Profit surge by Buffalo Wild Wings shows strength in sports bars

Profit surge by Buffalo Wild Wings shows strength in sports bars

Hard economic times haven’t weakened the strengths of at least one restaurant sector—casual-dining restaurants with sports bars.

Buffalo Wild Wings, Old Chicago, Beef ‘O’Brady’s and Duffy’s Sports Grill are four leading examples of full-service chains that feature sports programming on big-screen TVs and appear able to withstand the nation’s economic downturn.

Apparently, America’s sports fans are not giving up their love of cheering their favorite teams or playing their own sports-related games while dining and drinking with groups of friends in genial and lively settings.

“People go [to sports bar restaurants] for multiple reasons—to meet, eat and hang around,” said Allan Hickok, head of the restaurant industry practice at Minneapolis-based Houlihan Lokey, the investment banking and financial advisory firm.

Compared with many struggling stalwarts in casual dining, Buffalo Wild Wings’ restaurants “are newer, hipper and louder and have a lot of energy,” he said.

The 519-unit Buffalo Wild Wings, which just reported a 46-percent surge in second-quarter profit, was accorded “top dog status” by stock analyst Jeff Farmer of Boston-based Jefferies & Co. on the basis of same-store sales growth of 8.3 percent at its 171 company stores and 4.5 percent at franchised branches.

The Minneapolis-based chain is on course to add 75 new restaurants by the end of this year.

Sally Smith, Buffalo Wild Wings’ president and chief executive, recently told Nation’s Restaurant News that her company is outpacing many competitors because “we are a value. Our guest comes in for the experience in addition to the food. There is still room for wings and beer, even in a weaker economy.”

BWW’s senior vice president of marketing, Kathy Benning, added: “Our customers love football, socialization and drinking beer.” While the chain’s core demographic skews to 60-percent male and a predominant age range of 21 to 34, Buffalo Wild Wings also is family-friendly, especially earlier in the evenings, Benning noted.

The chain is upgrading to high-definition TVs in all restaurants and offers free Wi-Fi, she said. It promotes itself as being a headquarters for watching football and participating in fantasy football games. This month, the chain is promoting fantasy football draft parties by rewarding hosts with $100 in gift certificates.

Other successful ongoing promotions are Wing Tuesdays, with chicken wings priced between 40 cents and 50 cents each, and Boneless Thursdays, when those wings are discounted to 50 or 60 cents each, depending on the market. BWW’s promotion this summer that its kitchens stay open as late as 2 a.m. has garnered additional business, Benning said, noting that late-service hours are unusual in casual dining.

Such points of differentiation may help explain the sports bars’ trend-bucking avoidance of the kind of sales softness that has begun to spell doom for some casual-dining contenders.

“The concepts that have a unique niche and have built loyalty may be the only ones left standing,” said Paul Emmett, owner of 17-unit Duffy’s of Palm Beach Gardens, Fla. “I think it really does help to have a hook.”

At a time when many chains are slowing expansion, closing underperforming units or suffering strings of negative same-store sales, Duffy’s continues to open new restaurants, each averaging 250 seats, and each, if current trends continue, averaging $3.25 million in annual sales.

Duffy’s TV-ad debut this month “should give us a pop,” Emmett said.

A typical Duffy’s has 45 flat-panel TVs. Some are tuned to big sporting events, while others can be tuned to smaller events for individual customers, Emmett pointed out. “You can watch a Brazilian soccer match or your podunk college game,” he said.

Duffy’s 200,000-member loyalty program also boosts business by giving participants free food after a certain number of purchases. A new program upgrade also awards patrons who spend $1,000 a year with automatic top slots on wait lists for tables, and with added food and beverage awards.

Emmett especially credits Duffy’s sports theme for lessening seasonal slumps that plague many Florida restaurants in the summer. “Florida people are passionate about sports. We see much less of the hills and valleys than most do,” he said.

Wi-Fi technology is being introduced this month in Old Chicago restaurants, which is expected to boost fantasy football participation in the group’s 95 restaurants, said vice president of marketing Gretchen Paules. She said the chain has enjoyed same-store sales growth for 16 consecutive months through June.

This football season, Louisville, Colo.-based Old Chicago will introduce such new menu items as a Cajun burger, mini hamburgers, a ballpark pretzel and beer specials geared to NFL teams’ hometowns. Some restaurants located in college towns run shuttle buses to home games, Paules noted.

While Old Chicago typically sees spikes in sales during football games on Sundays, Mondays and Thursdays, its airing of football seven days a week has resulted in more regular business, she said.

One of Beef ‘O’Brady’s marketing priorities is to convince guests who may only come in for Sunday football to dine at its restaurants more regularly, said Nick Vojnovic, president of the 253-unit chain.

Tampa, Fla.-based Beef ‘O’Brady’s is on track to open 50 new restaurants this year, he said, despite weak sales in its Florida market, blamed on widespread home foreclosures there.

Mid-Atlantic and Midwestern branches of the chain have increased same-store sales, he said. Vojnovic credits hands-on franchisees who know their customers by name and support local school sports teams. He encourages franchisees to offer free Wi-Fi, high-definition TV and other electronic upgrades.

To court favor with sports-loving customers who want to stake out the best seats, many Beef ‘O’ Brady’s [3] branches publicize which games will be shown on which TVs in their 120-seat restaurants. Vojnovic estimates that about 20 percent of customers come in four to six times every week.

Operators of sports bar restaurants that boast the biggest of big screens and the best of sports event programming could be benefiting from a mini-trend detected in May and June by Harris Interactive in an online survey of 8,700 commuters who are confronting higher gas prices. Of the nearly half of those respondents who said they were cutting down on other spending to afford gas, 11 percent said they had dropped their cable TV or magazine subscriptions—potentially leaving a viewing vacuum that sports bars might help fill.