The refranchising of Buffalo Wild Wings has kicked into gear. The chicken-wing chain announced Monday that is now offering 83 company-owned restaurants for sale. These stores are located in Canada, Central and Eastern Pennsylvania, Northeast U.S., South Texas, and Washington, D.C.
As previously noted, The Cypress Group, a restaurant and franchise investment banking firm that has worked with Wendy’s and TGI Fridays in the past, is managing the initiative.
“In order to ensure a consistent and disciplined process, Cypress will coordinate all discussions and distribution of offering materials with potential buyers. Effective immediately, Cypress is entertaining requests and contacting parties regarding participation in the process. Any interested party should click on the link below and include the requested contact and background information: bwwinfo@cypressgroup.biz,” the company says in a statement.
Buffalo Wild Wings revealed during its first-quarter earnings release that it planned to refranchise 13 percent of stores. Whether that number will balloon as activist investor Marcato Capital Management increases its influence remains to be seen. The San Francisco-based hedge fund, which owns around a 9.9 percent stake in Buffalo Wild Wings, acquired three seats on the chain’s nine-member board of directors in June. That included founder Mick McGuire, who has long criticized the brand for its heft of company-owned units. At the end of the first quarter, Buffalo Wild Wings managed around 623 stores globally and franchised another 607.
Marcato believes a 90 percent franchised model by 2020 would cut costs and turn around Buffalo Wild Wing’s stagnant sales—a fact the company has refuted by measuring itself against a challenging casual dining climate.
Buffalo Wild Wings reported adjusted earnings of $1.44 a share in the first quarter, which fell 19.1 percent year-over-year. Same-store sales grew 0.5 percent at company-owned stores and 0.6 percent at franchised locations. Total revenue increased 5.2 percent to $534.8 million.
During the June shareholders meeting, Buffalo Wild Wings also announced that CEO Sally Smith, the brand’s leader since 1996, would retire by year’s end.
Buffalo Wild Wings has warned investors of the dangers of mass refranchising by highlighting the cautionary tale of DineEquity giant Applebee’s. “Marcato was very supportive of the major refranchising at Applebee’s of approximately 480 stores, a process that took five years. However, same-store sales growth has struggled following Applebee’s transition to an approximately 99 percent franchised system and the stock has significantly underperformed,” Buffalo Wild Wings said in a letter to shareholders in May.
Buffalo Wild Wings also announced earlier in June that it will unveil its quick-service concept in two Minneapolis metro markets this summer.
