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Buffalo Wild Wings Ahead of Earns
A Buffalo Wild Wings restaurant in San Ramon, California. Photograph by David Paul Morris — Bloomberg via Getty Images

Buffalo Wild Wings’ Fails To Appease Activist Investor

Mar 27, 2017

Buffalo Wild Wings unveiled plans to add two fresh new faces to the restaurant chain's board, a move that didn't appease an activist investor that is calling for bigger and bolder changes.

On Monday, Buffalo Wild Wings (bwld) announced a slate of nominees to stand for election at the company's 2017 annual meeting of shareholders, including CEO Sally Smith and several others that already serve on the board. Two are planning to retire—James Damian and Michael Johnson—and would be replaced by former McDonald's (mcd) executive Janice Fields and CTI Foods CEO Sam Rovit. Rovit is one of four nominees that activist investor Marcato Capital Management floated for the board in February as it stepped up its fight with the restaurant chain.

Marcato, which amassed a stake in Buffalo Wild Wings last summer, said it wasn't pleased with the move. "In our view these changes do not go far enough," said Marcato, which owns a 5.6% stake in Buffalo Wild Wings. "Rather than scrambling to protect the status quo, Buffalo Wild Wings should address our proposed operational improvements and business model modifications, which we believe are the only ways to drive sustainable value for all shareholders."

Buffalo Wild Wings has been playing defense as Marcato has called for fresh management talent, a greater focus on the core brand, and killing new fast-casual pizza and taco concepts. Once a star performer in the restaurant world, Buffalo Wild Wings has posted softer sales of late, citing a challenging operating environment for restaurants as traffic across the industry falls. Marcato, however, contends that the issues stem from execution and management woes.

Smith struck a hopeful tone in February when the company reported disappointing fourth-quarter results, saying a loyalty program, lunch special and a wing promotion were helping improve traffic in the first quarter.

By aiming to add Fields and Rovit, Buffalo Wild Wings would bolster restaurant and food service expertise on the board. Fields was previously president of McDonald's United States business and also served as COO of that division for several years. She was featured on Fortune's 50 Most Powerful Women in Business list. Rovit, meanwhile, is more of a supply chain expert and also previously worked at Kraft Heinz (khc).

Beyond Rovit, Marcato had proposed the nomination of three others, including former Pizza Hut executive Scott Bergen, former TGI Fridays executive Lee Sanders, and Marcato fund manager Mick McGuire . It remains to be seen if Marcato and Buffalo Wild Wings will come to more agreeable terms on the composition of the board before the annual meeting. A date for that event hasn't yet been set by Buffalo Wild Wings.

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