All of these trends and changes aside, however, one challenge—an issue out of Buffalo Wild Wings’ control—really defined its final year as a public company.
In late July 2017, Buffalo Wild Wings killed its famed Half-Price Wings Tuesday deal in favor of a boneless offering. The BOGO boneless promotion, which hit company locations by mid-September, wasn’t related to traffic. In fact, it was one of the company’s major guest count drivers for some time. The death of the deal could be credited to historically high wing prices.
When Buffalo Wild Wings released its 2017 earnings forecast, it cited rising wing prices as a serious threat to its bottom line. The chain was paying an average of $2.16 per pound. A year earlier, Buffalo Wild Wings averaged $1.72.
On top of that, executives said at the time that boneless wings outsold traditional wings at company restaurants in 2016 (Buffalo Wild Wings sold 1.2 billion boneless wings and 1 billion traditional wings that year). At first, the change paid off. Buffalo Wild Wings’ shares soared as it crushed analyst expectations the following quarter with earnings per share of $1.36, beating calls of 79 cents.
Beyond the balance-sheet benefit, though, what was the real effect? Did this change actually suit Buffalo Wild Wings’ customers?
In January 2018, data from the NPD Group showed that U.S. restaurants sold 1.1 billion servings of traditional bone-in chicken wings in the 12 months ended September, or 64 percent of the overall wing market. And despite rising prices on bone-in wings, Bloomberg reported that traditional-wing servings rose 6 percent. Boneless wings? They fell by the same percentage.
For all of 2017, Buffalo Wild Wings missed not only Wall Street’s expectations for same-store sales, but it’s own guidance, too. It said comps would range between 1.6–1.7 percent for the year, which was worse than the 1.5 percent analysts anticipated and what Buffalo Wild Wings guided to after the boneless deal first bumped optimism.
As The Motley Fool pointed out, while the boneless deal helped bolster margins, bone-in diners are loyal.
Buffalo Wild Wings’ switch to the boneless deal improved its cost-to-sales margin by 40 basis points, year-over-year. It said it believed the campaign would continue to sequentially improve in the fourth quarter, making them 60 basis points lower than a year ago despite wing costs upping 50 basis points.
However, Buffalo Wild Wings didn’t get all of its franchisees on board, which prevented it from putting serious marketing spend behind boneless.