Buffalo Wild to boost 2009 restaurant count by 15 percent
BANGALORE (Reuters) - Buffalo Wild Wings Inc (BWLD.O), an operator of bar and grill restaurants, aims to boost its restaurant count by 15 percent in 2009 as it seeks to sustain its growth momentum, even as a weak U.S. economy forces its peers to scale back on new restaurant openings.
"If we can continue that 15 percent growth... we are not too many years away from hitting the 1,000-unit mark," Buffalo Wild Wings finance chief Mary Twinem said in an interview with Reuters.
The company also plans to expand internationally, but not before 2010, Twinem said.
Buffalo Wild Wings has been benefiting from favorable chicken wing prices and several initiatives, like store remodeling and marketing, it has taken to boost sales.
The company has recently benefited from buying chicken wings at low spot rates and not being tied to long-term supply contracts. Chicken wings made up about 21.5 percent of its cost of sales in the first half of the year.
The company may also benefit from low exposure to areas hit hard by the credit crunch and U.S. housing slump, analysts had said, following its strong second-quarter results.
However, Raymond James analyst Bryan Elliot had said he believes chicken wing prices may jump in the next 6-12 months as chicken production drops. He has an "underperform" rating on the stock.
Shares of Buffalo Wild Wings, which does not have any debt, have risen 61 percent so far this year, boosted by its strong quarterly results, compared with a 1 percent rise in the S&P 1500 Restaurants Sub-Industry Index .15GSPREST.
The company, which has been consistently posting profits in line or above market estimates over the past few quarters, competes with CBRL Group Inc (CBRL.O), Ruby Tuesday (RT.N) and larger rivals like Brinker International Inc (EAT.N).
BETTING BIG ON NEW RESTAURANTS
Buffalo Wild Wings, which is on track to open 75 restaurants in 2008, had 515 restaurants as of June 29, of which it owned and operated 169, and franchised an additional 346 Buffalo Wild Wings Grill & Bar restaurants in 37 U.S. states.
The company expects to record $17 million in costs in the third quarter related to the opening of 12 company-owned restaurants, CFO Twinem said.
Peers like Ruby Tuesday and Brinker have cut down on new restaurant openings as they counter a weak economy and tight consumer spending.
New restaurants have been driving volumes for Buffalo Wild Wings, and as other restaurants scale back on expansion, it gives the company an opportunity to explore other real estate locations, Twinem said.
Buffalo Wild Wings also plans to expand on a smaller scale in subprime-hit areas like California and Florida through its franchises, she said.
Going forward, Twinem reiterated that the Minneapolis-based company is confident of achieving its targets of net earnings growth of 25 percent, revenue growth of 20 percent, and unit growth of 15 percent for the full year, despite posting a better-than-expected first half.
Historically, the second half of a year has been better for Buffalo Wild Wings as sports fans drive sales volume watching the National Football League matches on big screen high-definition televisions over chicken wings and drinks.
(Editing by Deepak Kannan)
