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BWW’s largest franchisee seeks a change

In another indication of Buffalo Wild Wings’ mounting problems, the chain’s largest franchisee disclosed last week that it’s seeking “financial alternatives,” corporate speak for a sale or refinancing.

Diversified Restaurant Holdings, an operator of 65 BWWs, slipped the announcement into a press release about the public company’s third-quarter sales results. Same-store sales for DRH’s restaurants fell 4.4% for the period, leaving the company with a loss of roughly $500,000.

Buffalo Wild Wings Inc., the franchisor of the 1,271-unit chain, said about a week earlier that same-store sales had slipped 2.3% at company-run locations and decreased an average of 3.2% at franchised units.

DRH CEO David Burke said his charge is focused on bolstering efficiencies, but noted the company intends to step up its investments in “revenue-driving initiatives” in the fourth quarter. He did not reveal what those measures might be, but specified that the expenses would be in addition to the chain’s continued spending on a loyalty program and the development of a delivery system.

A sale of DRH’s 65 restaurants could dilute the market for BWW units. The announcement came as BWW feels pressures from a dissident shareholder group to refranchise its 638 company-run restaurants, or about half the chain. A franchisee group has come out in support of its franchisor's opposition to the plan.

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