Buffalo Wild Wings (BWLD) 8-K Results of Operations and Financial Condition

Exhibit 99.1

FOR IMMEDIATE RELEASE
Investor Relations Contact: Mary Twinem 952.253.0731	Mary Twinem – CFO

Buffalo Wild Wings, Inc. Announces

Third Quarter Earnings per Share of $0.57

Minneapolis, Minnesota, October 23, 2012 – Buffalo Wild Wings, Inc.(NASDAQ: BWLD), announced today financial results for the third quarter ended September 23, 2012. Highlights for the third quarter versus the same period a year ago were:

o Total revenue increased 24.8% to $246.9 million

o Company-owned restaurant sales grew 26.2% to $228.4 million

o Same-store sales increased 6.2% at company-owned restaurants and 5.8% at franchised restaurants

o Net earnings decreased 5.0% to $10.7 million from $11.3 million, and earnings per diluted share decreased 6.6% to $0.57 from $0.61

Sally Smith, President and Chief Executive Officer, commented, “We’re pleased with our strong top-line growth of nearly 25% in the third quarter. We focused on operational excellence at the restaurant level and our teams delivered strong same-store sales. In addition, we leveraged on labor, operating, and occupancy expenses. High cost of sales and incremental preopening expenses moderated our bottom-line expansion, producing earnings per diluted share of $0.57 compared to $0.61 in 2011.”

Total revenue increased 24.8% to $246.9 million in the third quarter compared to $197.8 million in the third quarter of 2011. Company-owned restaurant sales for the quarter increased 26.2% over the same period in 2011, to $228.4 million, driven by a company-owned same-store sales increase of 6.2% and 55 additional company-owned restaurants at the end of third quarter 2012 relative to the same period in 2011. Franchise royalties and fees increased 10.2% to $18.4 million for the quarter versus $16.7 million in the third quarter of 2011. This increase is attributed to a franchise same-store sales increase of 5.8% and 13 additional franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $52,561 for the third quarter of 2012 compared to $49,461 for the same quarter last year, a 6.3% increase. Franchised restaurants averaged $55,608 for the period versus $51,350 in the third quarter a year ago, an 8.3% increase.

For the third quarter, net earnings decreased 5.0% to $10.7 million versus $11.3 million in the third quarter of 2011. Earnings per diluted share were $0.57, as compared to third quarter 2011 earnings per diluted share of $0.61.

2012 and 2013 Outlook

Ms. Smith remarked, “With the excitement of football season, the entire Buffalo Wild Wings team is focused on maximizing sales as we have strong prior year same-store sales to eclipse during the next two quarters. Same-store sales are about 3.8% at company-owned restaurants and 5.6% at franchised locations for the first four weeks of the fourth quarter compared to 6.6% and 5.3%, respectively, for the same period last year. Our unit growth will continue and we expect to open at least 24 new company-owned and 20 new franchised restaurants before year end. We completed the purchase of nine franchised locations and are positioned to acquire an additional nine locations this quarter. With continued leveraging of expenses and the benefit of a 53rd week, we will partially offset the continuing high wing costs and estimate our net earnings growth for 2012 will be 15%.”

Ms. Smith concluded, “We are a vibrant and resilient brand. In 2013, we will open more than 60 company-owned and 45 franchised restaurants, and should achieve the 1,000 unit mark by the end of the year. We now anticipate we can expand to 1,700 locations in North America, with additional growth abroad. We’ll begin to realize the benefit of strategies we’ve been working on over the past year. We have an enhanced Guest service strategy along with new innovations in food, beverage, and technology that will drive revenue. With this growth and financial diligence, we have a goal for 2013 to achieve 20% net earnings growth on a 52-week basis.”

Buffalo Wild Wings will be hosting a conference call today, October 23, 2012 at 4:00 p.m. Central Daylight Time to discuss these results. There will be a simultaneous webcast conducted at our website www.buffalowildwings.com.

A replay of the call will be available until October 30, 2012. To access this replay, please dial 1.858.384.5517 password 4568234.

About the Company

Buffalo Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis, Minnesota, is a growing owner, operator and franchisor of Buffalo Wild Wings Grill & Bar™ restaurants featuring a variety of boldly-flavored, made-to-order menu items including its namesake Buffalo, New York-style chicken wings. The Buffalo Wild Wings’ menu specializes in 20 mouth-watering signature sauces and seasonings with flavor sensations ranging from Sweet BBQ™ to Blazin’®. Guests enjoy a welcoming neighborhood atmosphere that includes an extensive multi-media system for watching their favorite sporting events. Buffalo Wild Wings is the recipient of hundreds of "Best Wings" and "Best Sports Bar" awards from across the country. There are currently more than 861 Buffalo Wild Wings locations across 48 states in the United States, as well as in Canada.

