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UPDATE 2-Higher costs hurt Buffalo Wild Wings 2nd qtr
July 24, 2012 / 9:12 PM / 5 years ago

UPDATE 2-Higher costs hurt Buffalo Wild Wings 2nd qtr

* Q2 EPS $0.62 vs est $0.68

* Q2 rev $238.7 mln vs est $240.2 mln

* Shares fall 15 pct after market

July 24 (Reuters) - U.S. casual dining chain Buffalo Wild Wings Inc’s second-quarter results fell short of Wall Street estimates as menu-price increases failed to offset rising costs of chicken wings.

The company’s shares were down 15 percent in after-market trading.

The company plans another round of price increase in September as the bar and grill chain expects chicken wing costs to be higher in the current quarter, compared with the second quarter. For the quarter ended June 24, wing costs had doubled, pressuring margins.

Buffalo Wild Wings has been struggling to protect margins through price increases and cost cuts at its restaurants as costs of chicken wings continue to climb.

Chief Executive Sally Smith in a statement on Tuesday said the restaurant industry, among other industries in the United States, was facing rising commodity costs.

Chicken wing costs were pushed up further by a recent increase in feed costs such as corn.

A lethargic U.S. recovery has also cooled sales growth at several restaurants.

Restaurant chains such as Chipotle Mexican Grill Inc and McDonald’s Corp reported disappointing quarters and flagged concerns regarding cutbacks on discretionary spending.

Buffalo Wild Wings, which has also been opening new restaurants and acquiring franchise restaurants to boost sales, reported an increase in same-store sales of 5.3 percent at company-owned restaurants and 5.5 percent at franchised restaurants.

Second-quarter profit rose to $11.7 million, or 62 cents per share, from $10.7 million, or 58 cents per share, a year earlier.

Sales at the company, which operates 835 sports-themed restaurants in the United States and Canada, rose 29.7 percent to $238.7 million.

Analysts on average had expected earnings of 68 cents per share on revenue of $240.2 million, according to Thomson Reuters I/B/E/S.

The company was founded by Jim Disbrow and Scott Lowery who decided to open a restaurants to satisfy their craving for Buffalo, New York-style chicken wings.

The company’s shares, which have risen about 26 percent this year, closed at $78.90 on Tuesday on the Nasdaq.

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