Buffalo Wild Wings announces higher profits, but per-store sales remain under pressure

Buffalo Wild Wings beat expectations with higher profits in the second quarter, but same-store sales stayed negative and are not expected to even out until the end of the year.

Buffalo Wild Wings said its second-quarter profit rose 10 percent, as cost-cutting offset continued pressure on revenue.

The restaurant chain said it earned $23.7 million, or $1.27 a share, 2 cents more than the consensus of analysts surveyed by Thomson Reuters.

The performance, announced after regular stock trading closed Tuesday afternoon, ended a string of three quarters in which the company's profit missed expectations. The company's shares were up 2 percent in after-hours trading.

"We controlled costs and expenses well in a challenging sales environment," Chief Executive Sally Smith said in a statement accompanying its results announcement.

Sales rose 15 percent to $490.2 million, but they still fell below analysts' forecast of $498 million. Comparable sales, at locations open at least a year, fell 2.1 percent at company-owned stores and 2.6 percent at franchised restaurants.

Although the company recently added a 15-minute lunch guarantee on weekdays, Bloomberg Intelligence analyst Michael Halen said there is little change in the menu or the food to attract new or casual customers. "It's just more of the same," he said.

To reach new customers, the company is starting to reach out to soccer fans and eSports leagues. The wings-sports-beer restaurant gets its most loyal customer base from college and professional football games.

Buffalo Wild Wings executives continue to see a difficult environment in casual dining, with people reluctant to spend discretionary dollars.

The chain had 89 more locations in the April-June period than it did a year ago.

On Monday, San Francisco-based Marcato Capital Management, a hedge fund, purchased 5.1 percent of the company. Marcato said in its filing that it believes the company's shares are undervalued. It plans to suggest strategic alternatives that may involve management changes, the capital structure, and the mix of corporate vs. franchise-owned stores.

John Ewoldt • 612-673-7633