Buffalo Wild Wings Reworks Tuesday Wing Special as Profits Plummet
Buffalo Wild Wings shares hit a nearly four year low on Thursday following news that the restaurant chain’s profits shrunk 63 percent during the second quarter.
Increasing wing prices contributed to a roughly 8 percent rise in costs and expenses for the Golden Valley-based company, as its profit was dragged down to $8.8 million compared to $23.7 million a year ago.
Additionally, those factors led the company to nix one of its most popular specials: half price traditional wings on Tuesday.
“As traditional chicken wing costs remain at historically high levels, we’re adapting our value day on Tuesday to feature our boneless wings at company-owned restaurants,” CEO Sally Smith said in a statement. “We are optimistic about the transition to boneless wings which provides a more stable promotional platform for the future.”
Over the next few weeks, about half of the chain’s 1,250 company-owned stores will transition over to the new deal. Stores owned by franchisees won’t make the change quite as quick, Smith told analysts during a conference call Wednesday.
“They want to see what the guest reaction is at company stores and that’s why we want to be thoughtful on the rollout as we learn more,” she said. “Though certainly that’s the case in almost any initiative we have. The more information we have, the more likely it is, the faster the franchisees adopt.”
Revenue during the three-month period ending June 25 rose 2 percent year-over-year to $500 million. Same-store sales, however, were down 1.2 percent at company-owned locations.
Earnings per share fell far below what analysts predicted. Instead of the $1.06 a share that Wall Street picked, the company reported earnings per share of 55 cents.
The result led Buffalo Wild Wings to drop its outlook for the year. Instead of a 1 percent gain in same-store sales, the company believes sales at its stores open a year or more will drop 1 to 2 percent. Its projection of earnings per share between $5.20 and $5.50 also fell to a range of $4 to $4.50.
In turn, shares dipped by 10 percent during after-hours trading on Wednesday. Buffalo Wild Wing shares as of mid-day Thursday were valued at $110.50, its lowest price since September 2013.