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Business

Strategic Plan and Presentation on Buffalo Wild Wings

TABLE OF CONTENTS

EXECUTIVE SUMMARY…………………………………………………………,,,………3

COMPANY BACKGROUND………………………………………………………,,,….….4

Mission…………………………………………………………………………,,,……,, 4

Vision……………………………………………………………………………,,,,…… 5

ENVIRONMENTAL SCAN…………………………………………………..…,,,, ……….6

External Factors…………………………………………….………………..……………6

Internal Factors……………………………………………….………………………………8

ORGANIZATIONAL STRATEGY..…………………….……….……………… …….….10

IMPLEMENTATION SUMMARY……………………………………….……………..…10

Functional Tactics……………………………………………………………………..….12

Key Success Factors ………………………………………………………………,……13

Projected Financials and Break Even Analysis ……………………………………………13

Risk Management Plan……………………………………………………………………..14

CONCLUSION…………………………………………………………………………….15

 

Executive Summary

Buffalo Wild Wings is one of the fastest growing sports bar food chains in the United States and Canada with over 900 locations and counting. Buffalo Wild Wings the place to go with family and friends to enjoy award winning wings and tasty sauces, with beer and drinks while watching the favorite sports team. Buffalo Wild Wings specializes not only in wings but offers a wide assortment on their menu of shrimp, wraps, chicken tenders, beefy burgers, and tasty salads. There also offer a full bar of favorite mixed drinks and beverages to quench any thirst.  Buffalo Wild Wings offers the viewing pleasure of catching up on the latest sports from football games, basketball games, hockey, and other games and pay per view events on their popular screen TVs. Buffalo Wild Wings is not just another bar, it serves as a friendly restaurant to bring the family, friends, or yourself to enjoy a delicious meal.

Buffalo Wild Wings is a dominant market player ranked as the eighth largest restaurant in the U.S. by Technomic Inc. (Merrill, 2002). For 2012 total revenue increased 37.8% to $303.8 million. This strategic plan will examine the company’s vision and mission Statement in order to implement an expansion strategy to plan for growth to reach the target 1000 locations, and expand globally. It will include charts and analysis of external and internal factors, access the factors in the implementation plan that might affect the whole company. These steps are essential is testing the feasibility of the growth strategy for Buffalo Wild Wings.

Company Background

Buffalo Wild Wings is a chicken wing restaurant that opened in 1982 by Scott Lowery and Jim Disbrow (Merrill, 2002). Their main target was college students thus most of the restaurant’s chains were located near colleges. With time, growth being one of the goals of the chicken wing firm, they extended their target market to not only college students, but also to the people living in emergent suburban areas. The restaurant’s specialty in chicken wings and a sports bar has made it popular among males aged between 21-34 years. Close to, a decade after the first restaurant was up and running, the chicken wing business had grown and could boast of having seven more outlets (Merrill, 2002). However, the financial state of the chains of the restaurant was in jeopardy, which forced Jim Disbrow to employ Sally Smith as the chief financial officer to restore affairs back in order. Within two, years, she had managed to correct financial affairs in the chain of restaurants, and by 1996, the firm had added 60 more outlets to its name and was still showing signs of growth. The hundredth restaurant was established in 1999 and was seeking to merge with Frito-Lay to introduce potato chips (Merrill, 2002). Buffalo Wild Wings owns, franchises, and operates in over 900 locations across 49 states and Canada. There are currently out looking in 2013 to open up 100 more stores, 60 company operated, and 45 franchised. They recently announced a multi-year partnership with the NCAA gives us exclusive marketing and promotional opportunities and makes Buffalo Wild Wings the ‘Official Hangout’ of NCAA March Madness®. We’ll increase the presence and popularity of the Buffalo Wild Wings brand and look forward to achieving a successful year of the unit and net earnings growth.” (Buffalo Wild Wings, 2013)

Mission Statement

Buffalo Wild Wings has a unique market. The target market is people from the ages of 20 to 50. Buffalo Wild Wings Inc., owns, operates, and franchises restaurants, which take part in the made-to-order menu items. Part of Buffalo Wild Wings the mission is to WOW people every day. They are guest driven, team focused, community connected, and dedicated to excellence. They strive to wow our guest by achieving the highest level of satisfaction with high focus on friendly service, food, fun and great value. They also want to WOW their team members and employees by showing the same respect and positive encouragement. Their miss is to always show good citizenship by helping to make these communities’ better places to live, work, and grow. They will dedicate ourselves to excellence by returning our franchisees and stakeholders with outstanding, industry-leading financial results and superior performance.

