Financing

Changes at Buffalo Wild Wings failed to avert a loss, 5.5% drop in comps for franchisee Diversified Restaurant Holdings

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Changes made to Buffalo Wild Wings by the casual brand’s new owner are having a positive effect, but came too late to help franchisee Diversified Restaurant Holdings (DRH) avoid a net loss of $1.8 million on a 5.2% drop in same-store sales for the third quarter. 

Comps were hurt in part by difficult comparisons with results for the year-ago quarter, when a broadcast of a championship boxing match between Floyd Mayweather and Conor McGregor packed the restaurants operated by DRH and other franchisees. Negating that year-ago spike in traffic and sales, DRH’s comps would have slipped just 3.2%, according to the company, one of the largest franchisees of Buffalo Wild Wings (BWW). 

A chainwide football promotion that began in September has appreciably raised sales, particularly on weekends, according to DRH CEO David Burke. Comps for October were up about 1.6% from the same month of 2017, he revealed. 

Burke said he expects sales to continue improving as Inspire Brands, the Roark Capital holding that now owns BWW, pursues changes on a number of fronts. BWW was purchased for about $2.9 billion by Arby’s in February, and the two chains became the basis for the formation of Inspire, which has since bought Sonic Drive-In. 

Inspire, which operates roughly a third of the BWW system, is plotting upgrades in its menu, food presentation, technology and marketing, according to Burke. A complete brand recast is planned for next fall, he revealed.

"We expect that these initiatives will drive increasingly positive sales momentum for the brand which, in turn, will result in margin expansion driven by our significant operating leverage," Burke said in a statement.

DRH’s revenues for the quarter were $37.5 million, down 4.5% from the year-ago period. The Q3 net loss of $1.8 million compares with a loss of $543.2 million for the like period of 2017. 

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