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NFL lockout could sideline sales at Buffalo Wild Wings

NFL lockout could sideline sales at Buffalo Wild Wings

Buffalo Wild Wings could feel a short-term hit if the National Football League lockout results in a shortened or canceled season, according to two restaurant analysts.

Minneapolis-based Buffalo Wild Wings is among the many casual-dining chains that drive a sizeable portion of their traffic on Sundays in the fall and winter during NFL games. The chain of nearly 750 units also ties much of its marketing to fans of football and fantasy football, by hosting fantasy draft parties in the summer and running a fantasy football league during the season.

Stephen Anderson, a restaurant securities analyst for Miller Tabak & Co., estimated in a research note that 10 percent of Buffalo Wild Wings sales are tied to NFL games. However, he noted that the lockout could be could be avoided if the NFL Players Association wins an injunction motion against the league.

“With the fate of the 2011-2012 NFL season likely resting on a court decision … we do not think it is a foregone conclusion that the start of the season will be delayed or even canceled,” Anderson wrote. “However, we think a fair valuation on Buffalo Wild Wings should reflect the possibility that some games will be postponed.”

David Tarantino, an analyst with Robert W. Baird & Co., also does not foresee a completely canceled season, but cautioned that a moderate risk of some lost regular-season games would hurt weekly sales volumes at Buffalo Wild Wings by as much as 15 percent. That in turn could reduce earnings per share by 3 cents to 4 cents per week if fans don’t have NFL games to watch.

“While a lockout could reduce earnings per share temporarily, Buffalo Wild Wings’ recurring business model and profits would be unaffected, in our opinion,” Tarantino wrote in a research note. “For perspective, based on the aforementioned assumptions, we estimate that losing an entire NFL season, which seems unlikely, would hurt Buffalo Wild Wings’ cash flow by $12 million to $15 million, or less than 2 percent of its current enterprise value.”

However, Tarantino noted that the chain’s relief in 2011 from the high chicken wing prices seen last year could offset lost sales from canceled NFL games.

Contact Mark Brandau at [email protected].

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