Buffalo Wild Wings Inc.’s second-quarter profit was pressured by “historically high wing costs,” the CEO said Wednesday.
The Minneapolis, Minn.-based casual-dining chain said profit for the second quarter ended June 25 was down 62.9 percent, and same-store sales at company-owned locations were down 1.2 percent
“Our profitability was pressured this quarter,” said Sally Smith, Buffalo Wild Wings president and CEO, in an earnings statement, “driven by historically high wing costs, a mix shift to our promotional days, lower than expected same-store sales and higher operating expenses."
The company, in guidance, said it expected traditional chicken wing price inflation of 8 percent to 10 percent for the rest of 2017.
Smith said the company continued to work on stabilizing business “in the challenging restaurant environment.”
"As traditional chicken wing costs remain at historically high levels, we're adapting our value day on Tuesday to feature our boneless wings at company-owned restaurants,” she said.
“In addition, we continue to implement our cost-savings plan to improve margins and profitability in areas we can control,” Smith said. “Due to our disappointing second-quarter earnings and an outlook for slowing traffic as we manage through the Tuesday promotional change, we are lowering our 2017 earnings outlook.”
The company now expects earnings per diluted share of $4 to $4.50.
“We are optimistic about the transition to boneless wings, which provides a more stable promotional platform for the future,” said Smith, who joined the company in 1994 and has announced she will retire as CEO by the end of the year as the company faces pressure from an activist shareholder.
For the second quarter ended, Buffalo Wild Wings reported net income fell to $8.8 million, or 55 cents a share, from $23.7 million in the same period a year aog. Revenue increased 2 percent, to nearly $500 million, from $491.2 million in the prior-year quarter.
The company has more than 1,240 Buffalo Wild Wings in the United States and abroad.
Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless