Activist investor pushes for change at Buffalo Wild Wings

by Erica Shaffer
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Buffalo Wild Wings  
Mick McGuire, founder of Marcato Capital Management, believes share price could triple if the restaurant chain improves its core business.

MINNEAPOLIS – Activist investor Marcato Capital Management LP demanded new leadership on the board and management levels of Buffalo Wild Wings Inc. The hedge fund is the chain’s fourth-largest investor with 950,000 shares, or a 5.2 percent interest in the company.

In a letter to James Damian, chairman of the Buffalo Wild Wings board, Marcato founder Mick McGuire revealed making Marcato’s discontent public became necessary despite a private dialog held two months ago regarding strategies for enhancing shareholder value.

“Given the Company’s lackluster analyst day presentation and observable discontent among shareholders and research analysts, we have determined that it is appropriate at this point to share our perspectives with the investment community,” McGuire wrote. “Along with this letter, we are filing the analysis that we shared with management at our first meeting in June and hope that research analysts as well as current and prospective shareholders will consider this information and express their views on the subject matter.”

In response, Buffalo Wild Wings said in a statement “We welcome communications with our shareholders and we value constructive input toward the goal of enhancing shareholder value.”

In the letter to Damian, McGuire said Marcato is “exceedingly optimistic about the future of Buffalo Wild Wings.” Nevertheless, the lack of detail around basic metrics of the business and “sub-optimal” capital allocation decisions were symptoms of a larger problem.

“The management team of Buffalo Wild Wings communicates its strategic and financial rationale to the investment community with inveterate avoidance of specificity,” McGuire wrote. “The chronic absence of detail around even the most basic of metrics causes us to question whether the right questions are being asked and answered.”

Necessary changes, McGuire wrote, include:

  • Fresh talent at the board of directors and management levels
  • A greater focus on Buffalo Wild Wings' core business
  • Higher sense of urgency, follow-through and accountability.

McGuire also called for a cessation of the company’s “emerging brands” growth plans, which focus on “hit-or-miss growth drivers — particularly those in the highly competitive fast-casual space.

“Experiments with new restaurant concepts are distracting management from advancing Buffalo Wild Wings’ core brand,” McGuire wrote. “At this point in time, any corporate resources, be they personnel, capital, or attention, would be better allocated to addressing the operational improvement opportunities at core Buffalo Wild Wings.”

Buffalo Wild Wings said “Members of our board and management team, as well as our outside advisors, have met with and spoken to Marcato numerous times since learning of its investment. We have reviewed Marcato’s June 2016 presentation, and will carefully consider its August 17, 2016 letter.”

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By Jennifer 5/12/2017 2:35:22 PM
We did a takeout order today and the quality of the chicken is definitely degrading. Perhaps a better focal point for cost opportunity would be decreasing the number of staff needed versus investing in cheaper ingredients. I've never quite understood the need to have 10 out of 20 associates standing around doing absolutely nothing work related . Cut your overhead.

By Kevin 8/19/2016 3:54:59 PM
Turn down the volume and reduce your prices! I took my 14 YO son there, and it cost over $30 just for a few wings and some sodas at lunch! Unacceptable! Not going back.

By Joe Morgan 8/19/2016 1:08:26 PM
The local BW3 has cockroaches and mice running around, the prices are way too expensive, and the food just plain sucks. I don't know how they're still in business in Valparaiso, IN. One time we had a fried cockroach in with the potato wedges and that was the end of it for us. Will never frequent another one.

By William Sullivan 8/19/2016 12:34:00 PM
I frequent a buffalo wild wings in my area, as it is the closest bar to my movie theater. I have sampled there food on a few occasions. To call it edible is a stretch. The wings would look better on a pigeon than a chicken and the sauces are completely interchangeable. Everything else on the menu obviously comes straight out of a box and into a microwave. I have found there bartenders competent. But any with real talent soon move on to positions where they are not constantly ridden by management about making sure they leave a 2 inch head on the beers among other things. Buffalo Wild Wings is a pure example of an establishment run by corporate america. Top heavy, lacking in any depth, with only one thing that's important. The bottom line.

By udo 8/19/2016 12:29:19 PM
I read the gun lobby comments with great amusement, including the barely literate quality of some of their offerings. I do wonder what link mpotivated this avalanche. It's highly unlikely that this is coincidental.

By Kelly 8/19/2016 12:15:38 PM
Food is not good. Quality has gone down. The environment is too loud. Their trying to be a fun sports bar without the fun. Life's too short.

By Ryan 8/19/2016 11:37:32 AM
I think the issue is fairly direct. The prices of their wings have only gone up while the quality and portion size have decreased leading to less customer satisfaction and in turn retention. Plus you have: competition from every other place in town selling wings and in this economy customer loyalty to brands isn't what it used to be. How they continue to exist is what I find baffling... I used to love the place as a kid but there are simply better wings at lower prices at more and more places.

By Meg 8/19/2016 11:11:56 AM
I only started eating a B-Dubs when they designated it a gun-free zone. It makes me feel safe knowing there isn't a murder machine strapped to the hip of the Old Navy sweatshirt wearing troglodyte next to me. The only way my experience at B-Dubs could improve would be for Obama to come with me and forcefully remove guns off customers bodies and give them to a refugee of questionable origin.

By Chris Chrispie 8/19/2016 9:57:39 AM
Cite any source that shows BWW's to remain a gun free zone directly correlates to the chain's 17% drop. Otherwise, the argument only points to your obsessive and blind narrative regarding "gun rights" and little to correctly identify the real reason for their decline. Otherwise, I'm going to believe Marcato's reasons. Fact is: BWW is a popular destination for families, and families don't feel comfortable when patrons surround them with concealed weapons fueled by beer, hot wings and a complete lack of reference towards the 2nd Amendment. Sad.

By Estevan Montoya 8/19/2016 9:10:50 AM
Ate there once. It was too loud and confusing with all the tv's at once. Food wasn't that great. I expected more for what I paid. Then, on the way out, I noticed the firearm issue. I decided never to return. I FIRMLY believe in the 2nd Amendment. And that is the story of how they lost my business in a single visit.

By Shelly 8/19/2016 8:59:21 AM
No Profanity Allowed, Please Retype Your Comment.

By paul t 8/19/2016 8:58:22 AM
the place is overpriced & the bar seating is uncomfortable. allowing smoking in the bar is another big problem for me. i used to go, i don't any more. i imagine i'm not the only one.

By Wilson 8/19/2016 8:47:31 AM
My wife and I went there to eat last year. I noticed a "gun free" sign on the door. I was hesitant to eat there but we had already committed. I was uncomfortable the entire time. We have had several opportunities to eat there since then, but we have always chosen not to because their policy discriminates against legal concealed carriers and makes innocent people sitting ducks. My family's safety is important to me, but not to Buffalo Wild Wings.

By William 8/19/2016 7:25:27 AM
I dont know about guns, but food that doesnt give you massive diarrhea every time you eat it would be helpful as well

By Tom Harvey 8/18/2016 9:33:01 PM
BWW needs to change their policies for conceal carry in their restaurants. They don;t allow it. Conceal Customers are law abiding citizens, not criminals. Stats prove this. Many thousands and thousands of conceal carry customers have boycotted BWW. Every percentage of sales helps, especially when BWW is down a whopping 17%, but BWW has lost these customers.