Buying BWLD - Buffalo Wild Wings

What Does Buffalo Wild Wings Do?

Buffalo Wild Wings (BWLD) is an owner, operator and franchisor of restaurants featuring a variety of boldly-flavored, made-to-order menu items including Buffalo, chicken wings etc.

The Bulls: Market Domination, Growth Rates

Buffalo Wild Wings serves tasty bar food including chicken wings and beer, primarily to young males.  BWLD is entering and dominating its market niche.  Buffalo Wild Wings has grown in size to nearly 500 locations, up from just 200 in 2002. 

What makes BWLD stand out is its ability to maintain its annual growth rate of 15% per store, 20% overall revenue growth, and 25% earnings growth.  In other words, it appears to be weather the issues associated with weaker consumer spending, and all that at a price just over half its 52-week high!

The Bears: Increase in Meat Prices, Consumer Spending Hit

BWLD might not be the worst of the restaurant stocks, but they've got it coming.  A large increase in meat prices combined with soaring commodities prices is going to pummel the restaurant sector, and consumer spending is finally going to slow down as long anticipated.  In the past the meat price increase kicked in well after the commodity price increase, and once it kicked in, it stayed for a while.

The bottom line is that if BLWD hasn't signed a long-term contract for its chicken wings, it's going to be blind-sided by the spike in meat prices and its stock price will continue to plummet.  The final blow will come from the minimum wage increase.  Since 2/3 of all minimum wage workers are employed in the food services industry, restaurant chains such as BWLD will take the biggest hit.