UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Buffalo Wild Wings, Inc.
(Name of Registrant as Specified In Its Charter)
MARCATO CAPITAL MANAGEMENT LP
MARCATO INTERNATIONAL MASTER FUND LTD.
MARCATO SPECIAL OPPORTUNITIES MASTER FUND LP
SCOTT O. BERGREN
RICHARD T. MCGUIRE III
SAM ROVIT
EMIL LEE SANDERS
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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On May 11, 2017, Marcato Capital Management LP delivered a presentation and supplementary materials to Institutional Shareholder Services, Inc. The presentation is attached hereto as Exhibit 1. The supplementary materials are attached hereto and include an analysis of total shareholder return (Exhibit 2), quotes from research analysts (Exhibit 3) and submissions to http://www.winningatwildwings.com (Exhibit 4).
Exhibit 1 BUFFALO WILD WINGS MAY 2017 |
DISCLAIMER 1 The views expressed in this presentation (the “Presentation”) represent the opinions of Marcato Capital Management LP and/or certain affiliates (“Marcato”) and the investment funds it manages that hold shares in Buffalo Wild Wings, Inc. (the “Company”). This Presentation is for informational purposes only, and it does not have regard to the specific investment objective, financial situation, suitability or particular need of any specific person who may receive the Presentation, and should not be taken as advice on the merits of any investment decision. The views expressed in the Presentation represent the opinions of Marcato, and are based on publicly available information and Marcato analyses. Certain financial information and data used in the Presentation have been derived or obtained from filings made with the Securities and Exchange Commission (“SEC”) by the Company or other companies that Marcato considers comparable. Marcato has not sought or obtained consent from any third party to use any statements or information indicated in the Presentation as having been obtained or derived from a third party. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed in the Presentation. Information contained in the Presentation has not been independently verified by Marcato, and Marcato disclaims any and all liability as to the completeness or accuracy of the information and for any omissions of material facts. Marcato disclaims any obligation to correct, update or revise the Presentation or to otherwise provide any additional materials. Neither Marcato nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy, fairness or completeness of the information contained herein and the recipient agrees and acknowledges that it will not rely on any such information. Marcato recognizes that the Company may possess confidential information that could lead it to disagree with Marcato’s views and/or conclusions. Funds managed by Marcato currently beneficially own, and/or have an economic interest in, shares of the Company. These funds are in the business of trading— buying and selling—securities. Marcato may buy or sell or otherwise change the form or substance of any of its investments in any manner permitted by law and expressly disclaims any obligation to notify any recipient of the Presentation of any such changes. There may be developments in the future that cause funds managed by Marcato to engage in transactions that change the beneficial and/or economic interest in the Company. The Presentation may contain forward-looking statements which reflect Marcato’s views with respect to, among other things, future events and financial performance. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if Marcato’s underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Marcato that the future plans, estimates or expectations contemplated will ever be achieved. The securities or investment ideas listed are not presented in order to suggest or show profitability of any or all transactions. There should be no assumption that any specific portfolio securities identified and described in the Presentation were or will be profitable. Under no circumstances is the Presentation to be used or considered as an offer to sell or a solicitation of an offer to buy any security, nor does the Presentation constitute either an offer to sell or a solicitation of an offer to buy any interest in funds managed by Marcato. Any such offer would only be made at the time a qualified offeree receives the Confidential Explanatory Memorandum of such fund. Any investment in the Marcato Funds is speculative and involves substantial risk, including the risk of losing all or substantially all of such investment. |
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS 2 Marcato International Master Fund Ltd. (“Marcato International”), together with the other participants in Marcato International’s proxy solicitation, have filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement and accompanying WHITE proxy card to be used to solicit proxies in connection with the 2017 annual meeting of shareholders (the “Annual Meeting”) of Buffalo Wild Wings, Inc. (the “Company”). Shareholders are advised to read the proxy statement and any other documents related to the solicitation of shareholders of the Company in connection with the Annual Meeting because they contain important information, including information relating to the participants in Marcato International’s proxy solicitation. These materials and other materials filed by Marcato International with the SEC in connection with the solicitation of proxies are available at no charge on the SEC’s website at http://www.sec.gov. The definitive proxy statement and other relevant documents filed by Marcato International with the SEC are also available, without charge, by directing a request to Marcato International’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (888) 750-5834 (banks and brokers may call collect at (212) 750-5833). The participants in the proxy solicitation are Marcato International, Marcato Capital Management LP, Marcato Special Opportunities Master Fund LP (“Marcato Special Opportunities Fund”), Emil Lee Sanders, Richard T. McGuire III, Sam Rovit and Scott O. Bergren (collectively, the “Participants”). As of the date hereof, Marcato International directly owns 950,000 shares of common stock, no par value, of the Company (the “Common Stock”), representing approximately 5.9% of the outstanding shares of Common Stock and Marcato Special Opportunities Fund directly owns 32,600 shares of Common Stock, representing approximately 0.2% of the outstanding shares of Common Stock. In addition, Marcato Capital Management LP, as the investment manager of Marcato International and Marcato Special Opportunities Fund, may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the shares of Common Stock held by Marcato and Marcato Special Opportunities Fund, therefore, may be deemed to be the beneficial owner of such shares. By virtue of Mr. McGuire’s position as the managing partner of Marcato Capital Management LP, Mr. McGuire may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the shares of Common Stock held by Marcato International and Marcato Special Opportunities Fund and, therefore, Mr. McGuire may be deemed to be the beneficial owner of such shares. |
BUFFALO WILD WINGS (“BWLD”): A GROWING, DISTINCTIVE RESTAURANT BRAND Differentiated concept focused on “wings, beer, and sports” ~1,200 units with long-term potential to grow to 1,700 units in US & Canada and 400+ units internationally (75% future unit growth) 3 Consensus Estimates: 2017E EPS: ~$5.76 per share 2017E EBITDA: ~$305 million Valuation (’17E): P / E: 26.8x EV / EBITDA: 8.8x Ticker: “BWLD” Recent Stock Price: $155 Source: Company filings, CapitalIQ. Market data as of 4/19/17, the last day before Marcato’s definitive proxy filing. Capitalization: Market Cap: $2.5 billion Enterprise Value: $2.7 billion |
WHY WE INVESTED IN BUFFALO WILD WINGS Differentiated concept with long runway for growth SSS declines, operational missteps, and poor capital allocation have hurt shares Opportunity to create substantial shareholder value by: 1) Improving “4-wall” profitability and returns 2) Transitioning to a 90%+ franchised model 3) Optimizing capital structure 4 |
Highlights from Marcato’s Campaign 5 |
Total Shareholder Return 1- Year 3- Year 5- Year S&P 500 Index 14% 34% 89% NASDAQ Index 20% 48% 108% S&P 600 Restaurants Index 13% 53% 167% Proxy Peer Median 11% 30% 103% Buffalo Wild Wings 10% 10% 84% Underperformance vs. S&P 500 (4%) (23%) (5%) Underperformance vs. NASDAQ (11%) (38%) (24%) Underperformance vs. S&P 600 Restaurants (3%) (42%) (83%) Underperformance vs. Proxy Peer Median (2%) (20%) (19%) BWLD’S SHARES HAVE UNDERPERFORMED AGAINST RELEVANT BENCHMARKS 6 SUMMARY OF SHAREHOLDER RETURNS “We believe the stock performance is compelling evidence of the effectiveness of the Board and management” -Buffalo Wild Wings Media Statement, 3/8/17 Source: Company filings, CapitalIQ. Market data as of 4/19/17, the last day before Marcato’s definitive proxy filing. Note: Proxy peers include BJRI, BLMN, BOBE, EAT, CAKE, CMG, CBRL, PLAY, DIN, DPZ, DNKN, FIVE, PNRA, RRGB, RT, TXRH, and ULTA. Total shareholder return for proxy peer group uses the median return for applicable peers over each timeframe. |
BWLD’S SHARE PRICE HAS REACTED FAVORABLY TO MARCATO’S CALL FOR CHANGE 7 SHARES JUMPED ~+20% IN THE WEEK WE FILED OUR 13-D Marcato’s 13D Filing on 7/25/16: 13-D filed intra-day Prior close: $141 BWLD reported Q2’16 earnings on 7/26/16: SSS: -2.1% vs. -0.5% est. “4-wall” margins contracted 90bps YoY EPS: $1.27 vs. $1.25 est.: Low-quality “beat” driven by reduced SBC from decreased bonuses SHARES UP +6% UPON CALL FOR CEO RESIGNATION Source: CapitalIQ, Bloomberg. Marcato’s DEFC14A Filing on 4/20/17: Sent letter to BWLD shareholders seeking resignation of CEO Sally Smith Released presentation highlighting validation from third parties of the need for change $170 $130 $135 $140 $145 $150 $155 $160 $165 $170 $175 7/1/16 7/7/16 7/13/16 7/19/16 7/25/16 7/31/16 $163 $150 $152 $154 $156 $158 $160 $162 $164 4/1/17 4/7/17 4/13/17 4/19/17 4/25/17 |
STOCK PERFORMANCE DECOUPLED FROM FUNDAMENTALS FOLLOWING MARCATO’S 13D 8 Source: CapitalIQ, Bloomberg. Market data as of 4/19/17, the last day before Marcato’s definitive proxy filing. Marcato’s 13D Filing on 7/25/16: Shares have clearly been supported by a floor following our public involvement… …Despite a precipitous drop in estimated future earnings power $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50 $65 $85 $105 $125 $145 $165 $185 $205 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 BWLD Closing Share Price Consensus EPS - FY'17 |
9 SAME-STORE SALES GROWTH, TRAFFIC, AND MARGINS HAVE ALL DETERIORATED SSS GROWTH IS AT LOWEST LEVELS IN OVER A DECADE, DUE TO DEEP & ACCELERATING DECLINES IN TRAFFIC AND MIX MARCATO BELIEVES “4-WALL” MARGINS HAVE SUFFERED DUE TO EXPENSE MISMANAGEMENT Q1 Q2 Q3 Q4 Q4 2016 ‘13 Q1 Q2 Q3 Q4 2015 2014 Source: Company filings, Wall Street research. (1) Underperformance relative to industry refers to Knapp-Track. Q1 Q2 Q3 Q4 Q4 2016 ‘13 Q1 Q2 Q3 Q4 2015 2014 -590 bps since Q1’14 peak (5.4%) (5.2%) (5.6%) (4.8%) (2.1%) 0.0% 0.4% 2.7% 2.5% 4.1% 5.1% 4.5% 3.9% 1.4% 3.4% 3.5% 3.1% 4.0% 3.9% 3.8% 4.3% 3.4% 1.9% 2.6% 2.1% 1.3% (4.0%) (1.8%) (2. 1%) (1.7%) 1.9% 3.9% 4.2% 7.0% 5.9% 6.0% 7.7% 6.6% 5.2% Menu Price Adjustments Traffic, Mix & Other 15.6% 17.6% 17.9% 19.5% 18.6% 18.2% 18.8% 18.9% 17.7% 18.4% 20.3% 21.5% 19.8% "4-Wall" Margins Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 |
WHEN GROWTH SLOWED, BWLD ACQUIRED FRANCHISED STORES FOR HIGH MULTIPLES 10 Total Acquisition Expense $33.7m $43.6m $4.3m $30.5 $205.2m # Units Acquired: Avg. Replacement Cost: $2,300 Source: Company filings, Marcato estimates. Franchise rights for Rusty Taco included in purchase price. 2014 calculation assumes full ownership of all restaurants acquired. (1) 2015 acquisition included franchise rights of $99m. BWLD’s franchisee acquisitions in 2015 valued acquired stores ~80% above prior four- year average and ~50% above replacement cost 18 18 3 15 59 $1,875 $2,421 $1,432 $2,033 $3,478 (1) 2011 2012 2013 2014 2015 - Avg. Purchase Price per Company -Operated Restaurant ESTIMATED ACQUISITION COST PER RESTAURANT | 2011 – 2016 |
MARCATO’S KEY RECOMMENDATIONS TO BWLD 11 I. Improve “4-Wall” Profitability and Returns Transition to a 90% Franchised Model Optimize Capital Structure II. III. STRATEGIC & FINANCIAL DRIVERS IMPACT TO VALUE Improve Returns on Capital Reduce Cost of Capital Create Economic Value + = |
