Of Hurricanes And Chicken Wings: A B-Dubs Story

A revision to Buffalo Wild Wings BWLD's financial model is necessary to reflect promotional changes, the impact of hurricanes Harvey and Irma, and chicken wing prices, analysts at Canaccord Genuity commented in a research report. The firm's Lynne Collier maintains a Hold rating on Buffalo Wild Wings' stock with an unchanged $120 price target.

BOGO Tuesdays

B-Dubs changed its Tuesday promotion offer from a half-price traditional bone-in wing deal to a buy-one-get-one-free boneless wing deal. While this offer could appear to be a negative to store traffic, management did note that the impact to its same-store sales has been better than expected and most of the loss was from takeout activity, the analyst noted.

The new offer does have a positive impact on the company's cost of goods sold and the metric could improve in the third quarter versus the second quarter despite higher chicken wing costs from a year ago.

Harvey And Irma

B-Dubs' management has already quantified that the impact from both Hurricane Harvey and Irma will result in lower third quarter sales by $3.0 million, EBITDA by $2.3 million and earnings per share by $0.10, Collier added.

Wing Prices

Finally, traditional chicken wing prices are currently hovering around $2.10 per pound, which is near peak levels, the analyst also highlighted. Over the near term, the price of wings is expected to rise, especially during the strong demand period of the football season. The restaurant chain itself is expecting a year-over-year wing inflation of 10 to 12 percent for the fourth quarter.

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