Vision Statement

            Buffalo Wild Wings vision is short and precise, their vision is to provide the ultimate social experience through restaurant brands worldwide. They plan to reach 1000 units by the end of 2013. The CEO’s vision for the future is for continual growth and future investments to make the company a success.

Value Statement

Buffalo Wild Wings follows a strict code of conducts and places value on their customers, employees, and franchise owners. Buffalo Wild Wings depends on the character of its team members and employees. Their character is a reflection out the company’s leadership values which includes attracting and recruiting quality, knowledgeable, honest people with leadership skills, and a passion for doing their best. Buffalo Wild Wings value their guests, co-workers and communities and strive to treat them with respect. (Code of Ethics, 2008)

Environment Scan

Internal Environment

            There are several factors that contribute to the success or fail of a business as Buffalo Wild Wings continues its plan for future growth, it must take into account the internal environment of the company. Buffalo Wild Wings currently at the end of 2012 owned or franchised 891 Buffalo Wild Wings restaurants in North America, of which 381 were company-owned, and 510 were franchised.(Buffalo Wild Wings, 2013) Buffalo Wild Wings currently employs approximately 25,500 Team Members. With approximately 2,800 full-time and 22,300 part-time Team Members working in the company-owned restaurants and 400 Team Members based out of the home office or in field management positions. (Buffalo Wild Wings, 2013) The management of Buffalo Wild Wings include CEO Sally Smith and CFO Mary Twinem who both came on the scene in 1994, have helped lead a successful turnaround from where it once stood. Including implementing a standard point-of-sale management information system, and changing the layout and design of the company.

            There financials explain their continued growth of the company compared to the industry.

Financial Strength                                                                        BWW                                Industry

 
Quick Ratio (MRQ) 0.90 0.70
Current Ratio (MRQ) 1.30 1.00
LT Debt to Equity (MRQ) 0.00 1.03
Total Debt to Equity (MRQ) 0.00 1.08
Interest Coverage (TTM) N.A.  

(Motley fool, 2013)

There at a financial advantage that continues to show through revenue of $ 1 billion, with system wide sales at $2.5 billion and net earnings of $57 million. 15% of company-owned and franchised. Sales of the company-owned restaurants, which represented 93% of total revenue in 2012. Food and nonalcoholic beverages accounted for 78% of restaurant sales. The remaining 22% of restaurant sales was from alcoholic beverages. The menu items with the highest sales volumes are traditional and boneless wings at 20% and 19%, respectively, of total restaurant sales.(Buffalo Wild Wings, 2013) The remaining revenues is from royalties and franchise fees received from our franchisees. Their debt-free capital structure is a primary factor of the company that puts at  a high advantage over their competitors, who contain significant debt, As the company is becoming more efficient, the company‘s margins are expanding. The Return on Assets has been an average of 7.01% for the last few fiscal years. Buffalo Wild Wings success is also contributed to the growing success of their franchises.

As of    
    Dec. 30,

2012

    Dec. 25,

2011

    Dec. 26,

2010

 
Company-owned restaurants     381       319       259  
Franchised restaurants     510       498       473  

The restaurant sales for company-owned and franchised restaurants are as follows (amounts in thousands):

    Fiscal Years Ended  
    Dec. 30,

2012

    Dec. 25,

2011

    Dec. 26,

2010

 
Company-owned restaurant sales   $ 963,963       717,395       555,184  
Franchised restaurant sales     1,510,020       1,326,213       1,147,848  

Increases in comparable same-store sales are as follows (based on restaurants operating at least fifteen months):

    Fiscal Years Ended  
    Dec. 30,

2012

    Dec. 25,

2011

    Dec. 26,

2010

 
Company-owned same-store sales     6.6 %     6.1 %     0.6 %
Franchised same-store sales     6.5       3.6       (0.2 )

With the overall demand for chicken wings at an all-time high, Buffalo Wild Wings has placed their self in a market that is in a competitive industry. Buffalo Wild Wings differentiates itself based of the quality, price-value relationship, and taste of the food. They create a friendly, family, and gaming environment that is unique to a sports bar. The atmosphere of all the restaurants include a place to view all the latest sporting events, a focus on exceptional guest experience, and  compete primarily with local and regional sports bars and national casual dining and quick casual establishments, and modern open layout.

At Buffalo Wild Wings, has updated its technology by implementing a standard point-of-sale system in all of the company-owned restaurants which is integrated to their central offices through a secure, high-speed connection. The system works in accordance with their geographic layout in restaurants, allows Buffalo Wild Wings to appeal to families, drinkers, and sports viewers alike.

External Analysis

External factors are as influential as internal factors. Buffalo Wild Wings significant external factor is its reliance on chicken wings sales, they account for over 20% of revenue. Any disruption in the wing price or demand could negatively affect their revenue and sales. As the chart shows the prices of wings over the years.