12 INDUSTRY EXPERTS SEE MULTIPLE WAYS TO IMPROVE MARGINS Source: Marcato’s presentation to BWLD management from June 2016, external consultants. A major consulting firm that evaluated BWLD at Marcato’s request identified several areas for potential margin improvement equivalent to 275 – 600bps Address Food Costs Menu design, protein management and waste mitigation 50 to 100 basis points Labor and staffing efficiencies Optimization of staffing between floor and kitchen 50 to 100 basis points Procurement Purchasing leverage, reduce non value added costs 75 to 125 basis points Spans & Layers Operational control bands to manage company owned and franchised units 25 to 150 basis points Franchise Management Domestic vs. international focus and service level 25 to 50 basis points Other Concepts Determine value add of being part of BWLD 50 to 75 basis points COST SG&A |
13 WALL STREET ANALYST: “[FRANCHISEES] CURRENTLY GENERATE STORE MARGINS THAT ARE UP TO 1000BP STRONGER THAN BWLD COMPANY STORES” “[Franchisees] generate much stronger store margins even after paying royalties and advertising fees to BWLD corporate” –Jim Sanderson, Arthur Wood, 3/28/17 Source: Company filings, Wall Street research. Note: “Food, beverage & packaging” refers to “cost of sales” line item for BWLD and “food, beverage and packaging” costs line item for the largest BWLD franchisee (also referred to henceforth as “SAUC”). “Labor” costs refer to “labor” line item for BWLD and “compensation costs” for SAUC. Other operating costs for SAUC add back the 5% royalty paid to BWLD for comparability. BWLD’S LARGEST FRANCHISEE’S “4-WALL” MARGINS ARE MATERIALLY HIGHER THAN BWLD’S Largest BWLD Franchisee The real margin gap is even larger than reported: BWLD’s COGS and rent are “subsidized” by vendor rebates on franchisee purchases & significant RE ownership The real margin gap is even larger than reported: BWLD’s COGS and rent are “subsidized” by vendor rebates on franchisee purchases & significant RE ownership RESTAURANT OPERATING EXPENSES AS A % OF RESTAURANT SALES Fiscal Year 2016 Differential Food, beverage & packaging 28.1% 29.9% (175 bps) Labor 24.8% 31.7% (686 bps) Occupancy 6.8% 5.8% 107 bps Other operating costs, adj. for 5% royalty 15.9% 15.1% 85 bps "4-Wall" Margin 24.3% 17.7% (669 bps) |
14 HIGHLY FRANCHISED COMPANIES TRADE AT HIGHER MULTIPLES 70+% mix = higher multiples BWLD is one of few “in the middle” BWLD’s growth would command a premium multiple if it were more highly franchised Source: (1) Franchise Mix = Margin = ROIC = Multiple funded with cash flow, new debt, and the proceeds from refranchising. Panera cited its engagement in constructive dialogue with Luxor Capital. (2) Represents unaffected multiples referring to last days before widespread public M&A rumors (4/2/17 and 2/10/17 for PNRA and PLKI, respectively). Company filings, CapitalIQ. Market data as of 4/19/17. EBITDA multiples shown on an “NTM” basis, based on Wall Street consensus estimates. On April 15, 2015, Panera announced progress on its earlier goal of refranchising 50-150 stores in 2015, as well as achieving G&A savings & an increased repurchase program |
15 INDUSTRY-LEADING ADVISOR SAYS MAJOR REFRANCHISING IS HIGHLY FEASIBLE Source: Marcato’s presentation at Sohn SF in October 2016. “We are highly confident BWLD could refranchise their owned stores at a multiple of 6.0x or higher and estimate a refranchising process to 90% could take as few as 18-24 months” – Cypress Group |
WE BELIEVE BWLD’S STOCK PRICE COULD RISE BY MORE THAN 2-3x UNDER MARCATO'S PROPOSAL POTENTIAL VALUE CREATION FOR BUFFALO WILD WINGS| 2016A – 2021E Source: Marcato’s June 2016 presentation to BWLD management. Market data as of 4/19/17. Note: Status quo case from June 2016 assumed no refranchising and no impact from leveraged share buyback announced subsequently by management 49% 63% 72% 81% 90% 90% ~8.5x 13.0x Franchise Mix EV/EBITDA 17.4 13.7 11.8 8.8 7.0 6.6 Basic Share Count 16 Status Quo Current / 2016A 2017E 2018E 2019E 2020E 2021E High: $311 @ 10.0x EBITDA Mid: $265 @ 8.5x EBITDA Low: $218 @ 7.0x EBITDA 90% Franchised High: $458 @ 14.5x EBITDA Mid: $402 @ 13.0x EBITDA Low: $346 @ 11.5x EBITDA +83% +53% ‘16 - ’21 (62%) 7.3% 9.8% 11.1% 14.5% 21.1% 26.9% EBIT Margin +268% Recent: $155 $100 $175 $250 $325 $400 $475 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 |
Righting the Ship Requires New Leadership 17 |
LET’S BE CLEAR: BWLD MANAGEMENT HAS PROVEN TO BE INCAPABLE OF EXECUTING 18 “4-Wall” profit margins well below management’s longstanding goal of 20% International development targets have been missed & extended by 2-5 years Loyalty and Tablet Order & Pay still not fully rolled out, despite three years of planning and millions of dollars spent Guest Experience Captains program has wasted money for nearly five years, having never produced positive ROI through operating leverage Sally Smith and her team have failed to hit their own goals for years: Why should they be given another opportunity to fail? Management is years behind plan on nearly every strategic priority: |
MANAGEMENT’S PLAN REPRESENTS “BUSINESS AS USUAL” 19 Slowing development of full-size units Takeout and delivery Small-footprints & Urban locations In-restaurant technology Improve margins Stated Areas of Focus We doubt that any of management’s goals will be achieved Abrupt changes in capital deployment framework validate our view that hundreds of millions of dollars had been imprudently deployed in low-returning units over the years Management is unable/unwilling to say whether these initiatives drive profits, not just sales Buffalo Wild Wings has been unable to keep up with Wingstop in this area Ignoring the core earnings driver and main brand engine (the ~1,230 traditional units already built) Like PizzaRev & RTaco, these are just speculative new concepts that distract management from improving execution in the core business Missed nearly every objective from 2014 on technology rollouts (mobile / tablet order & pay, POS rollout, server handhelds, mobile app & rewards program) No accountability: sponsors of bungled tech (Lee Patterson & Ben Nelsen) are still in charge at BWLD Management has been unable to hit its “20% margin target” sustainably for years Current bridge relies heavily on refranchising & operating leverage, not improved execution CFO admits that targets were articulated to investors before a credible plan was put in place International development Tim Murphy, leader of int’l operations, is a company loyalist (since ‘88) with no relevant int’l experience Targets for 400 units internationally have been perpetually extended by as much as 2-5 years Company has extremely poor track record of selecting and penetrating new markets Source: Company filings. Note: Support for assertions about technology, international, takeout, and diminishing ROIC have been discussed extensively in presentations available at www.WinningAtWildWings.com. |
ARE MANAGEMENT AND SHAREHOLDERS FOCUSED ON THE SAME ISSUES? 20 “We are surprised the Company’s investor presentations continue to center on tactical efforts, like FastBreak Lunch and Wing Tuesday, and secondary strategic priorities, like international development and new concepts, rather than full explanations for why traffic is declining, how costs will be reduced or why the business model is appropriate. It is not clear to us the issues and alternatives are fully understood” – Chris O’Cull, Keybanc, 2/7/17 Source: Wall Street research. |
EMPLOYEES AND FRANCHISEES EXPRESS SIMILAR VIEWS 21 EMPLOYEES “Company retains a ‘small- company’ mentality that is lacking…structured corporate processes” “Buffalo Wild Wings senior management is taking the company down a path of no return” FRANCHISEES “[M]y two supervisors – a direct, and a vice president - had NO restaurant experience” “To improve the performance of BWW, I would clean house and get operators involved in the management” “It is my sincerest hope that [BWW] will heed your company’s structural and strategic advice” “[BWW needs] fresh senior management which has a real interest in franchisees[’] profitability” Source: Submissions to www.WinningAtWildWings.com. Quotes shown were previously published in Marcato’s “Third Party Validation” presentation, filed on Form DFAN14A on 4/20/17. |
Open Mkt. Transactions Sales Purchases Current + Recent Insiders 667 1 SENIOR MANAGEMENT Sally Smith 129 – James Schmidt 80 – Judith Shoulak 65 – TENURED DIRECTORS J. Oliver Maggard 48 – James Damian 16 – Michael Johnson – – Jerry Rose – – Cindy Davis – 1 RECENTLY-DEPARTED SENIOR MANAGEMENT Mary Twinem 133 – Kathleen Benning 73 – RECENTLY-REPLACED DIRECTORS Warren Mack 71 – Dale Applequist 52 – 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 22 HUNDREDS OF OPEN MARKET SALES & ONLY ONE OPEN MARKET PURCHASE IN 13+ YEARS Source: Company filings as of 3/6/17. Note: Open market transactions include outright sales only and do not include shares gifted, transferred, or delivered or withheld for tax purposes, or shares purchased through the ESPP. Not all individual sale transactions included in total count of open market transactions are depicted on timeline due to multiple sales and other transactions occurring on the same day. Open-market Sale Open-market Purchase Only once in 13+ years has a BWLD insider (Cindy Davis) reached into their own pocket and bought stock at market value Since 2003, insiders have constantly sold stock |
NOMINATIONS SINCE IPO MEMBERS SINCE IPO A CULTURE OF COMPLACENCY: BOARD APPEARS TO HAVE NO OVERSIGHT OR ACCOUNTABILITY OVER MANAGEMENT July 2016: Marcato files 13D - Longstanding directors appear to concede all strategic decisions to CEO Sally Smith - Financial & legal “advisors” hired by the Company have only defended status quo - New directors selected by entrenched Board members to embrace and reinforce status quo 23 Since we arrived, the Board has exhibited dismissive and entrenching behavior… - Company has not produced a single analysis of how status quo creates equity value - Management focused on the easiest and smallest actions to help “win” proxy contest Start of Director Tenure Durtion of Director Tenure Source: Company filings. Note: Names in red indicate directors nominated by the Company for election at the 2017 Annual Meeting. End of Director Tenure |
J. Oliver Maggard ONLY ONE OF BWLD’S INDEPENDENT DIRECTOR NOMINEES HAS WORKED AT A RESTAURANT IN THE PAST DECADE 24 Jerry Rose Cindy Davis Andre Fernandez Hal Lawton Harmit Singh Janice Fields Investment Banking Agribusiness Golf Media Big-Box Retail, eCommerce Apparel, Lodging, Restaurants Restaurants Finance Supply Chain Golf Equipment & Media Finance and Strategy Hardlines Merchan- dising Finance Franchising & Operations We believe that BWLD’s turnaround should be led by a Board with relevant qualifications in restaurant operations Directors whose replacement we seek Directors recently nominated by BWLD Source: Company filings. Note: Directors shown in order of decreasing tenure, from left to right. Directors shown exclude Sally Smith (President & CEO of BWLD) and Sam Rovit, who was originally nominated by Marcato and whom BWLD has chosen to include on their 2017 nominee slate as well. |
OLLIE MAGGARD’S “RESTAURANT EXPERIENCE” IS QUESTIONABLE 25 Prior to this year, the Company cited the following as Ollie Maggard’s “qualifications” to serve on the Board, but never asserted that he had direct restaurant experience : “Mr. Maggard has significant financial experience and brings strong leadership to [the Board and the Audit Committee]. He understands the intricacies of restaurant-level financials as well as how they have an impact on the financials of the overall company” – Definitive Proxies filed 3/25/16, 3/27/15, 3/28/14, 4/5/13, 3/22/12, 4/4/11, 4/7/10 However, after seven years, the Company decided to add that he has investment experience in “multiple restaurant concepts”: “Throughout his career, he has advised and invested in numerous consumer oriented businesses, including multiple restaurant concepts. While reviewing hundreds of investment opportunities each year, he has a thorough understanding of the drivers of value in both public and private companies” – Definitive Proxy filed 4/21/17 Mr. Maggard’s now-defunct prior firm, Regent Capital, made just one documented restaurant investment other than in BWLD (in Buca di Beppo)—each over 15 years ago His current firm, Caymus Equity, has never invested in a restaurant company in its history Source: Company filings, http://caymusequity.com/portfolio/. |
WHICH WOULD YOU PREFER? 26 J. Oliver Maggard Incumbent Nominee Mick McGuire Shareholder Nominee Co-founder of Caymus Equity, which has never invested in a single restaurant company in its history Mick McGuire’s qualifications for Director far exceed Ollie Maggard’s in both quality and magnitude Source: Company filings, Bloomberg, http://caymusequity.com/portfolio/. Note: Ownership information as reported by Bloomberg based on 13-F data as available on 5/3/17. Investment manager with broad experience investing in consumer businesses, including numerous publicly-traded restaurant companies Genuine ownership mentality: currently BWLD’s third-largest shareholder Current ownership: 3,522 shares (0.02% of sh. outst.) Has never purchased BWLD stock in the open market Has personally sold stock 48 times since 2003 Prior employer, Regent Capital, sold its entire stake in BWLD in 2005 Current ownership: 982,600 shares (6.1% of sh. outst.) Entire stake purchased in the open market, alongside current shareholders |
