3 Signs That Point to a Big Year for Buffalo Wild Wings

By Demitrios KalogeropoulosFool.com

Buffalo Wild Wing's recent fourth-quarter results weren't as much "blazin" as they were "mild."

Sales improved by 5.9% at existing restaurants for B-Dubs' lowest growth rate of the year. And profit actually fell as soaring chicken prices and higher labor costs ate into earnings. Those operating results aren't exactly what you expect to see from a stock that's up 300% in five years and valued at 40 times earnings.

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Mango Habanero wings, B-Dubs' third-spiciest sauce offering. Source: Buffalo Wild Wings.

But in the results, and in the subsequent quarterly conference call with analysts, investors can see a few clues as to how profit and sales growth should be much better in 2015 than last quarter's results would suggest.

This sports thing could be bigFor starters, B-Dubs announced that comparable-store sales are up a massive 12% through the first five weeks of 2015. That's double the prior quarter's gain and well ahead of the growth from the same period last year. In fact, if that pace holds through March, it would mark B-Dubs' highest growth rate in at least 30 quarters. While the final three months of 2014 looked a little soft, the company is starting 2015 on pace to challenge the record of 8.9% comps it set back in the fourth quarter of 2011.

The wing slinger got help this winter from a menu price hike and a few extremely popular sports broadcasts. The Super Bowl, for example, attracted enough guests to drive sales of 11 million wings. College football also kept fans in their seats with hit playoff games and a blockbuster national championship fight.

Football season is over, but the sports draws keep on coming. B-Dubs' plan for cashing in on the NCAA basketball tournament this year includes a marketing push that could drive more traffic. Meanwhile, investors can take heart that the price hike that took effect in November didn't scare customers away. B-Dubs guests are still frequenting their favorite restaurants and loading up on food and beverages.

Focusing on the experienceMeanwhile, Buffalo Wild Wings' labor costs spiked for the right reasons. Management just finished rolling out a new staff position to its company-owned locations that they call "guest experience captains." These employees are charged with keeping customers happy through engagement tools like trivia games and B-Dubs' new tabletop tablets.

Source: Buffalo Wild Wings.

Management credits the captains with boosting sales and helping push customer satisfaction and loyalty scores to new highs. And now that the position is filled at the company's 500 locations, the next step will be to slowly add it to B-Dubs' 600 franchised restaurants.

A less volatile 2015CEO Sally Smith said last week that management is confident Buffalo Wild Wings can boost earnings this year by 18% -- on top of 2014's jump. As usual, swinging chicken wing prices will inject plenty of volatility into that result. Chicken wing costs are already trending 40% higher this quarter than at the same time last year.

But the company has made important progress on that front, too. It secured pricing agreements with chicken suppliers for the first time in its history. The contracts will cover two-thirds of B-Dubs' wings starting in April. And they should help keep prices in a narrower range so the business doesn't have to suffer through the worst of the whip-lash from historically high (or low) chicken wing prices.

Even with those contracts in place, it's not likely that B-Dubs will book anything like last year's 31% profit gain in 2015. However, its results this year could include record high guest satisfaction that powers some of its highest comps growth yet.

The article 3 Signs That Point to a Big Year for Buffalo Wild Wings originally appeared on Fool.com.

Demitrios Kalogeropoulos owns shares of Buffalo Wild Wings and can't handle the "Blazin" sauce. The Motley Fool recommends Buffalo Wild Wings. The Motley Fool owns shares of Buffalo Wild Wings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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