Buffalo Wild Wings Inc. reported Tuesday a 2.6-percent increase in net income during the first quarter ended March 29, as skyrocketing chicken wing prices offset revenue growth of nearly 20 percent.
Net income was $29.1 million during the quarter, or $1.52 per share, rising from $28.3 million, or $1.49 per share, the previous year.
Total revenue at the Minneapolis-based casual-dining operator rose 19.8 percent, to $440.6 million, from $367.9 million the previous year. Same-store sales at company restaurants rose 7 percent, and increased 6 percent at franchised locations.
“Sales were exceptionally strong during the college football bowl games, as well as the NFL playoffs,” CEO Sally Smith said in a statement. “Our sales growth leveraged operating, occupancy and general and administrative costs. As anticipated, cost of sales and labor as a percentage of restaurant sales were higher than the prior year, which tempered our earnings growth.”
The price per pound of chicken wings rose 41 percent during the quarter, compared with the previous year. Yet the price a year ago was considered unusually low amid a glut in the supply of chicken wings on the market.
Still, Buffalo Wild Wings’ stock fell nearly 9 percent in after-hours trading on Tuesday.
Investors may also be worried about slowing sales. Buffalo Wild Wings noted that same-store sales rose 4.2 percent at company-owned restaurants in the first four weeks of the second quarter, and increased 1.8 percent at franchised locations. A year ago, same-store sales rose 5.7 percent at company locations.
Labor costs as a percent of sales rose to 31.4 percent in the first quarter, increasing from 30.5 percent the previous year. The company has been adding staff to improve the guest experience, and has previously said that minimum wage hikes are weighing on labor costs.
Buffalo Wild Wings hopes that the recent launch of its B-Dubs Fast Break lunch program, which emphasizes speed and value, could bring business at a generally weak daypart for the company.
“Our focus remains on creating an engaging sports-viewing experience with great food and beverage offerings for our guests, and we continue to make progress in guest experience technology initiatives,” Smith said.
The company expects net earnings growth of 18 percent this year.
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