JERRY ROSE AND CINDY DAVIS DID NOT DO THEIR JOB ON THE GOVERNANCE COMMITTEE 27 Source: Company filings. Note: Commentary regarding Rose’s and Davis’ time on the Governance Committee refers to events prior to Marcato’s 13-D filings in BWLD. (1) Jerry Rose was elected to the Board in December 2010 and the Governance Committee from August 2011 to December 2016. Cindy Davis was elected to the Board in November 2014 and was named as a member of the Governance Committee as of the 2014 proxy. Board and committee activity during Rose’s and Davis’ tenures excludes the departure of Robert MacDonald in 2014, whose vacancy Davis filled later that year. 1) BWLD had one of the oldest-tenured Boards in the restaurant industry 2) No changes were made to composition or chairpersons of any Board committees 3) Not a single new director other than themselves was appointed to the Board 4) In response to our initial 13D filing, “circled the wagons” to further entrench the Board by appointing new directors with no restaurant experience During Jerry Rose’s and Cindy Davis’ years on the Governance Committee (1) : As reported by Barclays in September 2016 |
IF JERRY ROSE’S SUPPLY CHAIN “EXPERTISE” HAS ADDED VALUE, WE CAN’T SEE IT 28 24% 27% 25% 23% ??? Wings as % of COGS 27% 25% 19% Source: Company filings. $2.08 $1.91 $1.83 $1.55 $1.76 $1.97 $1.21 $1.58 2017E 2016 2015 2014 2013 2012 2011 2010 AVG. PRICE PER POUND FOR BONE-IN TRADITIONAL CHICKEN WINGS PAID BY BWLD DURING JERRY ROSE’S TENURE |
OUR NOMINEES WILL MAKE BUFFALO WILD WINGS A WINNING COMPANY AGAIN 29 Sam Rovit Scott Bergren Lee Sanders Mick McGuire Former CEO of Pizza Hut’s Global Business Veteran Franchising, Marketing, & Operations Expert 20yrs. in Restaurant Supply Chain, Retail, Food, & Corporate Strategy Turnaround Expert Former CEO and Franchising Head at Several Global Brands, Including Buffalo Wild Wings BWLD’s 3rd Largest Shareholder, Committed to Accountability & Shareholder Alignment |
SETTING THE RECORD STRAIGHT ON BUFFALO WILD WINGS’ PEER GROUP MAY 2017 Exhibit 2 |
DISCLAIMER 1 The views expressed in this presentation (the “Presentation”) represent the opinions of Marcato Capital Management LP and/or certain affiliates (“Marcato”) and the investment funds it manages that hold shares in Buffalo Wild Wings, Inc. (the “Company”). This Presentation is for informational purposes only, and it does not have regard to the specific investment objective, financial situation, suitability or particular need of any specific person who may receive the Presentation, and should not be taken as advice on the merits of any investment decision. The views expressed in the Presentation represent the opinions of Marcato, and are based on publicly available information and Marcato analyses. Certain financial information and data used in the Presentation have been derived or obtained from filings made with the Securities and Exchange Commission (“SEC”) by the Company or other companies that Marcato considers comparable. Marcato has not sought or obtained consent from any third party to use any statements or information indicated in the Presentation as having been obtained or derived from a third party. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed in the Presentation. Information contained in the Presentation has not been independently verified by Marcato, and Marcato disclaims any and all liability as to the completeness or accuracy of the information and for any omissions of material facts. Marcato disclaims any obligation to correct, update or revise the Presentation or to otherwise provide any additional materials. Neither Marcato nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy, fairness or completeness of the information contained herein and the recipient agrees and acknowledges that it will not rely on any such information. Marcato recognizes that the Company may possess confidential information that could lead it to disagree with Marcato’s views and/or conclusions. Funds managed by Marcato currently beneficially own, and/or have an economic interest in, shares of the Company. These funds are in the business of trading— buying and selling—securities. Marcato may buy or sell or otherwise change the form or substance of any of its investments in any manner permitted by law and expressly disclaims any obligation to notify any recipient of the Presentation of any such changes. There may be developments in the future that cause funds managed by Marcato to engage in transactions that change the beneficial and/or economic interest in the Company. The Presentation may contain forward-looking statements which reflect Marcato’s views with respect to, among other things, future events and financial performance. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if Marcato’s underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Marcato that the future plans, estimates or expectations contemplated will ever be achieved. The securities or investment ideas listed are not presented in order to suggest or show profitability of any or all transactions. There should be no assumption that any specific portfolio securities identified and described in the Presentation were or will be profitable. Under no circumstances is the Presentation to be used or considered as an offer to sell or a solicitation of an offer to buy any security, nor does the Presentation constitute either an offer to sell or a solicitation of an offer to buy any interest in funds managed by Marcato. Any such offer would only be made at the time a qualified offeree receives the Confidential Explanatory Memorandum of such fund. Any investment in the Marcato Funds is speculative and involves substantial risk, including the risk of losing all or substantially all of such investment. |
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS 2 Marcato International Master Fund Ltd. (“Marcato International”), together with the other participants in Marcato International’s proxy solicitation, have filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement and accompanying WHITE proxy card to be used to solicit proxies in connection with the 2017 annual meeting of shareholders (the “Annual Meeting”) of Buffalo Wild Wings, Inc. (the “Company”). Shareholders are advised to read the proxy statement and any other documents related to the solicitation of shareholders of the Company in connection with the Annual Meeting because they contain important information, including information relating to the participants in Marcato International’s proxy solicitation. These materials and other materials filed by Marcato International with the SEC in connection with the solicitation of proxies are available at no charge on the SEC’s website at http://www.sec.gov. The definitive proxy statement and other relevant documents filed by Marcato International with the SEC are also available, without charge, by directing a request to Marcato International’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (888) 750-5834 (banks and brokers may call collect at (212) 750-5833). The participants in the proxy solicitation are Marcato International, Marcato Capital Management LP, Marcato Special Opportunities Master Fund LP (“Marcato Special Opportunities Fund”), Emil Lee Sanders, Richard T. McGuire III, Sam Rovit and Scott O. Bergren (collectively, the “Participants”). As of the date hereof, Marcato International directly owns 950,000 shares of common stock, no par value, of the Company (the “Common Stock”), representing approximately 5.9% of the outstanding shares of Common Stock and Marcato Special Opportunities Fund directly owns 32,600 shares of Common Stock, representing approximately 0.2% of the outstanding shares of Common Stock. In addition, Marcato Capital Management LP, as the investment manager of Marcato International and Marcato Special Opportunities Fund, may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the shares of Common Stock held by Marcato and Marcato Special Opportunities Fund, therefore, may be deemed to be the beneficial owner of such shares. By virtue of Mr. McGuire’s position as the managing partner of Marcato Capital Management LP, Mr. McGuire may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the shares of Common Stock held by Marcato International and Marcato Special Opportunities Fund and, therefore, Mr. McGuire may be deemed to be the beneficial owner of such shares. |
3 BUFFALO WILD WINGS HAS PLAYED GAMES WITH ITS PEER GROUP I. Constant changes to peer group are suspicious I. Constant changes to peer group are suspicious II. “Casual Dining” distinction is a red herring II. “Casual Dining” distinction is a red herring III. New “casual” peers include inappropriate comparisons III. New “casual” peers include inappropriate comparisons IV. Use of broader restaurant peer set is appropriate methodology IV. Use of broader restaurant peer set is appropriate methodology We believe that BWLD’s focus on shareholder returns relative to “Casual Dining” peers alone is inappropriate, and that a broader, more accurate peer group shows that BWLD has underperformed Note: Throughout this presentation, market data has been derived as of 4/19/17, unless otherwise noted. Unless otherwise noted, TSR is not calculated for any company that was not public for the entire duration of any 1-year, 3-year, or 5-year trailing period from the corresponding date. We believe this methodology is more appropriate than that used by Buffalo Wild Wings in recent shareholder communications. |
BUFFALO WILD WINGS CONSTANTLY CHANGES WHO THEY DEFINE AS “PEERS” 4 BWLD USES ONE PEER GROUP FOR PAYING EXECUTIVES… Source: Company filings (clockwise from top-left: BWLD’s Definitive Proxy filed 4/21/17, August 2016 Analyst Day presentation, Press Release filed 5/4/17, Definitive Proxy filed 4/21/17. …ANOTHER FOR BUSINESS PLANNING… …A THIRD FOR TOTAL RETURN COMPARISONS… …AND A FOURTH TO CLAIM TO HAVE OUTPERFORMED The Board selectively re- designed BWLD’s peer group, which makes past performance look better than it is |
PEER GROUP COMPOSITION HAS CHANGED SEVERAL TIMES IN LAST NINE MONTHS 5 Source: Company filings, CapitalIQ, Marcato press release filed 5/4/17. Market data as of 4/19/17. Note: Median calculations reflect only those peers whose shares were publicly traded for the entire duration of the 5-year period ended 4/19/17. Reference in other filings to BWLD’s underperformance relative to the S&P 600 Restaurants refers to the index itself, not just current members. These peers are closer to the “right” comps for BWLD, and reveal BWLD’s underperformance… …While subsequent iterations obscure relative underperformance BWLD has used different peers for executive compensation and operating benchmarking from those used in recent proxy-related shareholder communications We believe the recent changes exclude numerous relevant peer businesses, particularly those with high franchise mixes The peer group that BWLD selected before the proxy contest began was more logical & showed BWLD’s underperformance, while subsequent changes create the illusion of industry outperformance |
DON’T JUST TAKE OUR WORD FOR IT: MANAGEMENT ALSO BELIEVES THAT THE BWW BRAND COMPETES WITH FAST CASUAL AND QUICK-SERVICE, NOT JUST CASUAL DINING 6 Source: Company filings. “I’d say that we were really fast casual long before there was even the term ‘fast casual’” –Sally Smith, President & CEO, 3/6/17 “I’d say that we were really fast casual long before there was even the term ‘fast casual’” –Sally Smith, President & CEO, 3/6/17 “You can get in and out of a Buffalo Wild Wings just about as fast as you can for fast casual. And so, if you want an alternative to the sandwich or something like that, wings are a great alternative” –Sally Smith, President & CEO, 4/26/16 “You can get in and out of a Buffalo Wild Wings just about as fast as you can for fast casual. And so, if you want an alternative to the sandwich or something like that, wings are a great alternative” –Sally Smith, President & CEO, 4/26/16 “[W]e’re not too focused on a comparison to casual dining” –James Schmidt, COO, 7/26/16 “[W]e’re not too focused on a comparison to casual dining” –James Schmidt, COO, 7/26/16 |