Forward-looking Statements

Various remarks we make about future expectations, plans, and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements relate to our future financial and store performance measures and growth goals for 2012 and beyond, including but not limited to those relating to our third quarter sales trends and projected unit and net earnings growth rates for 2012 and beyond. All statements other than statements of historical fact are statements that could be deemed forward-looking statements and are based upon the current beliefs and expectations of our management. We have attempted to identify forward-looking statements by terminology, including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will” or the negative of these terms or other comparable terminology. Actual results may vary materially from those contained in forward-looking statements based on a number of factors, including, but not limited to, our ability to achieve and manage our planned expansion, the ability of our franchisees to open and manage new restaurants, market acceptance in the new geographic regions we enter (particularly non-U.S. locations), unforeseen obstacles in developing nontraditional sites or non-U.S. locations, our ability to obtain and maintain licenses and permits necessary to operate our existing and new restaurants, our franchisees’ adherence to our practices, policies and procedures, the cost of commodities such as traditional chicken wings, the success of our key initiatives and our advertising and marketing campaigns, our ability to control restaurant labor and other restaurant operating costs, the continued service of key management personnel, our ability to protect our name and logo and other proprietary information, economic conditions (including changes in consumer preferences or consumer discretionary spending), the impact of federal, state or local government regulations relating to our employees, the sale of food and alcoholic beverages, the effect of competition in the restaurant industry, and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission, including the factors described under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 25, 2011, as updated in subsequent reports filed with the SEC. Investors should take such risks into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update any forward-looking statements.

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BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Dollar and share amounts in thousands except per share data)

(unaudited)

	Three months ended					Nine months ended
	September 23, 2012		September 25, 2011			September 23, 2012		September 25, 2011
Revenue:
Restaurant sales	$	228,418		181,036			681,284		514,459
Franchise royalties and fees		18,441		16,727			55,420		49,555
Total revenue		246,859		197,763			736,704		564,014
Costs and expenses:
Restaurant operating costs:
Cost of sales		71,263		51,655			213,213		143,654
Labor		68,804		54,783			203,710		154,970
Operating		34,626		28,537			99,772		78,134
Occupancy		13,458		11,195			39,349		32,081
Depreciation and amortization		16,818		12,748			48,439		35,701
General and administrative		21,813		18,336			62,213		53,394
Preopening		4,535		3,864			8,662		10,367
Loss on asset disposals and store closures		788		612			2,122		1,515
Total costs and expenses		232,105		181,730			677,480		509,816
Income from operations		14,754		16,033			59,224		54,198
Investment income (loss)		418		(374	)		713		(170	)
Earnings before income taxes		15,172		15,659			59,937		54,028
Income tax expense		4,464		4,393			19,322		17,228
Net earnings	$	10,708		11,266			40,615		36,800
Earnings per common share – basic	$	0.58		0.61			2.19		2.01
Earnings per common share – diluted		0.57		0.61			2.17		2.00
Weighted average shares outstanding – basic		18,589		18,352			18,573		18,330
Weighted average shares outstanding – diluted		18,723		18,520			18,675		18,433

The following table expresses results of operations as a percentage of total revenue for the periods presented, except for restaurant operating costs which are expressed as a percentage of restaurant sales:

	Three months ended						Nine months ended
	September 23, 2012			September 25, 2011			September 23, 2012			September 25, 2011
Revenue:
Restaurant sales		92.5	%		91.5	%		92.5	%		91.2	%
Franchising royalties and fees		7.5			8.5			7.5			8.8
Total revenue		100.0			100.0			100.0			100.0
Costs and expenses:
Restaurant operating costs:
Cost of sales		31.2			28.5			31.3			27.9
Labor		30.1			30.3			29.9			30.1
Operating		15.2			15.8			14.6			15.2
Occupancy		5.9			6.2			5.8			6.2
Depreciation and amortization		6.8			6.4			6.6			6.3
General and administrative		8.8			9.3			8.4			9.5
Preopening		1.8			2.0			1.2			1.8
Loss on asset disposals and store closures		0.3			0.3			0.3			0.3
Total costs and expenses		94.0			91.9			92.0			90.4
Income from operations		6.0			8.1			8.0			9.6
Investment income (loss)		0.2			(0.2	)		0.1			0.0
Earnings before income taxes		6.1			7.9			8.1			9.6
Income tax expense		1.8			2.2			2.6			3.1
Net earnings		4.3			5.7			5.5			6.5

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

(unaudited)

