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Buffalo Wild Wings <BWLD.O> is failing to deliver on its promise
of 20 percent profit margins, international expansion and
technology upgrade, Marcato says in a new 51-page slide
presentation, headlined "over-promising and under-delivering,"
to be publicly released on Wednesday.
Marcato officially launched a proxy fight against the company
earlier this month, nominating four directors for its
nine-member board on Feb. 6. The next day, the company reported
disappointing earnings.
"Rather than articulating any real plan to address the weakness,
they instead put forth rosy views that they plan to fix
everything, but with no timeline, no numbers," Marcato founder
and Chief Executive Officer Mick McGuire told Reuters.
The activist investor and the company have clashed since Marcato
disclosed its stake of more than 5 percent last July.
Minneapolis-based Buffalo Wild Wings' stock has slid to $158.20
on Tuesday from $190 two years ago and has a market value of
around $2.8 billion.
One of Marcato's original critiques was that Buffalo Wild Wings
did not franchise out enough restaurants, and the San
Francisco-based fund is pushing for a 90 percent franchisee
model. The franchisee versus company-owned restaurant ratio is
currently around 50-50, and the company has said the chain
actively seeks out new franchisees.
In Marcato's slide presentation, expected to be released on
Wednesday, it repeats its concerns about the board's lack of
experience in the restaurant industry and casts doubt on Buffalo
Wild Wings' ability to reach key targets.
Marcato said the company has been unwilling to provide details
on a timeline and how it would reach its stated promise of
achieving 20 percent profit margins by 2018.
Morgan Stanley also cast doubt on that goal.
"While the company's margin goal ... remains in place, the
achievability of this goal appears less certain near-term," the
investment bank said in a research note after the results were
released, citing challenges around the company's same-store
sales expectations and a rise in raw chicken wing prices.
Buffalo Wild Wings' annual meeting is expected in May.
(Editing by Jeffrey Benkoe)
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