BWLD HAS SELECTIVELY REMOVED PROXY PEERS THAT HAVE OUTPERFORMED 7 Source: Company filings, CapitalIQ. Market data as of 4/19/17. Companies listed from left to right in descending order of enterprise value. (1) Based on disclosures in most recently-filed definitive proxies. Indicates outperformance relative to BWLD for the corresponding time period. 2012 +37% +218% +196% 2008 +5% (8%) +11% 2014 +29% +145% +434% 2008 +45% +87% +108% 2012 +17% +22% +98% 2016 +56% 2016 +21% 2012 +42% +66% +108% Despite their use by the Compensation Committee for years, these companies have been suddenly excluded from share performance comparisons: suspiciously, nearly all have outperformed BWLD +10% +10% +84% +14% |
INCLUDES IRRELEVANT PEERS TO IMPROVE RELATIVE PERFORMANCE 8 Source: Company filings, CapitalIQ, Bloomberg. Market data as of 4/19/17. (1) Based on disclosures in most recently-filed definitive proxies. CHUY and BBRG based on competitor disclosures in most recent 10-Ks, as no peer group is listed in their definitive proxies. IRGT lists BWLD as a competitor for its Brick House brand (which comprises 25 of its 140 total units ) in its 10-K only, and does not list BWLD among its proxy peers. Indicates outperformance relative to BWLD for the corresponding time period. Names BWLD as a Peer? (1) # of Stores 140 118 83 1,731 645 Total Shareholder Return (through 4/19/17) 1-year (98%) (40%) (4%) +20% +11% 3-year (100%) (69%) (27%) +93% 5-year (77%) +219% +244% Both DENN & CBRL have outperformed BWLD… ..So BWLD appears to have selected three small & irrelevant underperformers to offset the positive contribution to the peer median from including DENN and CBRL In order to construct a list of peers in casual dining, BWLD logically included DENN and CBRL… “Casual” Peers +87% |
ADDITION OF BBRG AND IRGT IS INAPPROPRIATE & SKEWS THE ANALYSIS TO HIDE BWLD’S UNDERPERFORMANCE 9 Source: Company filings, CapitalIQ, Bloomberg. Market data as of 4/19/17. Note: TSR rankings shown in relation to current members of the Russell 3000 Restaurants index, per Bloomberg. Index used as an indicative set inclusive of a broad base of potentially usable restaurant company peers. IRGT and BBRG are not members of the index. Rankings exclude companies that were not public for the full duration of the applicable time period. Franchise mix includes one managed restaurant for BBRG. 140 Stores ~2% Franchised $1.8 million $120.4 million 1-yr.: 3-yr.: 5-yr.: (98%) (100%) NAa TSR 118 Stores ~2% Franchised $70.4 million $110.7 million 1-yr.: 3-yr.: 5-yr.: (40%) (69%) (77%) 49 out of 49 41 out of 41 NA TSR Rank (Russell 3000 Rest.) 44 out of 49 38 out of 41 31 out of 31 Rank (Russell 3000 Rest.) ~10% the size of BWLD’s system unit count ~10% the size of BWLD’s system unit count Virtually no franchising vs. ~50% for BWLD Virtually no franchising vs. ~50% for BWLD Micro-cap businesses & potentially in distress Micro-cap businesses & potentially in distress Highly levered: Debt equals ~35-100% of TEV Highly levered: Debt equals ~35-100% of TEV These are clearly inappropriate peers for BWLD These are clearly inappropriate peers for BWLD th th th st st |
Total Shareholder Return 1- Year 3- Year 5- Year 14% 94% 235% 27% 103% 208% 16% 107% 201% 39% 112% 128% 27% 52% 116% 1% (22%) 98% 17% 6% 80% (8%) (10%) 68% (1%) (2%) 57% (32%) (15%) 39% 2% 57% 0% (42%) (67%) (63%) "Casual Dining" Peer Median 8% 29% 89% Buffalo Wild Wings 20% 18% 85% Total Shareholder Return 1- Year 3- Year 5- Year 14% 94% 235% 27% 103% 208% 16% 107% 201% 39% 112% 128% 27% 52% 116% 1% (22%) 98% 17% 6% 80% (8%) (10%) 68% (1%) (2%) 57% (32%) (15%) 39% 2% 57% 0% (42%) (67%) (63%) (35%) (68%) (76%) (98%) (100%) (100%) "Casual Dining" Peer Median 2% 2% 74% Buffalo Wild Wings 20% 18% 85% DID BWLD INCLUDE TWO OBVIOUS UNDERPERFORMERS IN ORDER TO SKEW THE ANALYSIS IN THEIR FAVOR? 10 Source: Company filings, CapitalIQ. Market data as of 4/28/17. Note: The above tables intend to replicate BWLD’s analysis published on 5/4/17 by including CHUY, BLMN, and IRGT in the 5-year TSR median using the closing share price on date of their respective IPOs. Marcato disputes the validity of this methodology, as well as the use of 4/28/17 as the appropriate period-end date; thus, this methodology differs from that used in other calculations in this presentation. Removing these irrelevant peers changes the analysis dramatically: BWLD in fact underperformed its “Casual Dining Peers” over the past 3 and 5 years Including irrelevant peers gives BWLD the appearance of outperformance… …Stripping out the irrelevant peers, BWLD has actually underperformed its cherry-picked “comps”! |
OUR ORIGINAL PRESENTATION TO MANAGEMENT INCLUDED RESTAURANT COMPANIES THAT WE BELIEVE ARE REPRESENTATIVE PEERS FOR BWLD BENCHMARKING 11 Given BWLD’s ~50% franchise mix, we believe it is appropriate to balance the different economic characteristics that comprise BWLD’s earnings, rather than differentiate between service styles within a restaurant Note that the substantial majority of these peers themselves list BWLD as a comparable business in their filings These peers have materially outperformed BWLD Source: Company filings, CapitalIQ. Market data as of 4/19/17. Note: PLKI had been included in Marcato’s June 2016 presentation to management but was subsequently purchased by QSR and is thus excluded above. Indicates outperformance relative to BWLD for the corresponding time period. |
RESEARCH ANALYST SUPPORT FOR STRATEGIC & LEADERSHIP CHANGE MAY 2017 Exhibit 3 |
DISCLAIMER 1 The views expressed in this presentation (the “Presentation”) represent the opinions of Marcato Capital Management LP and/or certain affiliates (“Marcato”) and the investment funds it manages that hold shares in Buffalo Wild Wings, Inc. (the “Company”). This Presentation is for informational purposes only, and it does not have regard to the specific investment objective, financial situation, suitability or particular need of any specific person who may receive the Presentation, and should not be taken as advice on the merits of any investment decision. The views expressed in the Presentation represent the opinions of Marcato, and are based on publicly available information and Marcato analyses. Certain financial information and data used in the Presentation have been derived or obtained from filings made with the Securities and Exchange Commission (“SEC”) by the Company or other companies that Marcato considers comparable. Marcato has not sought or obtained consent from any third party to use any statements or information indicated in the Presentation as having been obtained or derived from a third party. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed in the Presentation. Information contained in the Presentation has not been independently verified by Marcato, and Marcato disclaims any and all liability as to the completeness or accuracy of the information and for any omissions of material facts. Marcato disclaims any obligation to correct, update or revise the Presentation or to otherwise provide any additional materials. Neither Marcato nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy, fairness or completeness of the information contained herein and the recipient agrees and acknowledges that it will not rely on any such information. Marcato recognizes that the Company may possess confidential information that could lead it to disagree with Marcato’s views and/or conclusions. Funds managed by Marcato currently beneficially own, and/or have an economic interest in, shares of the Company. These funds are in the business of trading— buying and selling—securities. Marcato may buy or sell or otherwise change the form or substance of any of its investments in any manner permitted by law and expressly disclaims any obligation to notify any recipient of the Presentation of any such changes. There may be developments in the future that cause funds managed by Marcato to engage in transactions that change the beneficial and/or economic interest in the Company. The Presentation may contain forward-looking statements which reflect Marcato’s views with respect to, among other things, future events and financial performance. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if Marcato’s underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Marcato that the future plans, estimates or expectations contemplated will ever be achieved. The securities or investment ideas listed are not presented in order to suggest or show profitability of any or all transactions. There should be no assumption that any specific portfolio securities identified and described in the Presentation were or will be profitable. Under no circumstances is the Presentation to be used or considered as an offer to sell or a solicitation of an offer to buy any security, nor does the Presentation constitute either an offer to sell or a solicitation of an offer to buy any interest in funds managed by Marcato. Any such offer would only be made at the time a qualified offeree receives the Confidential Explanatory Memorandum of such fund. Any investment in the Marcato Funds is speculative and involves substantial risk, including the risk of losing all or substantially all of such investment. |
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS 2 Marcato International Master Fund Ltd. (“Marcato International”), together with the other participants in Marcato International’s proxy solicitation, have filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement and accompanying WHITE proxy card to be used to solicit proxies in connection with the 2017 annual meeting of shareholders (the “Annual Meeting”) of Buffalo Wild Wings, Inc. (the “Company”). Shareholders are advised to read the proxy statement and any other documents related to the solicitation of shareholders of the Company in connection with the Annual Meeting because they contain important information, including information relating to the participants in Marcato International’s proxy solicitation. These materials and other materials filed by Marcato International with the SEC in connection with the solicitation of proxies are available at no charge on the SEC’s website at http://www.sec.gov. The definitive proxy statement and other relevant documents filed by Marcato International with the SEC are also available, without charge, by directing a request to Marcato International’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (888) 750-5834 (banks and brokers may call collect at (212) 750-5833). The participants in the proxy solicitation are Marcato International, Marcato Capital Management LP, Marcato Special Opportunities Master Fund LP (“Marcato Special Opportunities Fund”), Emil Lee Sanders, Richard T. McGuire III, Sam Rovit and Scott O. Bergren (collectively, the “Participants”). As of the date hereof, Marcato International directly owns 950,000 shares of common stock, no par value, of the Company (the “Common Stock”), representing approximately 5.9% of the outstanding shares of Common Stock and Marcato Special Opportunities Fund directly owns 32,600 shares of Common Stock, representing approximately 0.2% of the outstanding shares of Common Stock. In addition, Marcato Capital Management LP, as the investment manager of Marcato International and Marcato Special Opportunities Fund, may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the shares of Common Stock held by Marcato and Marcato Special Opportunities Fund, therefore, may be deemed to be the beneficial owner of such shares. By virtue of Mr. McGuire’s position as the managing partner of Marcato Capital Management LP, Mr. McGuire may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the shares of Common Stock held by Marcato International and Marcato Special Opportunities Fund and, therefore, Mr. McGuire may be deemed to be the beneficial owner of such shares. |
