Marcato, Mick McGuire Again Urge Big Change at Buffalo Wild Wings
Earlier this week, Marcato Capital CEO Mick McGuire, sent another inflammatory statement to franchisees of Buffalo Wild Wings that, among other things, urged a radical increase from the company’s current 49 percent franchise standing.
"We believe all stakeholders would benefit from seeing the system transition to a 90 percent or higher franchise mix," McGuire wrote in the letter. "To achieve this target approximately 600+ company units would be refranchised, inclusive of expected future system growth.”
McGuire also mentioned, as he has before, that Buffalo Wild Wings could benefit from an “introduction of fresh talent at both the board and management levels.”
McGuire has made many bold statements to Buffalo Wild Wings franchisees and executives since Marcato acquired a 5.2 percent stake in the company back in July. The activist blasted the company in August, sending a harsh letter to the restaurant chain’s chairman, James Damian, calling for a management and board overhaul.
Back in October, McGuire told the crowd at the Sohn San Francisco Investment Conference that the restaurant chain must transition to more of a franchised store model to unlock value, bringing up the proposal to make at least 90 percent of its stores franchised. He also called for the company to improve operating margins and optimize the company’s capital structure by issuing more debt. McGuire stated that the stock (NASDAQ: BWLD) price could rise by more than 2 to 3 percent under Marcato’s proposal.
Buffalo Wild Wing’s CEO Sally Smith addressed the concerns from the August letter in an interview with Franchise Times, saying that the company has already addressed many of the concerns brought up in the letter, while citing the company’s strong international growth. “If you look at our G&A metrics or our operating margin metrics, we’re always in the top quartile,” she said in the interview.
In the midst of a struggling casual dining marketplace, Buffalo Wild Wings sales have been slightly above average. The broader segment reported -1.9% same store sales results in the third quarter, while Buffalo Wild Wings announced a -1.8% same store sales result in their most recent quarterly report.