How Buffalo Wild Wings turns slower meals into faster growth
Most restaurant owners like diners who eat fast, opening up tables for new spenders. Sally Smith, chief executive of Buffalo Wild Wings (BWLD), prefers it when people linger. Sports fans who stay long enough to watch an entire football game will buy more beers and wings than someone rushing through a 40-minute dinner.
That, Smith explains, is the recipe that has made the chain a hit—and of late, plenty of customers have come back for seconds. Over the past four years, Buffalo Wild Wings’ sales have surged 147%, reaching $1.52 billion in 2014, and net income has grown at almost the same pace. Same-store sales, a closely watched metric for restaurants, have increased for an impressive 18 consecutive quarters. There are now 1,111 “B-Dubs” locations, triple the number of a decade ago. Investors are being rewarded too: The stock is up 360% over the past five years—on par with bigger, heavy–hitting chains like Panera Bread (PNRA), Starbucks (SBUX), and Chipotle (CMG).
Sports fandom isn’t the only reason for the winning streak. Diet trends have favored the chain, as more Americans pivot away from processed foods and toward, well, meat. “That’s our sweet spot. We’ve got protein,” Smith says. Much of that is in wing form, of course, which can be a mixed blessing. Wing-related products account for 20% to 25% of total sales, according to research firm Dougherty & Co., and high dependency on a single menu item is risky for a restaurant. Wing prices are also volatile; in the most recent quarter they were 26% higher than a year earlier.
Smith, now in her 19th year as CEO, says wing woes are manageable; she has bigger strategic concerns. To keep growing, B-Dubs may need to compete more effectively with “fast casual” chains like Chipotle and Shake Shack (SHAK)—restaurants a step above fast-food chains but without the table service you’d get at a Buffalo Wild Wings. (According to research firm Technomic, fast-casual brands increased sales by 12.8% in 2014, to $30 billion, a growth rate nearly double that of any other restaurant segment.) Only one out of every five meals sold at Buffalo Wild Wings is served during lunchtime, when fast-casual thrives; to keep same-store sales growing, the chain will do more to target the midday crowd.
More expansion is a given: The chain aims to add 600 restaurants in the U.S. and Canada, while also reaching beyond North America—it opened its first franchises in Mexico in 2013. The company also made recent investments in two small fast-casual chains: Los Angeles-based PizzaRev and Rusty Taco, of Dallas. “What do we have to do to stay relevant?” Smith asks rhetorically. “That’s probably what I think about most.”
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A version of this article appears in the September 1, 2015 issue of Fortune magazine with the headline “Seizing their moment — The (food) sharing economy.”