Buffalo Wild Wings hires investment banker that activist shareholder wanted

Buffalo Wild Wings Inc.'s announcement Tuesday that it retained an investment banker to begin selling 50 or more company-owned stores to franchisees upset the activist shareholder who pushed the restaurant chain to sell them.

The company hired the Cypress Group, the same Colorado-based restaurant-focused investment banker that the shareholder, Marcato Capital, retained last fall to assess prospects for such sales.

"It is ironic that, despite spending the last nine months resisting all of Marcato's suggestions for financial and operational improvements, Buffalo Wild Wings has now chosen to engage the Cypress Group on its so-called 'portfolio optimization' process," Marcato said in a statement.

The criticism was the second in two days Marcato fired at Buffalo Wild Wings after the restaurant chain did something Marcato wanted.

On Monday, Buffalo Wild Wings nominated to its board of directors a food industry executive Marcato had nominated last month.

Marcato, a San Francisco investment firm, became a sizable investor in Buffalo Wild Wings last summer by purchasing a 5.6 percent stake. In the months since, the firm's principal, Mick McGuire, urged Buffalo Wild Wings to seek new leaders and sell nearly all of its company-owned restaurants to franchisees, deals that would likely yield proceeds to investors.

Buffalo Wild Wings executives brought on new board members and undertook a strategic review that led them to announce they would test the McGuire strategy by selling about 10 percent, or 50 to 60 units, of Buffalo Wild Wings' company-owned locations.

The company's statement included a comment from Cypress Group Chief Executive Dean Zuccarello that the firm was excited to work with the "exceptional management team" at Buffalo Wild Wings.

In its statement, Marcato noted that Cypress last fall had endorsed its recommendation for selling around 90 percent of the chain's company-owned units. It said that even with Cypress' support that such an extensive overhaul to the company's business model is feasible, "We remain concerned that Buffalo Wild Wings will continue to resist this plan."