Buffalo Wild Wings (BWLD) reported decent second-quarter results Tuesday that showed impressive top-line expansion but some cost pressures due to its store-expansion plans. We continue to believe in the long-term growth story of “B-Dubs” and would add to our position in our Best Ideas portfolio on any significant weakness in the shares as a result of the report.
Total revenue for the second quarter increased over 26% on the heels of a 5.9% same-store sales increase in company-owned restaurants and a 2.7% jump at franchised restaurants (the firm operated 43 additional company-owned restaurants versus the same period a year ago). Average weekly sales for company-owned restaurants were up nearly 12% in the period, while the measure advanced 4% for franchised locations – both solid increases. The firm’s bottom-line expanded about 16%, a little lighter than what we were expecting, but still very strong performance. The company opened 18 new locations across the US and its first international location in Toronto during the quarter, strong unit-growth momentum. Management expects to open 29 new company-owned restaurants in the US and 3 in Canada during the second half of 2011 (it expects franchisees to open about 37 locations). We continue to believe that management’s expectation for the long-term restaurant potential of its chain is conservative.
The firm noted that same-store sales for company-owned and franchised restaurants are increasing at a pace of about 5% and 3%, respectively, so far through the third quarter. Buffalo Wild Wings noted that it should also achieve its net earnings growth goal of 20% for the year, as a result of this continued same-store sales momentum and the NFL season intact. We continue to like the shares.