As Buffalo Wild Wings must continue to explore other purchasing strategies to lessen the severity of cost increases and fluctuations. Like adding new food choices to the menu and keeping other costs down to account for the increase in price of wings. Wings affect the cost of sales percentage of chicken wings represented in terms of total restaurant sales. The market price for traditional wings reached its lowest price in 2011, and the price rose toward the end of 2012. The chart below illustrates the fluctuation in chicken wing prices from quarter to quarter in the last five years. (Buffalo Wild Wings Annual Report, 2013)

Competition is still an external factor, as entrance in to market is easy for an entrepreneur willing to put out the same layout and business format. It is then easy to acquire the same amount of customers by copying the same business and marketing strategy. There are in some direct completion with other restaurants such as Outback Steakhouse, Applebee’s. Cheesecake Factory and other sports type restaurants, however, they are still pulling in less revenue than them all, and BWW revenue growth is much stronger. However, in order to stay ahead of the competition they need to continue to add more choices to the menu, continue the customer loyalty relationship, and price strategy.

Market Capitalization P/E Ratio (forward) Revenue Growth (5 year) Beta
Applebee’s 1.80B 18.54 11.98 (%) 0.51
PF Chang’s 1.36B 30.51 28.27 (%) 0.87
Buffalo Wild Wings 267.52 M 23.03 35.19 (%) 0.72
Cheesecake Factory 2.88B 28.12 20.31 (%) 0.37
Outback Steakhouse 3.41B 17.65 12.16 (%) 0.82

Global expansion is also an external factor that if not managed properly could be a weakness.  Over expansion and under expansion of the company can be of no benefit whatsoever, especially with the restaurant facility. Expansion of the company has it is demerits for instance, due to its expansion it strains available resources hence can lead to standstill of activities and especially, challenges can arise in the management. If the company does not expand, it fails to take advantage of emerging markets. The essence of entry into emerging markets is that the outcome is reliant on the quality of products as the competitors are placed on an equal footing with a littler advantage over each other.

Organizational Strategies

Buffalo Wild Wings is a dominant market player ranked as the eighth largest restaurant in the U.S. by Technomic Inc. (Merrill, 2002). For the firm to realize growth, it needs to analyze its SWOT analysis and come up with strategies that will seek to minimize its threats, which are mostly external, and work on its weaknesses while taking advantage of its opportunities and maximizing on its strengths. Best value discipline, generic strategy, and grand strategy are several strategies options for Buffalo Wild Wings, however for the company to seek the expansion that they desire they must implement a growth strategy. With this strategy, Buffalo Wild Wings will help to tackle the threats of finding appropriate sites in new and existing markets. It must also acquire funds for constructing new restaurants that are conventional, and get more franchise locations.

Implementation Plan

            The objectives and goals of Buffalo Wild Wings must be clear and concise. With the goal of reaching 1000 units domestically and global expansion in mind.  The specific goals that need to be implemented include creating a substantial need to raise awareness of the restaurants in new markets through massive advertisements. This will put the firm at par with the competitors and in turn increase sales and consumer base (Smith, 2003).

Most importantly, Buffalo Wild Wings needs to recognize adequate number of appropriate new restaurant sites for it to endure the revenue growth rate it has achieved. It is notable that market acceptance in the new geographic regions may be slow hence interfering with the rate of returns. Product diversity is essential. It will create authenticity and originality in the established and new chains hence ensuring that no restaurant affects the other one in a negative way. Lastly, the restaurant chain should choose a way in which the implementation of the expansion strategy does not strain the company’s resources. This will help the firm to keep up with their competitors and increase the financial growth.

The key functional tactics that must be addresses in order to hire quality management, thorough background and referrals must be made to provide the necessary set of standards that are then applied through employee training. The plan of action is for the hiring and training to be handle by HR, HR to go over recommendations received from applicants, and provide new hires with orientation sessions. This goal is obtainable within the next year. The resource allocation used is the investments from the HR into the new employees that will eventually make good on the return of investment.

In order to compete in the market better the tactic of advertisement on television, word of mouth, and internet campaigns must be successfully implemented using the sources of social networks with the help of marketing executives. The plan of actions include, setting up a viral campaign on YouTube, crowdsourcing for an innovative marketing idea on Facebook, and buying celebrity endorsements. This goal is achievable with a six months deadlines, with milestone that of gaining international exposure. The resource allocation will also be taken from the marketing team for the benefit of the company. In order to locate more places for future locations the tactics of  selecting locations based on selection criteria, select locations that they are able to obtain agreeable lease terms, and every site is located in a marketable site with the overview of the operating manager. The action plan includes gathering market data from local offices, scouting for locations with feedback from local residents. The deadline for this is within two years as more time is needed for careful evaluation. The resource allocation will be taken from planning time for operations manager to research sites and budget figures. The last functional tactic of to be able to utilize the company’s resources for expansion strategy by planning a schedule that is efficient and cost efficient. The plan of actions are to come up with budgeted income to account for new expansion and write up a plan for design and construction. This tasks will be delegated to the operations manager with the deadline of two years. The resource allocations to obtain this goal and meet the deadline is allocated from using the operations and project manager in developing blue prints for future layouts and budgets.

