Buffalo Wild Wings (BWLD), Yum! Brands, Inc. (YUM): This Company Is On a Blazing Run

A pleasant part of due diligence can be actually visiting a business worth investigating. It had been a while since I ate at Buffalo Wild Wings (NASDAQ:BWLD). I wanted to see how busy it was, menu prices, and customer mix on an early Saturday evening around dinnertime, as opposed to a major sporting event.

Wings.beer.sports

The company has 407 company-owned and operated restaurants and 525 franchised ones. It has a five-year revenue CAGR of 25% and a 24% net earnings five-year CAGR thanks to its proven concept of “wings.beer.sports.”

No surprise, this one was busy, with plenty of families, small groups of adults, and singles at the bar, but the noise wasn’t unbearable. The sports screens were on, but as a nod to non-sports enthusiasts, regular news programming was available as well.

There were plenty of local specialty brews available, as well as Samuel Adams craft brands and the big beer giants. If you know anything about restaurants, you know a liquor license is a license to print money and specialty cocktails could be had. Buffalo Wild Wings (NASDAQ:BWLD) pours more brew on draft than any other U.S. restaurant chain. You need something to put out the blaze consuming you after even the medium heat wings.

I’ve written before how much I admire this company’s ability to run a sports bar/casual dining chain that is still family-friendly. It doesn’t reek of spilled beer or tolerate rowdy behavior. On Wednesdays, it is Kids Night with cartoons on the big screens and special kids menu prices.

The restaurant boasts several community involvement awards and is strategically located in an affluent neo-traditional community, a trend that is rarely mentioned in financial news about the company, it’s real estate savvy, gradually moving away from its original college town beer bust locations. The other closest Buffalo Wild Wings (NASDAQ:BWLD) is also located in another affluent neo-traditional community.

Another thing to like about the company is its expansion to more burgers and trendy casual dining appetizers, and the wings, while always good, have been the victim of their own popularity with wing prices rising in the last few years.

On the Q1 earnings release on April 29, CEO Sally Smith noted the volatility in wing prices and wing yields and said the company had decided to address this with servings of wings by portions in snack, small, medium, and large. My snack included eight boneless wings and was filling enough. These new portions are supposed to generate cost savings of 40-50 basis points to its current cost per sales of 32.7%.