Buffalo Wild Wings leans into Go takeout format as a third of sales move off premises

Buffalo Wild Wings opened its 100^e Go location on Wednesday in New York City, four years after unveiling the quick-service offshoot of its sports bar chain.

BWW Go sells the chain's famous chicken wings and other classic menu items, but the locations are smaller and limited to delivery and takeout orders. For the sports bar chain, it's a way to make the brand even more ubiquitous while offering customers more convenience.

Since 2018, Buffalo Wild Wings has been part of Inspire Brands, which is supported by private equity firm Roark Capital. Initially formed after a merger between BWW and Arby's, Inspire has since added other chains including Sonic Drive-In, Jimmy John's, Dunkin' and Baskin-Robbins.

Inspire is reportedly considering going public in late 2024 or 2025 and is targeting a $20 billion valuation.

BWW is the second largest US casual dining chain in the bar and grill category, with a 14.4% market share, trailing only Dine brands' Applebee's, according to research by Barclays. The company has established chicken wing dominance among its closest competitors, serving more than 3 million gallons of ranch and blue cheese dressing by 2023.

But the casual dining segment has struggled, with listed rivals like Chilis And red Robin constantly stuck in reversal mode.

Buffalo Wild Wings' 2023 revenue fell 1% to $2.32 billion, according to franchise documents. A fast-growing spinoff like Go could make Inspire more attractive to potential public market investors.

Opening a traditional Buffalo Wild Wings location will require anywhere from $2.44 million to $4.83 million in initial investments, depending on the restaurant's location and other factors, according to franchise documentation. By comparison, a Go location earns a franchisee approximately $560,000 to $1.05 million.

While a BWW sports bar averages about 600 square feet, a Go location is about 1,500 square feet. That means cheaper real estate that is faster to build and easier to operate.

“With the ability to fit into smaller footprints, it has the recognition of an established brand with the unlimited potential of an emerging brand,” said Jack Litman, president of the Munson Group and franchisee of the 100^e Go location.

The Go format is mainly intended to reach customers who sometimes do not want to give up their couch for a sports bar.

Before the pandemic, off-premise orders accounted for 15% of Buffalo Wild Wings' sales, according to John Bowie, brand president at BWW. Now, takeout and delivery services make up about a third of BWW's revenue.

“This was an opportunity for us to take the takeout portion of the business, put it in a freestanding unit and put it in a very convenient location where our customer is,” Bowie told CNBC.

As of Wednesday, BWW has also branded its entire off-premise operations under the Go name.

BWW's off-premise growth mirrors that of the broader chicken wing category, which soared in popularity during the pandemic. Like pizza, chicken wings travel well when delivered, but they also offer more variety, with an array of sauces and rubs to change up the flavor.

While pizza chains like it Dominoes and Pizza Hut have seen their sales struggles since the pandemic as pizza fatigue set in, but chicken wings haven't slowed down in the same way.

For example, fast-casual chain and stock exchange darling Wing stop has reported strong same-store sales growth over the past year and a half, bucking industry trends. Bernstein analyst Danilo Gargiulo wrote in a February research note that Wingstop has the potential to become “the next Dominoes.” (Roark Capital previously owned Wingstop, but quit a year and a half after the chain's IPO.)

Other chains are now also looking at chicken wings to increase their sales. Restaurant Brands International Popeyes permanently added chicken wings to its menu last year.

BWW Go also gives the chain the opportunity to better compete with its fast-food rivals. The chain may adjust its limited menu to appeal to customers looking for an easy dinner.

BWW Chief Marketing Officer Tristan Meline told CNBC that the chain may offer more specialty sauces, menu items or promotions to Go customers in the future.

BWW plans to continue expanding its current footprint of more than 1,300 sports bars, but Go will open locations much faster, according to Bowie.

“It takes a long time to get approval for a sports bar and to build a sports bar, but we have already seen with the sixty franchisees that we have now that they can start to eradicate this, and the growth will be very exciting,” says he. said.

BWW already has nearly 600 commitments from franchisees to open additional Go locations. About 85% of operators also franchise with other Inspire-owned chains, such as Dunkin' or Arby's.

But the calls for franchising also come from outside Inspire; Bowie said he's heard from major franchisees who already operate multiple concepts.

The chain plans to open another 50 Go locations by the end of this year.