Buffalo Wild Wings has a new activist stakeholder that wants to shape the company's response to flattening sales.
Marcato Capital Management, a San Francisco-based hedge fund, disclosed Monday that it has purchased 950,000 Buffalo Wild Wings shares, or 5.1 percent of the Golden Valley-based company. That made Marcato the company's fourth-largest shareholder, according to FactSet.
The company's stock jumped after the stake was revealed in a securities filing Monday afternoon. It closed up nearly 6 percent.
Marcato is run by Richard McGuire, who formerly worked with hedge fund manager Bill Ackman, another prominent activist investor.
In the filing, Marcato said it believes Buffalo Wild Wings' shares are undervalued and that it plans to suggest strategic alternatives that could involve changing management, the company's capital structure and its mix of franchised and company-owned restaurants. Marcato said it has been in talks with company executives.
Through last week, Buffalo Wild Wings shares were down 12 percent for the year while the broader market is up 6 percent.
The disclosure came a day before the company reports its results for the April-to-June quarter.
In the first three months of the year, sales at company-owned restaurants open at least a year fell 1.7 percent, while those at franchised restaurants were down 2.4 percent.
"The macro environment for casual dining has had a rough quarter — a rough couple of quarters — and we are impacted by that," Sally Smith, Buffalo Wild Wings chief executive, said in April when first-quarter results were announced. At that time, executives said they expected flat comparable sales for the second and third quarters.
Until the recent leveling-off, Buffalo Wild Wings' fast growth led to a sevenfold increase in its shares from 2008 to an all-time high last summer. Its shares are down about 24 percent from that peak.
The chain, which was founded in 1982, has more than 1,150 locations in the U.S. and Canada. It recently announced two promotions, including a 15-minute lunch guarantee on weekdays and half-price chicken wings this Friday for National Chicken Wing Day, a July 29 tradition that started in Buffalo, N.Y., in 1977.