High chicken wing costs are still plaguing Buffalo Wild Wings.
The company reported a Q3 net earnings decrease of nearly 20 percent Wednesday as its cost of sales rose to 30.8 percent of restaurant sales from 28.9 percent during the same quarter last year. While its profit dropped, the full-service chain performed better than Wall Street expected with adjusted earnings per share of $1.36. Analysts expected adjusted earnings of 79 cents per share on revenue of $501 million.
Same-store sales decreased 2.3 percent at company-owned restaurants and fell by 3.2 percent at franchise locations. Overall sales rose by 0.5 percent to $473 million while revenue also increased 0.5 percent to $496.7 million.
"Our teams are executing on the cost initiatives of our fiscal fitness program and we exceeded our goal in the third quarter. These savings helped deliver adjusted income from operations above our expectations,” president and CEO Sally Smith said in a statement.
Buffalo Wild Wings recently shifted its Tuesday half-price wing Tuesday from high-cost traditional wings to higher-margin boneless wings, which Smith says will improve cost of sales while traditional wing prices remain elevated.
“Combined with our cost savings initiatives and service excellence focus, we are optimistic these actions will deliver an improving bottom line,” she said in a statement.
Traditional wings prices have risen by 25.6 percent since last year, and cost Buffalo Wild Wings $2.16 per pound during the third quarter. Cost of labor and restaurant operating expenses comprised 46.6 percent of restaurant sales, though both costs have decreased for the company since last year.
Restaurant level profit fell from 17.6 percent of restaurant sales during Q3 2016 to 16.6 percent of restaurant sales this year.
According to the company, total savings achieved from its fiscal fitness program in the third quarter were $9.2 million, and $15.3 million year-to-date in 2017.