Lesson learned at Buffalo Wild Wings (BWLD), which is shifting its strategy two years after being criticized for all but skipping a high-profile boxing match.
The restaurant chain, which thrived for years as a destination for live sporting events, will show Saturday’s anticipated bout between Floyd Mayweather and Conor McGregor at nearly half its U.S. locations amid a sales slump that prompted a proxy fight and board shake-up.
McGregor, a UFC mixed-martial arts champion, and Mayweather, one of the best boxers of his generation, will face off Aug. 26 in Las Vegas. The decision to air the boxing match comes after Buffalo Wild Wings was knocked for balking at the price to show the championship fight between Mayweather and Manny Pacquiao in 2015.
“It’s something they have to do,” said Michael Halen, an analyst at Bloomberg Intelligence. “It’s a huge event, people want to see it.”
Buffalo Wild Wings’s struggles led to a fight with Marcato Capital that forced longtime Chief Executive Officer Sally Smith to announce that she’ll step down by the end of the year. The company’s shares have lost value in each of the last two years after a seven-year streak of gains.
The stock slipped as much as 2.2% on Wednesday to $104.50, the lowest intraday price in nearly four years. The shares peaked at $205.73 in 2015.
Drawing Customers
Buffalo Wild Wings has more than 1,200 restaurants, the majority in the U.S. The company frequently cites live sporting events as a key draw for customers. Saturday’s fight is being aired on pay-per-view, and costs nearly $100 for a high-definition broadcast. That’s roughly the price of the 2015 fight between Mayweather and Pacquiao. Bars and commercial establishments are charged for the fight based on the number of customers they can hold.
Mayweather-Pacquiao generated a record of more than $400 million in pay-per-view revenue. The organizers of this weekend’s match see sales approaching $500 million.
Two years ago, only a handful of Buffalo Wild company-owned restaurants, along with about 70 franchisees, decided to show the Mayweather fight. The company locations charged a $20 cover fee, the first time the chain took that step. Buffalo Wild Wings said it would have cost as much $6 million, or $5,100 per restaurant, to show that fight at all of its locations.
While the Aug. 26 fight will be expensive for Buffalo Wild Wings, it will draw customers who don’t want to pay for it at home, Halen said. The company is betting that fight fans will be willing to pay a cover charge and order food and drinks while they’re there, he added.
“It’s a no brainer — if you’re running a sports bar you have to have it,” he said.