Buffalo Wild Wings (BWLD) Maintains 20% Unit Level EBITDA Profitability with $300 Sales per Square Foot

March 12, 2013

Buffalo Wild Wings (BWLD) maintains one of the highest unit growth rates among restaurants with more opportunities to expand toward from coast to coast, and BWLD displays a competitive advantage through its higher profitability per square foot, says Nick Setyan, Senior Equity Analyst for Wedbush Securities.

“In terms of Buffalo Wild Wings, the longer-term context there is they have probably the highest unit growth rate on the company side in restaurants,” Setyan said. “Their cash-on-cash returns are increasing, which is always a metric that I look to, as they expand to the West Coast and East Coast. They can maintain 20% unit level EBITDA profitability on just $300 a square foot in sales.”

Because BWLD can maintain profitability at lower prices than its competitors, BWLD is able to penetrate areas that are up to 60% below state median income levels while still performing at or above system averages, Setyan says.

BJ’s Restaurants (BJRI) needs almost $1,000 a square foot in sales to maintain 18% profitability. Applebee’s and Chili’s need something in the neighborhood of $400 to $600 in sales to maintain those types of profitability metrics. Buffalo Wild Wings can do it with only $300 in sales per square foot,” Setyan said. “So the longer-term growth opportunity because of that, in my opinion, is still quite big as they can get to above 2,000 units.”