ANALYSTS LACK CONFIDENCE IN BWLD LEADERSHIP FOLLOWING WEAK Q1’17 EARNINGS 3 “While BWLD’s strategy appears compelling on paper, operational missteps continue to drive a lack of confidence in BWLD’s outlook…issues seem to consistently crop up that make it difficult to have confidence in the strategy laid out by management. We were surprised by the guidance reduction, particularly the magnitude, but find it challenging to have confidence in the revised outlook or 20% restaurant margin target given uncertainty across comps, margins, and execution…Although same store sales outpaced expectations in the quarter, BWLD effectively ‘bought the comp’ through heavy promotions at the expense of profitability” –Andrew Strelzik, BMO Capital Markets, 4/26/17 “’Poor execution blocks last-second buzzer beater as shareholder meeting looms’…We continue to be frustrated by poor execution of sales-building and cost-savings initiatives” –Chris O’Cull, KeyBanc, 4/27/17 “We worry that the current mgmt. team will struggle to navigate the challenging external backdrop, while also repositioning the company to focus on leaner operations over store growth…Some might argue that there’s a silver lining to BWLD’s weakening trends, in that this increases the likelihood of activist influence and mgmt. change…We agree that recent trends increase the likelihood of leadership change, and getting new energy and fresh eyes/ideas on the biz are probably a net positive” –Jason West, Credit Suisse, 4/27/17 “[R]ecently BWLD has been plagued by complacency and a continued lack of adequate leadership…The lack of managerial direction and vision can be seen in the Company’s most recent fiscal year projections, which have been significantly altered since BWLD’s 4Q16 presentation…This is unsettling, to say the least, and shows management’s lack of adequate foresight. It is hard to trust a management team that will drastically change the outlook and shows a lack of understanding of its business…At a time when the leaders in the restaurant industry refuse to participate in the race to the bottom, BWLD continues to offer aggressive promotions as a way to draw patrons” –Howard Penney, Hedgeye, 4/27/17 Source: Wall Street research. “We are concerned by the lack of accountability by management for SSS struggles as softness is attributed to industry pressures. March Madness experienced sales declines despite higher TV ratings, which in our view suggests their marketing message is missing the mark. We view the June 2, 2017 annual shareholder meeting as a potential catalyst for change as the activist has nominated 4 new board members along with its slate to increase the company's franchise skew along with management changes” –Matt DiFrisco, Guggenheim, 4/27/17 “The Q1 report marked the tenth consecutive quarter of disappointing revenue/EPS performance for BWLD…we are concerned about the profitability of the top-line performance amid heightened promotional activity” –David Tarantino, Baird, 4/27/17 “It would seem that this quarter will be a test of investor patience as operating profit will be flat for the third year in a row…industry dynamics and persistent cost pressures don't paint a very attractive picture, at least right now, for long term company ownership unless the sales and margin enhancements prove effective and longer term costs begin to normalize” –John Glass, Morgan Stanley, 4/27/17 |
ANALYSTS HAVE CONSISTENTLY QUESTIONED MANAGEMENT’S ABILITIES & STRATEGY 4 “We are surprised the Company’s investor presentations continue to center on tactical efforts, like FastBreak Lunch and Wing Tuesday, and secondary strategic priorities, like international development and new concepts, rather than full explanations for why traffic is declining, how costs will be reduced or why the business model is appropriate. It is not clear to us the issues and alternatives are fully understood” –Chris O’Cull, KeyBanc, 2/7/17 “[T]here remains a sense that the company retains a “small-company” mentality that is lacking the structured corporate processes often found in larger companies…Frustration regarding the lack of communication and strategic direction could be a reason for a high level of turnover in corporate staff. While improvements have been made in recent years, better tools and formalized structure more akin to a ~$3B market cap company could help” –Nick Setyan, Wedbush, 2/7/17 “We believe a deep dive into the right asset design makes strategic sense on the back of meaningful build cost inflation; however, we question if a focus on more urban areas is the right approach” –Karen Holthouse, Goldman Sachs, 2/13/17 “We believe the appointment of a CFO…enables BWLD to further evaluate its long-term strategic direction and engage with outside investors. However, we also imagine that a CFO with deeper experience in restaurants and franchising in particular would have indicated a level of preparation and willingness to change the current course of action” –John Zolidis, Buckingham, 10/25/16 “[Investors canvassed agree] that there are numerous things [that] can be done including management changes, operational fixes (cost cutting, labor) or on the financial side (including, but not limited to refranchising)…Many believed some level of managerial changes is likely/needed” –Brett Levy, Deutsche Bank, 10/11/16 “We believe BWLD’s sales issues are fixable…but the turnaround could take time as current initiatives highlighted do not go far enough…[V]alue enhancements to Wing Tuesday leave much to be desired for the remaining six days of the week. We note Fast Break lunch features value but we do not view this as a durable sales driver” –Andrew Charles, Cowen, 8/12/16 “We believe mgmt. will be slow to implement meaningful change” –Jason West, Credit Suisse, 8/9/16 “We look forward to hearing from new CFO Alex Ware on the topics of cost mgmt. and optimizing the business and financial structure. However, our concern is that BWLD needs a deeper reset in the areas of value, food quality and service to truly turn around the business” –Jason West, Credit Suisse, 1/25/17 “ [T]he investor day came and went and…it was clear that there was minimal preparation for the meeting. Overall, your management team came across as nervous, clueless and weak. Lastly, did I see that you actually sold stock the day before the analyst meeting?” –Howard Penney, Hedgeye, 10/17/16 Source: Wall Street research. |
RESEARCH ANALYSTS RECOGNIZE MARGIN DEFICIENCIES 5 “[W]e believe BWLD company-owned stores could improve margins substantially, by up to 500 [basis points] based on our analysis, by adopting labor practices currently deployed by [franchisees]” –Jim Sanderson, Arthur Wood, 3/28/17 Source: Wall Street research. “Our advisor believes there is an opportunity to bring lower performers more in line with the rest of the system, with store-level labor perhaps the largest opportunity. The example of Guest Experience Captains was cited…In his experience, BWLD franchisees are as or more qualified to run a large number of restaurants than corporate personnel” –Nick Setyan, Wedbush, 2/7/17 “[Margin opportunities] exist across labor, operating expenses, and COGS…Diversified Restaurant Holdings, Buffalo Wild Wing’s largest franchisee, highlights opportunity for greater margin efficiency. While there are notable differences, including geographic and overall exposure, SAUC has exhibited favorable food & labor margins relative to BWLD” –Dennis Geiger, UBS, 1/5/17 |
THE STREET RECOGNIZES THAT FRANCHISEE ACQUISITIONS WERE POOR USE OF CAPITAL 6 “[T]he last minute exercise of the first right of refusal to buy a big block of franchise stores in 2015 …is a perfect example of how misguided your incentive compensation structure is and how poor strategic planning can lead to poor capital allocation decisions” –Howard Penney, Hedgeye, 10/17/16 “[T]he most recent acquisition (38 units in the 3Q15) has weighed on earnings and came with a rich multiple, adjusting for the foregone royalties” –John Glass, Morgan Stanley, 7/25/16 “[R]eturn metrics suffered from the company’s FY15 decision to acquire a large number of franchisees…[which] resulted in lower operating margins and financial returns as incremental capital was deployed to eliminate a high margin royalty revenue stream” –John Zolidis, Buckingham, 7/26/16 “Acquiring franchise stores increases business risk…Why in a slowing sales[,] lower return environment would the parent company want even greater exposure to the volatility in the business?” –Howard Penney, Hedgeye, 6/13/16 Source: Wall Street research. Indicates a quote taken from a report published before Marcato publicly disclosed its suggestions to management, indicating an “unaided” observation. Observers agree: the large franchisee acquisitions of 2015 destroyed value by diluting ROIC and eliminating a highly valuable, high-margin royalty stream |
ANALYSTS AGREE WITH MARCATO’S RECOMMENDATIONS 7 “Our patience on BWLD is running thin after another disappointing report…that said, with comps showing signs of stabilization in Q1 and with management focused on financial strategies that could enhance shareholder value amid the presence of an activist investor, we are cautiously optimistic” –David Tarantino, Baird, 2/7/17 “Our advisor stood by his opinion that Marcato’s initial board letter, while perhaps not being 100% correct in its assessment, may not have been off the mark on many points. A refocus on operations in particular, especially when done by or in conjunction with franchisees, was something that rang true with most employees internally, our advisor believes. Increased franchisee ownership could also allow management to focus more closely on strategy, initiative implementation, and operational improvement” –Nick Setyan, Wedbush, 2/7/17 “BWLD’s recent upward re-rating (against weak sales results) partly anticipates potential restructuring and activist pressure…We see a bull/bear case on the stock…with the bear case assuming no major restructuring and continued deterioration in SSS and unit growth, and the bull case assuming improvement in SSS and material financial engineering moves” –Jason West, Credit Suisse, 8/9/16 “4Q suggests BWLD still has a long ways to go to regain stability and visibility in the business…[T]he very weak 4Q result may bolster the case for activist involvement. However, with the Board vote still ~3 mos. away, it will be a while before this potential change will begin to impact strategy and results” –Jason West, Credit Suisse, 2/8/17 “[Q4’16 earnings were] so Bad it could be Good…While the reliability in guidance is highly questionable, we are encouraged that management is now giving consideration to some of the activist’s requests” –Matt DiFrisco, Guggenheim, 2/8/17 “Looking out to 2018-19, we agree with the vast majority of activist Marcato’s restructuring recommendations…We are also uncomfortable with BWLD’s announced (1/24/17) year-end 2017 target leverage ratio of 1.5x EBITDA” –Paul Westra, Stifel, 1/31/17 “We recognize that the activist presence at BWLD provides a sense of urgency for mgmt. to address recent market share loss and margin erosion” –Jason West, Credit Suisse, 1/25/17 Source: Wall Street research. “Given the recent events, the biggest mistake you [CEO Sally Smith] are currently making is not taking Marcato (or your investor day) seriously...Marcato has put forth compelling arguments and substantial evidence that you have ignored the basic principles of corporate finance” –Howard Penney, Hedgeye, 10/17/16 |
SEVERAL ANALYSTS AGREE THAT MARCATO’S INVOLVEMENT HAS HELPED THE STOCK 8 “We think that the substance of Marcato’s investment thesis goes much deeper than a simple ‘lever up and buyback stock’ and will require a material change in business strategy, something best done with influence in the boardroom” –UBS US Special Situations, 8/18/16 “The emergence of an activist shareholder could provide a “floor” for the stock and a potential win-win for shareholders, i.e., either fundamentals improve and/or restructuring comes into play…Our analysis of potential strategies, such as leveraged- buybacks, cost-cutting and refranchising points to significant EPS accretion, should mgmt. pursue these measures…[We see] significant upside from the activist case [and] we also believe a change to mgmt.’s incentive compensation structure (heavily weighted to growth over returns) would be well received by investors” –Jason West, Credit Suisse, 8/9/16 “Recent news of an activist investor is a positive for BWLD, in our view, as the brand is strong and uniquely positioned in casual dining, but likely needs strategy tweaks as it enters its ‘maturing’ phase…BWLD does have untapped levers to create shareholder value. Among them: Refranchising” –John Glass, Morgan Stanley, 7/25/16 “We agree with the spirit of [Marcato’s] filing as we cite recent company actions which lowered ROIC among the rationale for our NEUTRAL rating” –John Zolidis, Buckingham, 7/26/16 Source: Wall Street research. “[W]e believe the presence of an activist investor (Marcato Capital), who might push BWLD to pursue value-enhancing financial strategies, can help to support investor sentiment while we await signs of better top-line momentum” –David Tarantino, Baird, 10/24/16 |
“‘LOGIC’ SUPPORTS THE PREMISE” THAT FRANCHISE BUSINESSES DESERVE HIGHER MULTIPLES 9 Source: Wall Street research. “Investors have rewarded restaurants pursuing a franchise model with multiple expansion relative to co-op peers. ‘Logic’ supports the premise that a franchise model is better insulated against economic volatility, generating a high margin annuity stream of royalties with limited operating volatility…Bottom line, the above thesis is intact and we were actually surprised at the magnitude of outperformance across all measures for our heavily franchised restaurants (75%+ of units) relative to the industry…We expect investors to further encourage (re)franchising / licensing at [BWLD]” –Jeffrey Bernstein, Barclays, 5/17/16 |
