USA TODAY US Edition

Arby’s swoops in on Buffalo Wild Wings

Fast-food chain to acquire restaurant in $2.4B deal

- Nathan Bomey USA TODAY

Bonnie Riggs

Wings. Beer. And Arby’s. Fast-food chain Arby’s Restaurant Group said Tuesday it reached a deal to acquire Buffalo Wild Wings, which promotes the slogan “wings, beer, sports” in its advertisem­ents, for $2.4 billion in cash.

The deal comes in an ailing casual dining sector as Americans have rediscover­ed home meals amid low grocery prices and new delivery options. Competitio­n from fast-casual competitor­s and higher labor costs also are hurting.

Buffalo Wild Wings also had been battered by a sharp increase in the cost of chicken wings, although the cost is down 20% from its high, according to analysts at investment bank UBS.

The company has recently bolstered foot traffic with a half-price deal on wings and has gleaned benefits from investment­s in delivery.

Buffalo Wild Wings had been a “star performer” in the sector for years but recently “lost their value propositio­n to families with kids,” NPD Group restaurant industry analyst Bonnie Riggs said.

Arby’s, which has executed a deft turnaround by emphasizin­g its core identity as a fast-food chain with unique products, could apply a similar formula to Buffalo Wild Wings.

“What consumers are looking for is value,” Riggs said. “It’s getting what you paid for. They want quality products. They want fresh, but they want it to be reasonably priced.”

The deal, which had been rumored for weeks, calls for Arby’s to pay $157 per share in Buffalo Wild Wings stock. Arby’s Restaurant Group also will assume the debt of Buffalo Wild Wings.

“Buffalo Wild Wings is one of the most distinctiv­e and successful entertainm­ent and casual dining restaurant companies in America,” Arby’s CEO Paul Brown said in a statement.

“We are excited to welcome a brand with such a rich heritage, led by an exceptiona­lly talented team. We look forward to leveraging the combined strengths of both organizati­ons into a truly differenti­ated and transforma­tive multi-brand restaurant company.”

Arby’s private equity owner Roark Capital Group is backing the deal.

NPD Group restaurant industry analyst

Activist investor Mick McGuire’s Marcato Capital Management, which had bashed Buffalo Wild Wings’ strategy and pushed for major changes, agreed to support the deal. Marcato’s criticism had culminated in a big shakeup in June when the restaurant chain’s longtime CEO, Sally Smith, announced her retirement.

Minneapoli­s-based Buffalo Wild Wings has more than 1,250 locations in

10 countries. Arby’s has more than

3,300 in seven countries.

“What consumers are looking for is value. It’s getting what you paid for. They want quality products. They want fresh, but they want it to be reasonably priced.”

Newspapers in English

Newspapers from United States