Roark Capital Group could soon have another project under its wings.
The private equity firm reportedly made a $2.3 billion bid for Buffalo Wild Wings (BWLD – Get Report) Monday afternoon, Nov. 13, just months after CEO Sally Smith announced she would retire by year-end amid activist pressures. Roark has a history of acquiring struggling casual dining chains and turning them around, as was the case with Arby’s, which it bought in 2011, and Auntie Anne’s Inc., in 2010.
But some industry sources say B-Dubs has enough livelihood to fend for itself, especially as investors were already optimistic about prospects of a new CEO. The Minneapolis-based company beat Wall Street expectations last month, posting earnings of $1.36 per share in the third quarter to analysts’ predictions of 79 cents.
“We don’t believe the Buffalo Wild Wings brand is dead. It still has good mindshare with consumers,” said Jeremy Hamblin, a senior analyst at Dougherty & Co. “You can argue that most restaurant operators have struggled in recent years because of higher labor costs and lower traffic trends in casual dining.”
Buffalo Wild Wings has seen two years of declining sales, Hamblin told TheStreet. Its stock lost nearly 25% of value so far this year. Its struggles arise largely from poultry prices at all-time highs.
As of early October, wing prices were over $2 per pound, nearly double the 10-year average of $1.35, according to a Stifel report that found consumers ranked B-Dubs to be the worst chain restaurant when it comes to value. But given the volatility of chicken wing prices, earnings could rebound when prices go back down.
Read more: https://www.thestreet.com/story/14388942/1/does-buffalo-wild-wings-need-a-private-equity-takeover-to-resuscitate-itself-.html