3 More Crazy Things Brewing at Buffalo Wild Wings


Sriracha fans, Buffalo Wild Wings has some mouthwatering news for you. For a limited time Sriracha sauced wings will be on the menu at a Buffalo Wild Wings near you. Once that promotion is over, start lining up for even more new sauces that will be rolled out throughout 2014.

Buffalo Wild Wings has a lot of things brewing for the year ahead, as we reported a few months ago, including partnerships with craft brewers for Buffalo Wild Wings-only beers, installing tablets at tables with exclusive interactive sports program, and a nascent foray into pizza.

And the changes at this chicken joint just keep coming.

Source: Buffalo Wild Wings.

1. Buffalo Wild Wings is kicking Coke to the curb.
The restaurant chain just announced a deal with PepsiCo to provide soft drinks to thirsty patrons. The switch from Coca-Cola allows Buffalo Wild Wings access to popular beverages including Pepsi, Lipton teas, Tropicana, Mountain Dew, and Sierra Mist as well as PepsiCo's snack portfolio of "-tos" -- Doritos, Cheetos, Tostitos, and Fritos. And what about a Wild Wings-Doritos concoction? It may already be in the cards given that Buffalo Wild Wings' management visited the PepsiCo innovation center and were offered a taste of what the two could cook up together.

Leveraging PepsiCo's NFL and MLB relationships is another plus for Buffalo Wild Wings. Buffalo Wild Wings CEO Sally Smith was quoted in The New York Times as saying, "We might be able, say, to utilize some proprietary films these groups have and show them in the restaurants. Pepsi also has relationships with players and entertainers, and they might make appearances in the restaurants."

Those proprietary films would meld quite nicely with the table tablet B-Dub sports network. And what sports bar would turn down a visit from a pro athlete? Certainly not one that has 30-plus HDTV flatscreens showing sports.

2. Your meal is about to get saucy-er.
As mentioned earlier, Sriracha is going on the menu for a limited time. So far there's been no official announcements about other new sauces, although there have been hints about a Cajun-inspired creation.

The company's sauce initiative comes just in time for the Super Bowl and NCAA March Madness. Buffalo Wild Wings has a partnership with the NCAA and is now "The Official Hangout of NCAA March Madness." The company is a sponsor of all 89 NCAA championships.

3. Hiring now: Cruise ship directors to guide your dining experience.
The third new initiative hasn't been mentioned much by the press, though it was highlighted in Buffalo Wild Wings' recent earnings call and investor presentations.

The new initiative is actually a position -- Guest Experience Captain -- the company says it will be filling at all company-owned locations through 2014.

The Guest Experience Captain position is no glorified hostess job, according to Buffalo Wild Wings. Its website describes it like this: "Guests will welcome and appreciate your help as you keep the vibe alive with fresh, fun sports news; well- timed samples of our Signature Sauces; an interesting Beer Flight to drink and discuss; or some friendly competition around a trivia game. The GEC gauges Guests' interests, plans fundraisers and local activities, and introduces Buffalo Wild Wings specials and new foods and beverages."

The company is expecting some increased labor costs as this is integrated, but with all its new initiatives, tablets, games, drinks, and eats someone has to explain and promote them.

It's time for the competition to cry "Uncle!"
To borrow a line from fictional sportscaster Jonny Wilde, victory does indeed taste like chicken for Buffalo Wild Wings.

Competitors have yet to take flight. McDonald's had a disastrous Mighty Wings rollout. And then there's Popeye's, owned by AFC Enterprises , and Yum! Brands , which sells wings at KFC and Pizza Hut.

However, the Popeye's chain is not a casual dining/sports bar but a slower fast food proposition with a fairly limited menu without alcohol. And despite the renovation of some Yum! Brands restaurants to be more inviting for "lingering," customers don't go to KFC to order a round of craft beers and watch worldwide sports.

Source:BWLD presentation at Goldman Sachs.

Meanwhile, Buffalo Wild Wings' multiyear innovations and reinvestment in the business and expansion to the current 960 locations in the U.S., Canada, Mexico, Philippines, Saudi Arabia, and United Arab Emirates have led to a 24% five-year earnings CAGR and 25% revenue CAGR.

Still, analysts are divided.

UBS initiated coverage with a Buy but Morgan Stanley downgraded from an Overweight to an Underweight based on valuation and a slowing pace of expansion.

True, the sweet real estate deals that fueled company expansion in 2009- 2010 aren't as widely available these days. CEO Smith addressed this slowing on the earnings call, pointing out that the company still plans for 1,700 locations but has extended the time period to 10 years.

Despite its disciplined management style and conservative expansion Buffalo Wild Wings is on quite a tear strategically. Frequent new menu items, innovative labor strategies, win-win partnerships with beverage companies, both alcoholic and non, are keeping this chain in the forefront of casual dining investors' thoughts.

In only 10 years this company has made amazing progress. Expect more of the same.

The article 3 More Crazy Things Brewing at Buffalo Wild Wings originally appeared on Fool.com.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings, Coca-Cola, McDonald's, and PepsiCo. The Motley Fool owns shares of Buffalo Wild Wings, Coca-Cola, McDonald's, and PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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