RESEARCH ANALYSTS HAVE SEEN UPSIDE FROM REFRANCHISING FROM THE BEGINNING 10 “We believe investors would applaud the introduction of multi-year refranchising programs from Buffalo Wild Wings…While we believe softening fundamentals have been the primary driver of the multiple compression seen by these three casual dining names, the acquisition of franchised units has also played a sizeable role, in our view” –Jeff Farmer, Wells Fargo, 7/13/16 “There is significant value from an operational perspective that can be gained by refranchising underperforming stores, especially from trimming corporate G&A” –Howard Penney, Hedgeye, 6/13/16 Source: Wall Street research. |
“Our math supports a more favorable range of outcomes for investors in a refranchising strategy[.]…We agree with the spirit of [Marcato’s] work” –John Zolidis, Buckingham, 9/6/16 RESEARCH ANALYSTS OVERWHELMINGLY AGREE THAT REFRANCHISING ADDS VALUE 11 “Our analysis of a theoretical model in which 80% of BWLD is franchised along conservative industry standards yields per share valuations significantly higher than BWLD’s current share price” –Nick Setyan, Wedbush, 2/8/17 “[T]he math [on a transition to a 90% franchised business model] looks intriguing, even when using what we think are conservative assumptions” –David Tarantino, Baird, 10/24/16 “We like the potential for additional value-unlocking actions or a more drastic tack in strategy in-line with some of the ideas outlined in a recent 13D filing…Investors may look past downward revisions if the prospect of transformative action is on the table, but if this is called into doubt, fundamentals suggest a lower price for the stock” –John Zolidis, Buckingham, 9/15/16 “We view refranchising as a realistic alternative path to value creation for shareholders…Investors often forget BWLD was >65% franchised a few years ago. Our conversations with brokers that specialize in restaurant and franchisee transactions lead us to believe the appetite for most of BWLD’s markets would be strong, and could command multiples towards the higher end of the 5-6x unit-level EBITDA industry standard’” –Nick Setyan, Wedbush, 9/12/16 “[D]irectionally the activist plan is a much better plan than the one the current management team is focused on” –Howard Penney, Hedgeye, 8/18/16 “[A] falling [ROIC] as a result of higher capex could suggest a greater proportion of units would create more per share value as franchised units (e.g., where the same capex could be deployed for share repurchases)…Investors remain highly focused on the potential opportunity for BWLD to increase its franchise mix” –Karen Holthouse, Goldman Sachs, 8/4/16 “[D]uring its Analyst Day…[Management] failed to address any changes to BWLD’s long-term company/franchise store mix (now at 52% company- owned, which we believe should be reduced) by defending ongoing consideration of future franchise purchases (where we would hope for a re-franchising strategy)” –Paul Westra, Stifel, 8/16/16 “We believe investors would applaud the introduction of multi-year refranchising programs from Buffalo Wild Wings” –Jeff Farmer, Wells Fargo, 7/13/16 “‘Logic’ supports the premise that a franchise model is better insulated against economic volatility, generating a high margin annuity stream of royalties with limited operating volatility…We expect investors to further encourage (re)franchising / licensing at [BWLD]” –Jeffrey Bernstein, Barclays, 5/17/16 Source: Wall Street research. Indicates a quote taken from a report published before Marcato publicly disclosed its suggestions to management, indicating an “unaided” observation. |
FEASIBILITY OF LARGE-SCALE REFRANCHISING IS OBVIOUS IN CONTEXT OF HISTORY 12 “The move to being >90% franchised is not unprecedented…Concerns on demand for franchised BWLD units seems overblown…Marcato’s cadence of proposed franchising follows the 6 year time period it took [Applebee’s], and we believe that is a feasible timeframe” –UBS US Special Situations, 8/18/16 Source: Wall Street research. ““[T]he Company accurately described the requirements for creating value from a highly franchised business model, but stated the risk of execution was simply too great, especially for a casual dining chain. It appears the Company’s concern is based on the only highly franchised, casual dining company, DineEquity, which has under-performed the past 12 months. We struggle to draw the conclusion that DineEquity’s struggles are due to its business model (i.e., why are Chili’s, Ruby Tuesday and Red Robin struggling?), and that one company’s performance portends the same fate for others. All the other publicly held restaurant companies that have shifted business models are QSR chains, but we argue the common ingredient to all of their successes was not their industry- defined segment, but their decision to shift their cultures and structure to support franchise growth. Before significant investments are made supporting company-owned restaurants, a fresh perspective at the Board level could benefit shareholders” –Chris O’Cull, KeyBanc, 2/7/17 |
SUBMISSIONS TO WWW.WINNINGATWILDWINGS.COM VALIDATE THE NEED FOR CHANGE Exhibit 4
DisclAIMER The views expressed in this presentation (the “Presentation”) represent the opinions of Marcato Capital Management LP and/or certain affiliates (“Marcato”) and the investment funds it manages that hold shares in Buffalo Wild Wings, Inc. (the “Company”). This Presentation is for informational purposes only, and it does not have regard to the specific investment objective, financial situation, suitability or particular need of any specific person who may receive the Presentation, and should not be taken as advice on the merits of any investment decision. The views expressed in the Presentation represent the opinions of Marcato, and are based on publicly available information and Marcato analyses. Certain financial information and data used in the Presentation have been derived or obtained from filings made with the Securities and Exchange Commission (“SEC”) by the Company or other companies that Marcato considers comparable. Marcato has not sought or obtained consent from any third party to use any statements or information indicated in the Presentation as having been obtained or derived from a third party. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed in the Presentation. Information contained in the Presentation has not been independently verified by Marcato, and Marcato disclaims any and all liability as to the completeness or accuracy of the information and for any omissions of material facts. Marcato disclaims any obligation to correct, update or revise the Presentation or to otherwise provide any additional materials. Neither Marcato nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy, fairness or completeness of the information contained herein and the recipient agrees and acknowledges that it will not rely on any such information. Marcato recognizes that the Company may possess confidential information that could lead it to disagree with Marcato’s views and/or conclusions. Funds managed by Marcato currently beneficially own, and/or have an economic interest in, shares of the Company. These funds are in the business of trading— buying and selling—securities. Marcato may buy or sell or otherwise change the form or substance of any of its investments in any manner permitted by law and expressly disclaims any obligation to notify any recipient of the Presentation of any such changes. There may be developments in the future that cause funds managed by Marcato to engage in transactions that change the beneficial and/or economic interest in the Company. The Presentation may contain forward-looking statements which reflect Marcato’s views with respect to, among other things, future events and financial performance. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if Marcato’s underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Marcato that the future plans, estimates or expectations contemplated will ever be achieved. The securities or investment ideas listed are not presented in order to suggest or show profitability of any or all transactions. There should be no assumption that any specific portfolio securities identified and described in the Presentation were or will be profitable. Under no circumstances is the Presentation to be used or considered as an offer to sell or a solicitation of an offer to buy any security, nor does the Presentation constitute either an offer to sell or a solicitation of an offer to buy any interest in funds managed by Marcato. Any such offer would only be made at the time a qualified offeree receives the Confidential Explanatory Memorandum of such fund. Any investment in the Marcato Funds is speculative and involves substantial risk, including the risk of losing all or substantially all of such investment.
Certain information concerning the participants Marcato International Master Fund Ltd. (“Marcato International”), together with the other participants in Marcato International’s proxy solicitation, have filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement and accompanying WHITE proxy card to be used to solicit proxies in connection with the 2017 annual meeting of shareholders (the “Annual Meeting”) of Buffalo Wild Wings, Inc. (the “Company”). Shareholders are advised to read the proxy statement and any other documents related to the solicitation of shareholders of the Company in connection with the Annual Meeting because they contain important information, including information relating to the participants in Marcato International’s proxy solicitation. These materials and other materials filed by Marcato International with the SEC in connection with the solicitation of proxies are available at no charge on the SEC’s website at http://www.sec.gov. The definitive proxy statement and other relevant documents filed by Marcato International with the SEC are also available, without charge, by directing a request to Marcato International’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (888) 750-5834 (banks and brokers may call collect at (212) 750-5833). The participants in the proxy solicitation are Marcato International, Marcato Capital Management LP, Marcato Special Opportunities Master Fund LP (“Marcato Special Opportunities Fund”), Emil Lee Sanders, Richard T. McGuire III, Sam Rovit and Scott O. Bergren (collectively, the “Participants”). As of the date hereof, Marcato International directly owns 950,000 shares of common stock, no par value, of the Company (the “Common Stock”), representing approximately 5.9% of the outstanding shares of Common Stock and Marcato Special Opportunities Fund directly owns 32,600 shares of Common Stock, representing approximately 0.2% of the outstanding shares of Common Stock. In addition, Marcato Capital Management LP, as the investment manager of Marcato International and Marcato Special Opportunities Fund, may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the shares of Common Stock held by Marcato and Marcato Special Opportunities Fund, therefore, may be deemed to be the beneficial owner of such shares. By virtue of Mr. McGuire’s position as the managing partner of Marcato Capital Management LP, Mr. McGuire may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the shares of Common Stock held by Marcato International and Marcato Special Opportunities Fund and, therefore, Mr. McGuire may be deemed to be the beneficial owner of such shares.
A founder’s perspective: “I support the re-franchising”
Unsolicited support from one of BWLD’s original founders “As one of the original 4 founders of BW-3 back in 1982, I have my own take on the current discussion taking place. As I travel to other cities and visit our restaurants, I am constantly disappointed by the consumer experience being provided. Dining areas are filthy, food quality ranges from good to terrible and employees are poorly trained… Marcato's focus, at least in the articles I've read, seems to be on re-franchising and financial strategies. While those are critically important, so is the guest experience. We all know of local restaurants where the food and service are always outstanding. They do little to no advertising but there is always a waiting list to be seated. That is not the case with Wild Wings. I've talked to hundreds of diners who all have stories about their sub-par experiences in our restaurants. I support the re-franchising, with the main reason being that franchised stores seem to provide a better guest experience. The actual owners are often on premise, making sure things are as they should be” –3/29/17 Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error.