	September 23, 2012		December 25, 2011
Assets
Current assets:
Cash and cash equivalents	$	31,322		20,530
Marketable securities		52,511		39,956
Accounts receivable – net of allowance of $25		17,785		12,165
Inventory		6,511		6,311
Prepaid expenses		3,128		3,707
Refundable income taxes		2,355		7,561
Deferred income taxes		7,249		6,323
Restricted assets		36,266		42,692
Total current assets		157,127		139,245
Property and equipment, net		346,963		310,170
Other assets		27,979		28,174
Goodwill		17,777		17,770
Total assets	$	549,846		495,359
Liabilities and Stockholders’ Equity
Current liabilities:
Unearned franchise fees	$	1,815		1,852
Accounts payable		37,591		30,089
Accrued compensation and benefits		33,595		30,499
Accrued expenses		11,614		7,580
System-wide payables		36,503		44,250
Total current liabilities		121,118		114,270
Long-term liabilities:
Other liabilities		1,679		1,544
Deferred income taxes		35,826		38,512
Deferred lease credits, net of current portion		25,381		23,047
Total liabilities		184,004		177,373
Commitments and contingencies
Stockholders’ equity:
Undesignated stock, 1,000,000 shares authorized; none issued		—		—
Common stock, no par value. Authorized 44,000,000 shares; issued and outstanding 18,590,352 and 18,377,920, respectively		120,268		113,509
Retained earnings		245,387		204,772
Accumulated other comprehensive income (loss)		187		(295	)
Total stockholders’ equity		365,842		317,986
Total liabilities and stockholders’ equity	$	549,846		495,359

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(unaudited)

	Nine months ended
	September 23, 2012			September 25, 2011
Cash flows from operating activities:
Net earnings	$	40,615			36,800
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation		46,409			35,065
Amortization		2,030			636
Loss on asset disposals and store closures		1,757			1,279
Deferred lease credits		2,966			2,703
Deferred income taxes		(3,612	)		8,220
Stock-based compensation		6,207			8,642
Excess tax benefit from stock issuance		(2,024	)		(700	)
Change in operating assets and liabilities:
Trading securities		(850	)		37
Accounts receivable		(7,712	)		(5,752	)
Inventory		(199	)		(632	)
Prepaid expenses		583			(1,019	)
Other assets		(1,826	)		(2,216	)
Unearned franchise fees		(37	)		(124	)
Accounts payable		2,088			5,704
Income taxes		7,230			2,877
Accrued expenses		13,162			13,322
Net cash provided by operating activities		106,787			104,842
Cash flows for investing activities:
Acquisition of property and equipment		(79,007	)		(84,651	)
Purchase of marketable securities		(123,943	)		(78,690	)
Proceeds of marketable securities		112,238			94,387
Net cash used in investing activities		(90,712	)		(68,954	)
Cash flows for financing activities:
Issuance of common stock		1,147			870
Tax payments for restricted stock units		(8,447	)		(2,481	)
Excess tax benefit from stock issuance		2,024			700
Net cash used in financing activities		(5,276	)		(911	)
Effect of exchange rate changes on cash and cash equivalents		(7	)		(86	)
Net increase in cash and cash equivalents		10,792			34,891
Cash and cash equivalents at beginning of period		20,530			15,309
Cash and cash equivalents at end of period	$	31,322			50,200

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

Restaurant Count

Company-owned Restaurants:

	Q1	Q2	Q3	Q4
2012	327	330	343
2011	263	277	288	319
2010	235	234	244	259
2009	206	215	220	232
2008	165	169	187	197

Franchised Restaurants:

	Q1	Q2	Q3	Q4
2012	505	505	511
2011	488	492	498	498
2010	430	447	457	473
2009	373	383	400	420
2008	340	346	348	363

Same-Store Sales

Company-owned Restaurants:

	Q1		Q2		Q3		Q4		Year
2012	9.2	%	5.3	%	6.2	%
2011	3.9	%	5.9	%	5.7	%	8.9	%		6.1	%
2010	0.1	%	(0.1	%)	2.6	%	(0.3	%)		0.6	%
2009	6.4	%	2.8	%	0.8	%	2.6	%		3.1	%
2008	4.1	%	8.3	%	6.8	%	4.5	%		5.9	%

Franchised Restaurants:

	Q1		Q2		Q3		Q4		Year
2012	7.3	%	5.5	%	5.8	%
2011	1.6	%	2.7	%	4.2	%	5.9	%		3.6	%
2010	0.7	%	(0.7	%)	0.3	%	(1.1	%)		(0.2	%)
2009	6.0	%	3.7	%	1.9	%	2.0	%		3.4	%
2008	2.1	%	4.5	%	2.1	%	2.5	%		2.8	%

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

Supplemental Information

Average Weekly Sales Volumes

Company-owned Restaurants:

	Q1	Q2	Q3	Q4	Year
2012	$55,131	51,524	52,561
2011	48,845	47,970	49,461	51,983		49,627
2010	45,327	43,021	44,394	45,595		44,601
2009	45,593	42,938	42,602	44,583		43,912
2008	41,438	40,572	42,400	43,864		42,141

Franchised Restaurants:

	Q1	Q2	Q3	Q4	Year
2012	$57,282	54,766	55,608
2011	52,744	50,995	51,350	53,385		52,081
2010	51,532	49,051	49,005	49,837		49,835
2009	50,729	48,619	48,458	50,115		49,479
2008	47,812	46,390	46,889	48,424		47,382