Franchisees throw support behind Buffalo Wild Wings

by Erica Shaffer
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Franchise Business Services said the association supports CEO Sally Smith and the management team.
 

KENNESAW, Ga. – An association representing Buffalo Wild Wings franchisees announced its support for CEO Sally Smith and her management team which has been entangled in a public disagreement about the direction of the fast-casual chain. Atlanta-based Franchise Business Services (FBS) provides education, training, advocacy and member services to the Buffalo Wild Wings franchise community.

Wray Hutchinson, chairman of the FBS board of directors and owner of 39 Buffalo Wild Wings franchises, said in a statement that the association has been in discussions with the company’s management about improvements in operational practices. Otherwise, FBS members did not think radical changes are necessary.

“We are listening to Marcato, but just because they are a five percent owner doesn’t mean they know better than restaurant owners and operators how to achieve even more success without sacrificing our core culture,” Hutchinson said. “Our owners will vote in support of our current board members and ownership team. While many of our competitors in the casual dining segment are struggling, Buffalo Wild Wings continues to excel. This would not be the time to mess with a winning formula.”

Marcato Capital Management increasingly has ratcheted up criticism of Buffalo Wild Wings executives and board members. Recently, Marcato claimed in a presentation to shareholders that company executives lacked “skin” in the company due to consistent insider selling of company stock. Marcato owns a 5.6 percent interest in Buffalo Wild Wings.

“Since its IPO in 2003, Buffalo Wild Wings’ board and management team have sold the vast majority of all stock ever owned,” Mick McGuire, managing partner of Marcato, said in a statement. Marcato said executives weren’t “putting their money where their mouth is…” and accused senior executives of using Buffalo Wild Wings’ employee equity plan “…to extract short-term gains, taking advantage of the plan’s discount purchase incentive to buy stock at a discount and quickly flip the shares into the open market at fair value.”

But Hutchinson said Marcato’s statements implied that “Buffalo Wild Wings is unaware of and not addressing analysts’ concerns. That doesn’t accurately reflect what is actually happening.”

He explained that Buffalo Wild Wings is leading the casual dining sector in many performance indicators and believes that management is implementing several important initiatives to improve upon the company’s five-year share price performance of 132 percent. The results show that management has earned franchisees’ full support, Hutchinson noted.

“Collaborative initiatives between the company and franchisees around loyalty, order and pay at the table, merchant acquirer and EMV compliance, reduction of remodel costs, launch of a system-wide food safety program, food innovation, online ordering and delivery services are all examples of the efforts by current management to enhance the guest experience and increase store profitability,” Hutchinson said. He added that the board is launching a test to increase the share of franchisee-ownership versus corporate-owned locations, an idea advocated by Marcato.

“No matter how you analyze the data, Buffalo Wild Wings is on the right track,” Mark Jones, FBS vice chairman, said in a statement. “Whether it’s annual same-store sales, average customer check, unit growth and volume — or the all-important popularity with and spending by the most populous generational segment, millennials — we think Buffalo Wild Wings’ recipe for success is not one to be altered to accommodate a short-term and uncertain vision by a minority shareholder group.”

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