Employees and franchisees believe new leadership is needed at BWLD
BWLD employees would welcome Change in leadership and strategy 8/17/16: “Many of us (home office employees) completely agree with your assessment, and your statement "...we have come to appreciate that suboptimal capital allocation behavior is symptomatic of a larger organizational deficiency: a tendency to favor gut feel and thematic proclamations without tangible evidence or appropriate analytical support." It is 100% accurate, and in large part, the reason we've had so many abrupt departures from the team since the beginning of the year, including - our VP of Insights & Analytics, who left in frustration because senior leaders refused to acknowledge the "realities" of the market and brand- followed by the Insights Director, who left a few weeks later - followed by the Beverage Director, who has accepted a VP Beverage Innovation position with DineEquity - and too many marketing and field people to mention[.] Pricing increases have been far too frequent and aggressive. Technology no longer leads. The loyalty pilot has been a bust. The GEC (Guest Experience Captain) role has shown negligible positive impact on store performance. The list goes on. We are hopeful that your focus will bring long overdue change.” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 8/16/16: “Several of the BWW expats have had communication over the last couple of days. Just wanted to let you know that the assessment of you and your team, as it related to the challenges with Buffalo Wild Wings, are spot-on and things that literally we have been talking about and trying to change for years. Love the brand, just not the leadership so much” 4/20/17: “Marcato has the support of most employees (current and former). The majority of us still have a passion for the Buffalo Wild Wings brand, and want to see it succeed”
4/11/17: “In full transparency, I am a former employee. Left on good terms with the company. But the frustrations I had with the lack of communication and infrastructure had me shaking my head often. With more than 20 years in the restaurant industry, I was quite taken aback to learn that my two supervisors - a direct, and a vice president - had NO restaurant experience. And these were the people "leading the charge'. It provided a lot of frustration to both me and my peers” complacent leadership culture has demoralized Employees Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 2/22/17: “Just had a chance to quickly scan [Marcato’s] BDubs deck…The HQ staff is silently cheering” 2/20/17: “The culture that middle management has created or was directed by executive leadership is dispiriting all management running the four wall execution. Bonus structure for managers are consistently changed to benefit the companies profit with no regard for the managers working 80+ weekly” 1/11/17: “I am a former operations & franchising VP of the brand…I think I can speak for many of us when I say we still have / had a great deal of passion for the brand, but saw certain writing on the wall. From the lack of investment into Product R&D, the lack of operations experience/leadership in the SVP/C-Suite and board room, the lack of a solid and long term strategic plan, to the way the franchise community were viewed as step children, all caused me/us concern. I've remained very close to many franchisees and I am confident stating that your platform and the areas in which you intend reform will be very well received. As a past and future share holder and continuous user, I welcome your position and efforts” 4/20/17: “It was disappointing to see all of the talent and experience of teams be stifled by upper management's lack of planning. Having worked closely with franchisees over the years that I was with BWW, I heard their frustrations…however, I was always told that it could cost me my job if I pushed back or offered empathy for the franchisees”
field operators see numerous flaws in BWLD’s “strategy” 4/29/17: “As a former field leader for them that was eliminated as part of the “efficiency” program that the leadership at Buffalo Wild Wings discussed…Knowing the individuals delivering the call as I do, it was extremely apparent that they were nervous and unprepared. They filled their presentation with excuses on why they so horribly missed Wall Street’s EPS estimates. Their favorite excuse being wing costs. • A while back the company introduced the concept of selling wings by the weight. The expectation was that locations would take a case of wings, twice a day, and weigh them and adjust the number of wings that are served for a snack, small…etc. This was done in an effort to address the wing sizes and cost per wing impact. As many of the other programs put in place by Buffalo Wild Wings, it isn’t happening. The level of importance of doing this has not been communicated by senior leadership. They live in a delusional and misguided world that they believe that because they say you are supposed to do it, you will do it…The other component that they didn’t mention is that COGS went up significantly because there was no longer a charge for the accompaniments of celery, carrots and dressings with the wing orders on value days. They KNEW and communicated there would be an impact to COGS but said the stores would just have to ‘suck it up’ • Delivery was a high point that the leadership continued to try and use as an example of how they are moving in the right direction. This is not entirely true. It is true, delivery sales have seen a significant spike in most locations. However, the cost associated with the delivery component is astronomical (to coin a recent term you used). The process is extremely complicated at the location level with double entry of orders. The third party delivery company sends the order via and iPad and then the team in the location needs to reenter the order into the POS. Because of the extreme speed that this was rolled out, it made for some unforeseen challenges. One of which was pointed out by the “efficiency company” they employed that the take-out areas in B’dubs are poorly designed and “crash and burn” at peak times. • After Delivery rolled out, there was no long-term plan and execution was not good. The third parties that BWW used (GrubHub and Door Dash) approached BWW with a threat of dropping them as a client. The model that the third parties use incorporates a 4% error factor that they are willing to absorb as part of the overall model. Well, because BWW had not addressed the importance of ironing out any kinks in the operations of take out, the error rate at BWW was over 10%. With the slim margins that the third-party delivery folks have, this high error rate was just not going to work. Coincidently enough, the District Managers and Regional Vice Presidents that had the worst results in this area are still there and were not removed during the down-sizing… • These are just examples of how the company was up 0.5% in sales for Q1 but the main impacts were COSTLY traffic driving programs like value day adjustments and delivery. They also had a shift in the where Easter Fell. • Two final statements about International growth and R Taco. Tim Murphy was put in charge of the rollout of the company store openings in Canada as part of his indoctrination in the role of leading international. Because of his complete lack of experience in operations at a high level, the locations failed miserably and were on the verge of being written off over and over again. It wasn’t until North American operations took over the locations that we saw turn around. Tim Murphy is not the man that should be leading International and that is part of why it is moving SO SLOW.” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error.
“field leadership team [does] not trust senior leadership” 4/24/17: “Recently, Buffalo Wild Wings has been utilizing a “voice of the employee” mechanism called FORUM to measure the level of engagement of team members of all levels at Buffalo Wild Wings. This is done every six months. In years past, they used a mechanism called Say it! Do it! Live it! When that mechanism was used, the senior leadership team used to communicate how well engaged the members of the team are. Since the use of FORUM, there have been no companywide communications to show results as a brand. The latest FORUM survey was launched the week after they reduced the workforce. Results won’t be available for a while. As investor, I am very sure you would like to know the results of the previous two surveys. In those surveys it indicated three important facts (if you ask for this information, be sure to ask for it broken out by each layer of field leadership, I’m sure you will be shocked): • The field leadership team did not trust senior leadership • The field leadership team does not believe the senior leadership team lives the company values • The field leadership team does not have confidence in the direction the senior leadership team has put forth or if they even have communicated one to the field. It’s really no surprise. The organization does not have a culture of accountability. Many years ago the company hired an organizational development company to help with the growing pains of rapid expansion. Their diagnosis was that there were too many committees and groups that were working on things that were either nonessential or were being worked on by other teams so they were duplicating efforts. All of these groups then flooded the organization with priorities and the field was confused and struggled to stay focused. The expectation the company proposed was to narrow spheres of accountability and cut out all the committees because it was leading to a culture of where shared accountability of a group equaled no accountability at all which then lead to no progress. They also said to stay focused on no more than a few priorities because as you add more priorities, the importance of them declines exponentially. Several years later, the company has abandoned that philosophy and went back to committee after committee. NABT and all the other sub teams that are in place. The largest growing segment of office space in the home office is not additional cubicles for additional support team members to support the field, guess what….its meeting rooms…Now the enterprise has hired yet another company to help with organizational development to see how the company should be structured which centered around observations of a small sample of franchisees and company locations. This looks to be the basis of the reduction in workforce. How many companies does this organization have to hire to tell them how to operate? Isn’t that the board of directors main mission? … New leadership is needed both at the senior leadership level and the board that “holds them accountable.” The enterprise just sent out their proxy information. They hail the increase in share value of 1697% since the IPO. This shows how strong the brand has been over the years. Unfortunately, the leadership in position now is not poised to take this brand to the next level as evidenced by their floundering over the last couple of years. Small company ideas do not solve big company problems” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error.
BWLD culture lacks accountability 3/2/17: “Bungled technology implementations that have distracted management from satisfying the core customer base…Lower labor costs can be achieved if managed correctly. POS replacement to Aloha- right after Lee Patterson got removed from IT. The write downs on these POS changes were the largest to date in company history. They set a precedent that made future mistakes look acceptable. It changed the company culture… LMS - Learning Management System, one deadline pushed after another. Lots of time and money with little-used results. This one's a doozie… B-dubs TV - nice idea on a limited basis, but way too much effort into something that doesn't add much value… Pay at the table - jeez, what disaster. Take it behind the barn and kill it… Dig into projects around Lee Patterson. He came from Applebee's and pushes for "big boy" systems that eventually contributed to Applebee's downfall. Repeating this at BWLD…He's big on "the next big thing" and has a poor track record of finishing projects that pay off any ROI. Any initiative that has a back-end promise can probably be traced back to suggestions from this guy. "In 3-5 years, this will really pay off...“… Overall, Patterson is a futurist technologist who really doesn't get the bdubs customer, so every initiative tends to miss. The worst part is how much it distracts from the core business. Bottom line - this guy never figured out how to make money. 3/7/17: “Another huge problem is watching individual stores fail due to poor management and low accountability standards from Regional Managers” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 4/20/17: “My Director and my Vice President had zero restaurant experience, yet they were responsible for driving sales and innovation. It was dumbfounding”
Pattern of poor execution 4/20/17: “BWW would roll out programs without a fully prepared game plan, and definitely without an exit strategy. One example of this is the Loyalty (Blazin' Rewards) program. After several years, this program has still not been fully developed…Another example is the BOGO Blitz - every month BWW is now pushing a discounted offer to our guests through digital and social media. Anyone with experience in the restaurant industry can tell you that this is a bad idea. When you offer a monthly discount, you are training your guests to wait until an offer is pushed out before visiting BWW. Additionally, these monthly offers are not communicated timely for our operators to fully staff and execute the program to provide our guest and team members a pleasurable experience.” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 2/22/17: “As an operator of a high-volume BWW location, the amount of operational changes that have taken place these last few years has taken a significant toll on all team members. [It] seems that we are throwing everything at the wall in a panic to see what sticks. The only way to increase revenue is to increase guest experience, tighten four-wall execution, and simplify the processes. Introducing an immense amount of operational changes in such a short period of time leaves everything muddled and gives no room for growth”
“wing-counting” strategy has been executed poorly & harms all constituents 2/20/17: “I previously worked for BW3's as a full-time shift lead…The transition from discrete quantities of chicken wings (8, 12, 18, etc.) to variable-quantity "labels" (snack, small, etc.) has been nothing but a nightmare for everyone involved. Let's dissect this market failure from a few different points of view: The customer --The expectation when walking into a "wing joint" is that you'll be able to order X quantity of wings for X price. The customer's expectation is immediately not met when looking at the menu for the first time. They'll probably question the motives behind the non-standard ordering requirements (maybe consciously, maybe subconsciously), and the solution the customer is offered may not be satisfactory. Also, in my experience, "snack" boneless wing counts were rarely ever in the "9" category, much less so than the "7" category, which seems to favor the company over the customer. Upon hearing the explanation of why the transition was made, the customer will likely be more critical of the quantity of food he/she is receiving, drawing attention away from the other positive things that make BW3's a great place to eat. Bite the bullet and factor the variance into the cost of the wings. The server --Explaining the reasoning behind wing quantities takes time to explain to customers. Most restaurants live or die based on service and ticket times… The kitchen --Counting and weighing wings adds workload to both managers and kitchen staff that could be spent elsewhere. These personnel already have a ton of tasks to juggle and may not have time to get around to (such as filtering the fryers twice a day [pretty unreasonable]). Instead of focusing on the company's bottom line, focus more time making the experience as best as possible for the consumer. There are a slew of other minor inefficiencies, such as making inventory harder to calculate, additional quality control at the expo window, remembering to update the count stickers, on top of the added cognitive load required to remember to count out the wings” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error.
Deficient corporate strategy has alienated “core customers” 3/8/17: “[W]e have had many issues ranging from food quality, to customer service, to overall convenience. Our biggest issues have been: - Inconsistent food quality (we predominantly order wings, and they come out with too much sauce, or too little sauce, are over-cooked, or under-cooked) - Inconsistent customer service (we have found a handful of servers over the years who have gotten to know us and treat us great, but beyond that, the transient nature of the server position usually winds up disappointing us, resulting in slow/inaccurate service) - The Guest Captain position has always perplexed me as a customer. From my vantage point, the only function the Guest Captain ever performed was hovering in the dining area introducing him/herself as the Guest Captain. When we dined during particularly busy times, it would have made sense for the Guest Captain to step in and assist where necessary, however, they always appeared to fumfer through the dining area aimlessly. Seemed like a very frivolous/wasteful FTE in my opinion. - My 5-year-old daughter always loves the tablets in the restaurants that we frequent. However, at BWW, the tablets always seem to be broken or unavailable, and higher level functionality doesn't seen to exist (i.e., paying your bill, ordering, etc.). We ate at Olive Garden this evening and had a wonderful experience with their tablet. We like Buffalo Wild Wings, and will continue to return. That said, it sure would be nice for the ops management folks to get some of the basic consistency issues ironed out. We have spent thousands of dollars dining and drinking at BWW, and would love to see it evolve from a quality and service point of view.” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error.
