Less than five weeks after Buffalo Wild Wings’ acquisition, one of its largest franchisees is heartened by what it’s seeing from new owner Roark Capital.
“We’re already making changes,” David Burke, CEO of 65-unit franchisee Diversified Restaurant Holdings, told investors Friday. He declined to reveal particulars, but did say the chain began testing “some new value propositions” just this past weekend.
He also relayed Roark’s intentions to look at all aspects of the business, including the brand’s food, plate presentations, marketing, branding and positioning.
Meanwhile, “the low-hanging fruit is going to be looking at all our contracts, leveraging their scale,” Burke said during Diversified’s quarterly meeting with financial analysts.
Roark is a major stakeholder in Carl’s Jr., Jimmy John’s, Moe’s Southwest Grill and about 15 other restaurant brands. It bought BWW on Feb. 5 for $2.9 billion and merged it with another of its holdings, Arby’s, to form a new subsidiary holding company called Inspire Brands, headed by former Arby’s CEO Paul Brown.
“We spent a lot of time with them, talking to the CEO of Inspire as well as meeting with the new management team,”said Burke. “We just had a Buffalo Wild Wings conference and [it’s] nothing but positive outlook as far as I am concerned. … It’s refreshing.”
He explained, “The way they view the franchisor and franchisee relationship is a true partnership in a true sense and that in and of itself is highly refreshing today.”
Burke blamed BWW’s prior management in part for his charge’s difficult fourth quarter of 2017. Same-store sales for Diversified’s restaurants fell 6.8%, and a major factor was a shift in the chain’s promotional strategy during the period, typically a busy one for the brand because of all the sporting events that are packed into the 12 weeks. Stung by historically high wing prices, BWW replaced a popular Tuesday night deep discount of boneless wings with a buy one, get one free promotion of boneless wings. It also changed its promotional message.
Burke suggested that traffic dropped precipitously.
However, he noted that the franchisor’s decision to drop the bone-in wings promotion instantly drove down the cost of that supply, saving Diversified considerable money. About half its restaurants have continued to promote the bone-in wings at roughly 50% their regular cost on Tuesday evenings, though the deal is limited to what Burke described as smaller orders.
During the analysts’ call, Burke was repeatedly asked about what changes might be undertaken by Inspire. He cautioned investors to look at that question in terms of what will happen in the short, mid- and long terms.
“There are a lot of initiatives,” he said. “Time is of the essence, as you can imagine with them. That said, they’re very prudent on how they do things, and there’s going to be zero shooting from the hip or instinctive decisions.”
He professed to be “looking forward to some of the changes [that] come down the pipeline.”