A sizable group of Buffalo Wild Wings Inc. franchisees on Monday expressed support for the company and Chief Executive Sally Smith in a fight with an activist shareholder over business strategy.
The group said it appreciated the ideas put forth by the shareholder, Mick McGuire of San Francisco-based Marcato Capital Management, but added it believed the company's executives were "listening and responding appropriately."
"We think Buffalo Wild Wings' recipe for success is not one to be altered to accommodate a short-term and uncertain vision by a minority shareholder group," Mark Jones, vice chairman of the group, called Franchise Business Services, said in a statement.
Because the group represents about 90 percent of the company's franchisees, the statement gives Buffalo Wild Wings more ammunition in the battle with McGuire, which is heading to a showdown in the board of directors election at the company's annual meeting this spring.
McGuire last month nominated himself and three others to the board. The company hasn't issued its official notice for the annual meeting, which would contain a stance on whether it supports McGuire's nominees. The franchisee group said it will support current directors and executives at the annual meeting.
Marcato took a 5.2 percent stake in the company last July with a call for "new talent" and greater reliance on franchising, a step that would unlock the value of company-owned real estate. Currently, about half of Buffalo Wild Wings' nearly 1,200 locations are company owned. McGuire has recommended that the Golden Valley-based firm lower its ownership to just 10 percent of locations, with the rest owned and run by franchisees.
Buffalo Wild Wings earlier this year said it planned to test McGuire's idea by selling off about 10 percent of its company-owned stores, or around 60. In its statement Monday, the franchisee group applauded that move but cautioned that McGuire's vision goes too far.
"We do not believe an 'asset-light,' 90 percent-franchised model would maintain the appropriate overall alignment of interests between the franchiser and the franchisee community," said Wray Hutchinson, chairman of the franchisee group and operator of 39 Buffalo Wild Wings locations.
Buffalo Wild Wings said in a statement it "appreciates the support of the Franchise Business Services and the hard work of all our franchisees."
Following the franchisees' statement, Marcato issued a statement that did not directly respond but underscored his criticism of the company.
"Buffalo Wild Wings' incumbent board and management have failed to address the numerous shortcomings at the company for years," the Marcato statement said. "We are confident that a reinvigorated board will lead to significantly enhanced opportunities for franchisees, a greatly improved customer experience and long-term value creation for shareholders."
Last week, McGuire revved up his criticism of Buffalo Wild Wings with an extensive analysis of the stock purchases and sales of the company's executives. A few weeks before that, McGuire criticized executives for missing target dates for store and technology initiatives they announced.
The company for much of the past decade was one of the fastest-growing restaurant chains in the United States, and its stock reflected that huge growth, rising from about $10 a share at the start of 2004 to around $150 at the start of 2014. But it has seesawed the past three years, peaking around $195 in August 2015.
On Monday, Buffalo Wild Wings shares closed at $150.15, down $2.40 or 1.6 percent.