Buffalo Wild Wings On Growth

Buffalo Wild Wings opened its 500th franchised location in the United States last month, a growth milestone for the sports-centric casual-dining chain, and has no plans to slow down, said chief operating officer Jim Schmidt.

The unit, which opened in South Miami, Fla., is one of nearly 800 total restaurants in Buffalo Wild Wings' portfolio. The Minneapolis-based brand foresees 1,400 U.S. locations, Schmidt said, and this year's plans call for 13-percent year-over-year unit growth, including 55 company-owned locations and 60 franchised restaurants.

The chain also operates three company-owned restaurants in Ontario, Canada - its first foray into the international marketplace.

Schmidt, who was named COO in February and has been with the company since 2002, spoke with Nation's Restaurant News about the role franchising plays in the chain's growth plans, and the challenges it faces.

How challenging is securing growth capital for Buffalo Wild Wings' franchisees? Is the lending environment more hospitable to multi-unit franchisees? Most of our franchisees are multi-unit developers, so we don't have too many small or one-off franchisees. Most of our franchisees, while they've experienced some lending challenges, continue to get the financing necessary to grow. We don't do anything special to assist them in that, though there are some relationships we've established with lenders, so they're obtaining their growth capital through their own resources. I think that speaks to the strength of those operators and of the brand.

The chain has identified California, Seattle and Philadelphia as potential markets to build out with company-owned stores. How do you determine which markets make sense for corporate or franchise units? That strategy has evolved over time, but it's something we constantly look at. Some of it is logistics, some of it is that certain markets play to franchisees' local knowledge and give them an advantage over a company-owned store. We have some franchisees doing a great job operating in smaller towns by becoming a part of their communities. And sometimes it's geographic. We try not to have too many mixed markets with both company-owned and franchisee locations.

Your first restaurant outside the United States opened in May near Toronto. What have you learned so far from this foray into international growth, and where else is Buffalo Wild Wings looking to expand in the near term? We've learned a lot. Even though it's Canada and there are a lot of similarities, everything is different, from the supply chain to employment laws to just how people conduct business. The learning curve is pretty steep, and things take a little longer to get done. You can get used to having a finely oiled machine in the United States, and then it's tougher to meet timelines and deadlines internationally.

We are also exploring possibilities in the United Kingdom and the Middle East in the near term, and we'll continue to look at other areas all over the globe.

Record-low chicken wing prices and the resolution of the National Football League lockout have worked out in your favor recently. But how do you plan for new franchise growth with commodity prices rising and the potential cancellation of the National Basketball Association season? Chicken wings have always been based on market price for us. We were at record highs a few years ago and were profitable and growing. It's something we know will be bearable, and we've learned over the years to manage through it. It doesn't impact growth decisions one way or another, that volatility.

As for the NBA, we are looking at contingencies [if the season is canceled], but pro basketball is not as significant a driver of sales as NFL football is, so I think we'll be OK.

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