Shares of Buffalo Wild Wings Inc. (NASDAQ/BWLD) soared on Wednesday July 29th, after the company reported second-quarter earnings, signaling the restaurant chain’s investment in customer experience is paying off.
During the previous quarter, total revenue increased 16.5% year-over-year to $426.4 million. (Source: Buffalo Wild Wings, July 29, 2015.)
Revenues from company-owned restaurant revenue for the quarter increased 17.1% over the same period in 2014, to $401.9 million. More importantly, same-store sales, which measures the growth in revenues at restaurants opened for more than one year, grew 4.2% year-over-year.
Investors were impressed with the announcement. As of 12:30 p.m. E.T., shares of Buffalo Wild Wings were up 13% from Tuesday’s close to $193.70.
The only blemish in the report was on the bottom line. During the quarter, the company earned $21.5 million, down 9.3% from the same period last year. Earnings per diluted share also fell 9.9% to $1.12, from $1.25 per share in the second quarter of 2014.
“The price per pound for traditional chicken wings was 26% higher than the prior year.” Company President and Chief Executive Officer Sally Smith, President and Chief Executive Officer wrote in the earnings press release. “Labor as a percentage of sales increased due to higher wage rates and benefits costs.”
The solid report shows the company’s investment in customer experience is paying off. While rivals like McDonald’s Corp. (NYSE/MCD) and Yum! Brands, Inc. (NYSE/YUM) are suffering from declining sales, Buffalo Wild Wings continues to get customers in the door. Management has found a hot niche by catering to cost-conscious families looking for an entertaining night out.
And this could just be one of many good quarters for Buffalo Wild Wings. The company is in the final stage to acquire 41 franchised Buffalo Wild Wings locations in different cities. New menu items and improvements to the customer experience are also expected to continue growing same-store sales in the mid-single digits.