The key success factors are in line with obtaining the goals set in place for more customers, better management, more franchises, and better locations for growth. If these goals are achieved then the goal of 1000 units by the end of 2013 will be obtained. The goal for global expansion is within reach, but factors including hiring qualified mangers need to be successfully completed. Further illustrated for the future of Buffalo Wild Wings is a chart for future financials. All the objectives have been budgeted to meet the needs of the company, the company continues to do business and function in the way it has, and then the financial forecast will present the company’s predicted results for the upcoming year. The company recently took in $1 billion in revenue. Employee training and hiring for qualified management is already apart of Buffalo Wild Wings budget, for this goal an additional $500,000 to $1 million operating expenses to pay for HR time and salaries, new training hours, utility bills, and research. For advertisement, the company needs to try and lock down celebrity endorsements, viral campaigns that will cost the company from upwards of $3-4 million. For expansion of new sites, Buffalo Wild Wings has already budgeted and allocated resources to support up to 1200 locations. There is no need to add any additional money to the budget. For the total expenses budgeted would equal, around $4-$5 million additional costs.  The added changes would only increase revenue and sales of Buffalo Wild Wings. A forecast of additional growth is illustrated.

A break even analysis was made on the rounded total fixed costs, a variable cost per unit at roughly .10 a unit, the total sales for wings increased with wings per pound purchased at 1.97. So for a year break even analysis costs and expenses will continue to stay medium with profits continuing to rise.

Risk Management Plan

The risk plan for Buffalo Wild Wings takes into account all the outside risk factors that could affect the operations and growth of the company. To access the risks for the growth strategy Buffalo Wild Wings must  minimizes individual risk and by having substantial background checks that follow a tier system, back up marketing and advertising plans if the viral campaigns were to not generate the expected outcome and generate a plan if expansion were to be delayed. Once the risks have been accessed and prioritized what risks will have the most impact cost wise, financially, and overall operations. Once all is access the necessary analysis of reducing the probability of these risks factors will be crucial. A contingency plan to reduce the impact on these risks will be made including using the money budgeted to be make up for any impact of operations or loss of sales. Implemented a newer growth strategy with the company’s goals in mind of new sites, newer menu products, and global expansion, and looking to quality headhunters for quality management.

Conclusion

Buffalo Wild Wings has enjoyed substantial success during the last few years and are on track to more revenue growth and earnings. The goal of expansion in reaching 1000 units by the end of 2013 is within reach with a total of 900 units at the end of 2012. Buffalo Wild Wings continued close relationship with their customer base keeps their customers loyal and coming back. The implementation plan of growth strategy will tackle some key objectives to help the company grow even more with better customer interaction and brand awareness, leadership reflected in qualified management, and global expansion to reach international markets. These objectives show to only help the company in spite of the possible risks for failure. The strategic plan includes all the necessary charts and analysis to help support the growth strategy that Buffalo Wild Wings will embark on.

References

Buffalo Wild Wings Annual Report. (2013). U.S. Securities and Exchange Commission Retrieved from http://www.sec.gov/Archives/edgar/data/1062449/000143774912001595/bwld_10k-12251

Buffalo Wild Wings Financial Analyst. (2013). NASDAQ. Retrieved from http://www.nasdaq.com/symbol/bwld/pe-growth-rates#. UTGSolful-w

Buffalo Wild Wings Financials. (2013). the Motley Fool. Retrieved from http://www.fool.com/quote/nasdaq/buffalo-wild-wings/bwld

CODE OF ETHICS AND BUSINESS CONDUCT. Buffalo Wild Wings. (n.d) http://public.thecorporatelibrary.net/ethics/eth_107322.pdf.

Merrill, A. (Feb. 5, 2002).  “Hot Prospects: After a Faltering Start Buffalo Wild Wings is Finding its Stride,” Star Tribune (Minneapolis), Retrieved from http://www.fundinguniverse.com/company-histories/buffalo-wild-wings-inc-history/

Smith, S., J. (Sept. 11, 2003) Securities and Exchange Commission. Retrieved on 20th Feb, 2013 from http://www.sec.gov/Archives/edgar/data/1062449/000119312503048285/ds1.htm