Americans diners continue to pick soups and salads over boldly flavored chicken wings.
In what is turning into a regular tradition, Buffalo Wild Wings (BWLD) and Panera Bread (PNRA) post their sales results just minutes apart on the same day every quarter. Fast-casual purveyor Panera has been on a winning streak, posting stronger sales and loftier sales projections for 2017 than peer Buffalo Wild Wings. Shares of the latter company were down more than 4% in after-hours trading as fourth-quarter results disappointed.
Buffalo Wild Wings CEO and President Sally Smith blamed the poor results on a “challenging restaurant environment,” which has been an excuse that nearly every chain has mentioned as the industry suffers from broad softness in traffic. Behemoths including McDonald’s (MCD) and Starbucks (SBUX) have also noted the lull, which experts blame on declining grocery prices and, conversely, an increase in restaurant prices as those chains digest higher worker salaries. Traffic isn’t expected to be much better for restaurant chains in 2017.
Smith said December was particularly difficult for the chain, though she lauded a loyalty program, a lunch special, and a wing promotion on Tuesdays as helping improve traffic for the first quarter. Still, overall revenue only increased 0.8% to $494.2 million for the fourth quarter, while same-store sales declined 4.0% at company–owned restaurants—results that missed Wall Street’s expectations.
Buffalo Wild Wings’ executive team has been under pressure to improve results as it faces off with an activist investor, Marcato Capital Management, which this week floated four individuals for election to the company’s board. Marcato is calling for fresh management talent, a greater focus on the core brand, and killing new fast-casual pizza and taco concepts.
Things have been far more stable at Panera. Fourth-quarter revenue increased 5% to $727.1 million, while comparable net bakery-cafe sales climbed 3%. While those figures were a tad under Wall Street’s hopes, Chairman and CEO Ron Shaich said Panera took market share from the industry for the full year.
Panera has been busy pushing diners on the chain’s movement toward “cleaner” ingredients—a benchmark the company said it officially hit earlier this year. There is a consumer-driven shift toward fresher, cleaner foods and Shaich, like many others in the industry, say he thinks this change isn’t a fad.
The chain is also also investing in some future growth drivers, including delivery and digital orders. Panera says digital sales now account for 24% of total sales at company-owned bakeries. The delivery roll out remains in the works, though it is now available at 15% of Panera’s total restaurant fleet.
“Because of the strength of our initiatives, we are confident our efforts will translate into market share gains and sustainable double-digit earnings growth,” Shaich said.
Looking ahead, Panera also outlined a profit increase of 11% to 14% on a per-share basis, while comparable sales are expected to increase 3.5% to 4.5%. Buffalo Wild Wings is projecting same-store sales increasing by 1% to 2%.
