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Buffalo Wild Wings: Revenue Growth Tops Casual Dining Restaurants

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Importance of revenue growth

Revenue growth drives earnings and, in turn, raises investor confidence. This should ultimately push up stock prices. In 1Q16, casual dining restaurant companies, which we covered in Part 1, posted a median revenue growth of 6.9%.

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The leaders

With revenue growth of 15.4%, Buffalo Wild Wings (BWLD) posted the highest 1Q16 revenue growth among casual restaurants in our series. Although same-store sales growth was in negative territory, BWLD’s revenue grew with unit growth. The company added more than 100 company-owned restaurants in the last 12 months, which drove its revenue.

BWLD was followed by Texas Roadhouse with revenue growth of 12.1%. TXRH’s revenue was driven by same-store sales growth and an increase in unit count of company-owned restaurants. The revenue growth for The Cheesecake Factory (CAKE) was at a median value of 6.9%. Unit growth was a major revenue driver for CAKE.

The laggards

Bloomin’s Brands (BLMN) posted revenue of -3.2%. Despite an increase in its company-owned restaurants, revenue declined due to negative same-store sales growth. BLMN was followed by Brinker International (EAT) with revenue growth of 5.2%. Revenue growth was mainly due to its acquisition of Pepper Dining, which operated 103 franchised Chili’s restaurants.

However, EAT’s negative same-store sales growth offset some of the growth in its revenue from unit growth. EAT forms 0.18% of the holdings of the SPDR S&P MidCap 400 ETF (MDY).

In the next few parts of the series, we’ll look at the revenue drivers for casual dining restaurant companies.

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