What's Next for Buffalo Wild Wings? | Food Newsfeed
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Marcato has called for a franchising plan that will sell more than 500 company units to have 90 percent of all stores franchised by 2020.

What's Next for Buffalo Wild Wings?

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With a shakeup at the very top, could the casual dining chain be headed for a very different future?
By Alex Dixon June 2017 Chain Restaurants

Following Buffalo Wild Wings CEO Sally Smith’s announcement that she will retire at the end of this year, investors seem to be optimistic in Marcato Capital Management’s plan for the future of the brand.

Three directors from the activist hedge fund were placed on the Buffalo Wild Wings board at the company’s shareholder meeting June 2, sending shares up by more than 5 percent during the day.

Read more: With Sally Smith set to retire, Buffalo Wild Wings might never look the same.

Smith, who has led the company for more than two decades, said in a statement following the vote that she is confident the company is “solidly positioned for its next phase of growth and development.”

Marcato has been publicly calling for changes for the past year—including ousting Smith and appointing new board members—in an effort to boost the brand, which has seen stock prices that lagged behind industry peers and sales coming in below industry estimates. Newly elected board members from Marcato include managing partner Mick McGuire, former Pizza Hut CEO Scott Bergren, and restaurant industry veteran Sam Rovit.

"We are very pleased that our fellow [Buffalo Wild Wings] shareholders recognize that additional change on the board is warranted to return Buffalo Wild Wings to a path of growth and long-term value creation,” McGuire said in a statement. “We will bring the fresh perspectives, restaurant industry expertise and oversight the BWLD board needs to spearhead improvements at the company. Scott, Sam, and I are eager to roll up our sleeves, and work closely with the incumbent directors to drive a strategy to make Buffalo Wild Wings a winning company again."

With Marcato at the helm and a new CEO on the horizon, here are a few areas that may transform the brand going forward.

Franchising and International Growth

Marcato has called for a franchising plan that will sell more than 500 company units to have 90 percent of all stores franchised by 2020. The hedge fund believes the plan will improve margins and unlock capital, but Buffalo Wild Wings has fought back against the plan by saying it “doesn’t want to be the next Applebee’s.”

Along with increased franchise units, Marcato also plans to accelerate international growth. Marcato says that international development targets have been repeatedly missed and extended by two to five years.

Takeout and Technology

As more and more customers desire takeout and delivery, Buffalo Wild Wings says it is testing smaller footprint units that will focus solely on that segment. Marcato says the guest experience has “significantly degraded” for the brand and that “poor food quality, deficient customer service, and a lack of menu and technological innovation have alienated core customers.”

Marcato has also called attention to the lack of a full rollout of a loyalty program and tablet order and pay, despite multiple years of planning and a multi-million dollar investment. Marcato also says that initiatives such as discount promotions “to shore up sales at the expense of margins are not a productive or sustainable long-term strategy.”

“To date, management has blamed difficult industry conditions,” Marcato said in a letter to shareholders in May. “We believe many of these issues are self-inflicted, resulting from management’s failure to execute.”