expecting it to post a much better financial performance.
- Warning! GuruFocus has detected 2 Warning Signs with BWLD. Click here to check it out.
- BWLD 15-Year Financial Data
- The intrinsic value of BWLD
- Peter Lynch Chart of BWLD
Buffalo Wild Wings achieved success due to attractive ambience, popular chicken wings, and signature sauces and seasonings. Besides this, it posted strong sales due to its mouth-watering menu. In addition, its strategic initiative to present gift cards during the holiday season proved handy. Buffalo plans to continue this strategic move in the current fiscal 2014 so as to bring in more customers to its doors.
Further, Buffalo Wild Wings has launched new stadia design restaurants in order to upgrade its football experience and provide a new level of guest experience that will probably drive in more customers.
Additionally, Buffalo Wild Wings will be introducing its seven signature sauces for chicken wings. Also, fan favorite beers such as domestic and craft beer will further enhance overall customer experience. Buffalo is also making an impressive move to equip its booths with tablets that will help customers order and pay from the table itself, thus eliminating labor costs.
More Good Moves
This move undertaken by Buffalo is identical to that of its peer Dine Equity, which has installed tables at its Applebee’s locations. According to USA Today, Dine Equity plans to equip all of its stores with tablets by the end of the year. These tablets should help Dine Equity accelerate its service to customers and eliminate extra costs involved. The move has proved beneficial for Dine Equity as the company reported higher appetizer and dessert sales in 50 Applebees restaurants.
Buffalo Wild Wings further plans to launch 45 company-owned and 40 franchised restaurants in the current fiscal 2014. The company is also determined to increase its store strength to 1,000 in Mexico as the performance in most of its stores in Mexico last year was solid. Buffalo Wild Wings is also planning to enter overseas markets such as Saudi Arabia and Dubai.
Buffalo is practicing aggressive marketing strategies with its two strategic partners, Pepsi and Dr. Pepper, which will further enhance its overall product portfolio. In addition, Buffalo is focused on utilizing The National Football League as a marketing tool by using NFL pass-through rights and music entertainment properties of its beverage partners.
Though Buffalo has had a comparatively slow start in 2014, its outlook looks pretty impressive. On the whole, the company is undertaking various strategic initiatives and moves to penetrate the market aggressively and enrich customer experience. Thus, the company can be a good long-term prospect for investors.