The company has plans to reach 1,700 North American stores compared to the 900 current stores. While it has already started opening up stores in Canada, the first real international expansion begins in the Middle East starting this year and Puerto Rico in 2014.
As a competitive example, Chipotle operates over 1,400 restaurants and Panera Bread has 1,650 locations with a new unit target of up to 125 in 2013. Even though it has already reached 49 states, Buffalo Wild Wings appears to have more growth potential than the listed goal of 1,700 based on Chipotle and Panera.
Based on Panera alone, the company could reach 2,000 units. In the local metro area, the company has three locations but still lacks restaurants in some of the major entertainment areas. As a further example, Panera has 7 locations within 10 miles and several other locations further out in the metro area.
While the fast-casual concepts won’t ever match the units of McDonald’s Corporation (NYSE:MCD), it does need enough areas to limit driving times as the concept will never be seen as a destination such as a high-end steakhouse. Though Buffalo Wild Wings might obtain such a designation on sports event driven days, consumers won’t generally drive a long distance no matter how good the wings.
The general category has been weak over the last year. As the below chart highlights, the nearly 13% loss by Buffalo Wild Wings sits in the middle of the group and significantly below the benchmark S&P 500:
The sector has considerably underperformed the market providing the potential for a sector rotation later this year especially if meat prices peak. Another catalyst for Buffalo Wild Wings could be the resuming earnings growth starting with Q2.
The stock has gone nowhere in the last year since spiking in early February 2012. After a year of digesting those gains, the stock might be poised for another rally as the company has years of strong growth ahead with store counts in the US alone set to double.
The article Buffalo Wild Wings: Going Nowhere of Late originally appeared on Fool.com.
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