Deficient corporate strategy has alienated “core customers” (Cont’d) Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 2/20/17: “My biggest complaint is the price. I was a huge customer for years. That has changed. Now I go to hooters. It seems like your prices raised while the wing sizes got smaller. I don't even know how many wings I will get in a order anymore. Its only a estimate now, I could get 7 maybe I get 10. You even charge for a tiny cup of ranch. I understand you need profit but this is to much for me. Unless it was to change I will not be back. I will just drive straight by it to get to hooters” 1/4/17: “Being a fan of BWW, I stood in line at my neighborhood store to be one of the first 100 people to get free wings for a year (6 wings/week). That was over 6-years ago. Since that time, I have visited BWW less and less and now only visit once every 3-months (maybe). My biggest qualm...the prices. While I would love to meet with my girlfriends or work friends at BWW's, we all have the same response, ‘It's too expensive’…And I have to pay how much for each additional ranch?! At a sports bar, you want to stay for awhile, to watch the full game, but the price of the alcohol and food don't mesh with this kind of atmosphere…In the first three years of the BWW's being open in my town, the staff was very quick, knowledgeable, knew the menu and were very attentive. Yet, this no longer seems to be as high of a priority. In visiting the restaurant in the summer of 2016, while I appreciated the waitress' personality for our table, the lack of priority was evident for others…I would love BWW's to be my restaurant of choice, once again, but until some things make a change for the better, I can't see myself visiting there more often than I do now.” 1/3/17: “Simplify the menu. You used to pretty much sell wings and now the menu is all over the road. Have you ever seen the menu at Cheesecake Factory? Gives me a headache with all the choices… “I have been going to BWW ever since they opened their doors in Dallas and I have seen a decline in enthusiasm with the staff. You don't sell wings. The product is your service. I go for the food of course but more importantly how I'm treated each and every time. There are some locations I will not step foot in again to a poor experience…I have seen too many times where staff is goofing around with their colleagues as opposed to getting a customer more water after consuming blazing wings. Not a pretty sight! Keeping customers happy will keep brining them back even when economic times are tough”
Buffalo wild wings stores are run better when owned by franchisees Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 4/13/17: “I am a former BWW franchisee who sold my stores to the BWW [corporation]. I created many of the promotions BWW uses to this day and was awarded all of the BWW franchise awards possible. Immediately after corporate took over the operations, I started to get phone calls from most of my mangers complaining about the ‘forced’ operation procedures which negatively impacted customer satisfaction. They all wanted out. My motto was to count smiles not wet naps. BWW corporate took a much different approach and tried to run the operations like their own stores. This lost all local identity and respect. I had customers call me and say[, ‘]I'll never go back into the stores[’] because the culture had changed their experience”
leadership change is needed to prevent irrevocable damage 4/17/17: “Buffalo Wild Wings senior management is taking the company down a path of no return. They recently "compressed" 50 home office and field employees in an effort to reduce costs and to create a diversion from what is sure to be another disastrous earning call next week. This move was done under the guise of getting "closer to the work". They have yet to be able to articulate how doubling workloads because of the firings gets anyone closer to anything. This management team is blindly following the script of a third party efficiency consultant, with no regard for tenure, value or experience. The moves made last week have weakened the organization, created morale and loyalty issues as well as significantly reducing the level of support that both Franchise and corporate units will receive. Original ideas are foreign to current leadership. All the success achieved in previous years was due to ideas from the field (table service, value engineering of remodels, limited time only menu offerings...). Management initially fought all these initiatives until they ultimately took credit for them. The worst ideas (generated by leadership) which cost the company tens of millions (Guest Experience Business Model, unifying to a single POS when they [knew] that the provider had significant programming issues) continue to plague the organization to this day. The firing of four dozen key employees may have slightly improved the bottom line for one quarter but did nothing to address the real issues still in play: *Lack of menu innovation which has driven customers elsewhere. *Inferior POS support which has cost Franchisees and corporate operators hundreds of thousands of dollars in lost revenue. *No technology innovation in a changing climate where competition is cutting edge. *No plan to effectively market to millennials. This management team must go. BWW is an iconic brand that is beloved by the nation but is in danger of implosion. Please right this rudderless ship!” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 4/13/17: “To improve the performance of BWW, I would clean house and get operators involved in the management. Now you have bean counters and attorneys running the show with lip service about customer care” 4/28/17: “It was obvious from the earnings call that the guest experience is less than ideal. Why are you not calling on Sally Smith to replace the person responsible for that area? When the NRN survey says the guest experience is at the bottom across all categories, the Senior Vice President of Guest Experience is clearly failing. Why does that position even exist? Is that person the "Head Guest Experience Captain? Did they take an idea that works well at high volume stores and force it across the system? Another failed initiative from Lee Patterson. Fire him!”
Employees & franchisees alike support marcato’s strategy recommendations Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 2/22/17: “Thank you for your company's recent letter to Buffalo Wild Wings, Inc. highlighting many of the valid, fundamental issues and strategic mistakes which continue to hinder our franchise success and growth. As a current 24 year franchisee of BWW, Inc, I have expressed many of these same highlighted issues to our franchisor, its executive committee, its operators and representatives only to be relegated to the background and advised to "...not be contrary or outspoken". Over recent years our company has seen and realized a marked paradigm shift in our BWW, Inc. franchisor strategies, its methodologies, its greed, its waste, its accountability, and its systematic limitation/ elimination of its franchisees, their available territories and future for growth. It is not just BWLD's stock price that is compromised or limited by the highlighted issues listed in the letter… It is my sincerest hope that BWW, Inc's executive committee, will heed your company's structural and strategic advice responsibly. That many of the issues which hinder BWW, Inc. have been highlighted in your company's letter is much appreciated and long overdue” 12/8/16: “Fresh senior management which has a real interest in franchisees profitability vs. their own stock options. Consistency in the application and enforcement of system standards and other compliance requirements, including remodels. Too many pet and favorite son franchisees getting special treatment: Ansley, Cook, Hutchinson, Ward” 12/8/16: “Franchise operators always seem to produce higher sales per seat/unit at most chain or casual dining restaurants. It is no different at Buffalo Wild Wings. A closer look at Company operations would identify numerous markets that fall far, far short of what franchise operators can (and do) produce in many areas of the country” 12/6/16: “I was VP Franchise Sales with BWW 1997-2008 and awarded many of the current franchise agreements nationally as well as approved franchise sites. One of the reasons I decided to leave early 2008 is the company's continued priority of company store development & their desire to hold future territory for company stores. It was pretty clear during my 10 years at BWW that franchising was the "weak step child" of the brand. Creating a pro franchise format and refranchising company stores will unleash the brand to new heights”
Shareholders are frustrated with the status quo 3/10/17: “Buffalo Wild Wings continues to miss the mark…As a shareholder I feel the leadership has gotten complacent, and aren't focused on the needs of their shareholders, but instead their own greed” 3/9/17: “Owner of 1986 shares. I agree with all your perspectives. I have listened to most of the quarterly calls and it has become more yada yada and nothing improves. One area is at seat ordering and they have never gotten this done right. I just came across an app that could be implemented quickly and cost effectively that is done, not off a tablet that BW3 has to purchase, but off a customers smart phone and is done without a specific BW3 phone app having to be created…BW3 should be a leader in this regard.” 2/20/17: “I have read the reviews on the naples' fl bw3. I am a stock holder. The reviews on yelp and trip advisor are terrible. This is not good…I see that the company wrote off $600,000.00 in the past year on pizza rev. So much for research. I wonder how rtaco is doing?” 2/23/17: “Like you, I believe that BWW's decision to buy back franchised stores was a mistake. I would be interested to find out how this decision was made” 2/20/17: “I own 1800 shares in an IRA. Current management is 'in over its head. Last year the CEO's excuse on CNBC for lame financial performance was that March Madness hadn't produced enough exciting games, but she promised that the upcoming soccer tournament (Copa America, I think) would turn it around, which was nonsense. Appalling Yelp reviews about service indicate poor oversight and quality control” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error.
Shareholder support for Marcato’s plan for change 12/6/16: “Just go ahead with your plan! Very much appreciated! I can't see why any rational individual could argue against it” 3/8/17: “You guys have come out with some fantastic analyses. Thank you for holding management and the board accountable!” 12/15/16: “Marcato Capital Mgmt, I'm a long term shareholder of BWLD since April 2005; and I greatly appreciate all efforts to increase shareholder value” Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error.
support for marcato’s director nominees Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 3/30/17: “Lee [Sanders] joined the BWW executive team in 2001 as SVP Development & I reported to Lee. His creativity and leadership company-wide were, in my opinion, key factors in the amazing franchise & company restaurant expansion we experienced through those "go-go' years… His innovative franchise sales incentives & site modeling knowledge were built into the BWW FDD with great success. We attracted quality restaurant operators nationally to carry the brand forward. Without Lee's leadership & common sense approach BWW would not be the successful brand that we all love today” 3/30/17: “As an owner operator of 250 restaurants across the USA, I feel very fortunate that I was able to work with Lee Sanders…He always provided our company with great insight, expert advice on how to implement a very fast paced development plan, and kept us focused on the importance of building the brand the right way. As a result of his outstanding leadership, keen business insight, and total in-depth knowledge of the franchise business model, we eventually built 41 successful Buffalo Wild Wings units. We always had the utmost confidence in Lee's ability to lead the Buffalo Wild Wings development to new heights of success” 3/31/17: “I had the privilege to work with Lee Sanders during my time as a Director at Buffalo Wild Wings… Lee is a consummate professional and talented leader. He is extremely well respected within the restaurant and franchise industries for his strong leadership and ability to build lasting relationships. These skills are especially apparent when working with franchisees. While he is unafraid to make difficult decisions that he believes are best for the long term viability of an organization, he actively seeks to collaborate to determine the best course of action. I experienced this leadership firsthand, as he chartered the course to quickly and successfully grow Buffalo Wild Wings from a regional brand into a well respected national restaurant brand that was highly desired by landlords and municipalities. Always willing to also take calculated risks, Lee provided the vision to keep the concept fresh and profitable. He also provided the structural framework to ensure success”
support for marcato’s director nominees (cont’d) Source:Inbound communications submitted via email and through www.WinningAtWildWings.com. Note:Quotes shown as submitted and are not edited for spelling, syntax, or grammatical error. 4/13/17: “I see Lee Sanders might get on the board and I would highly endorse Lee. He came in when I had already opened some restaurants and made a significant improvement on getting the franchisees perspective in front of his bosses. He is a no non-sense guy who understands what drives the business” 3/8/17: “Thanks Mick, You are bold man orchestrating a brilliant maneuver. I am very grateful for your leadership at this time for BWLD…You couldn't have chosen better Board members in Scott Bergren & Lee Sanders…Your Team & ideas are brilliant. For that, I thank you! I have several ideas regarding the capitalization of this company, far different from the humble ideas of current management of 1.5X Debt/EBITDA & buybacks. The ABS debt market would be a better home to return capital” 3/30/17: “As a former Director, Sr Director and VP in a variety of franchising and operational roles at BWW, I worked with and for Lee...[He is:] Trusted and Respected by franchisees as fair, honest, impartial and firm when necessary. Sometimes he had to make the tough and unpopular decisions that were best for the business…in the end, it was clear the right decision had been made. He also always looked out for the benefit of the system. He is an acknowledged content expert in the company for franchising and restaurant strategies. The strategist who was the critical driver of the massive growth of the chain from a 100 units to 500+. Lee had a vision of how to grow that brand. I arrived at 117 locations and departed at 599. From 1982 - 2001, no one else was able to plan for and execute that growth. Acknowledged in the casual dining industry as an operators' operator” 3/2/17: “Lee Sanders - there's a guy who knows how to make money. Great choice! If you get one director on the board, push for Lee Sanders”
