Buffalo Wild Wings has 2 quick fixes to combat brutal criticisms of the brand
Gerald Angeles/FlickrA month after an investor ripped apart Buffalo Wild Wings' business, the sport-bar offered up some solutions of its own to Morgan Stanley.
Buffalo Wild Wings is going back to the basics, with two short-term fixes to boost sales, according to a research note released by Morgan Stanley on Monday.
The first: half-priced wings on Tuesdays. The weekly discount launched nationally last week, and, according to Morgan Stanley, proved in tests to have a quick impact on sales.
The second solution is a weekday 15-minute lunch guarantee, which the chain introduced in early July. Executives said that the new guarantee is a way to draw customers who may not be Buffalo Wild Wings loyalists, but instead are seeking an inexpensive and convenient deal from any restaurant.
"The two combined are enough in the eyes of management to revitalize sales, getting them back to flat by the 4Q and presumably better thereafter," reads Morgan Stanley's note.
In the future, Buffalo Wild Wings is planning on launching other, fairly standard programs to boost sales, including happy hour and late-night deals, as well as growing its to-go, digital, and (currently nonexistent) delivery business.
However, an activist investor has much bigger changes in mind.
In August, Mick McGuire, the founder and CEO of Marcato Capital Management who has been called a Bill Ackman "protégé," released a letter to James Damian, the chairman of Buffalo Wild Wing's board of directors. The letter trashed management and called for the chain to adopt a 90% franchised model by 2020.
Buffalo Wild Wings told Morgan Stanley that refranchising so quickly would not be feasible, and could lead to problems for the chain.
"Refranchising, especially on a deadline, also brings with it operational and franchisee selection risks," writes Morgan Stanley. "A B-Dub is more complex than the typical [quick-service restaurant.]"
Ultimately, both Buffalo Wild Wings management and investors agree that a change is necessary, as sales have slipped in recent quarters. In July, the company reported in the second quarter, sales at company-owned stores open for at least one year fell 2.1% during the quarter, and fell 2.6% at franchised restaurants.