Junk food chain Arby’s likes to tout on TV advertising that it “has the meats.” It’s possibly launched venison to the menu. But if Wall structure Street rumors should be believed, the business behind Arby’s may quickly own a chain famous for something more prevalent — chicken.
Roark Capital, almost all owner of Arby’s, Carl’s Jr and Moe’s Southwest Grill, is reportedly thinking of buying Buffalo Crazy Wings (BWLD) for $2.3 billion. Shares of the poultry wing and sports activities bar franchise surged almost 25% Tuesday on the news.
Spokespeople for Buffalo Crazy Wings and Roark Capital, which also offers big stakes found in Auntie Anne’s, Carvel and Jimmy John’s, were not immediately available for comment.
But Buffalo Wild Wings, referred to as B-Dubs to its lovers, has been struggling because of rising meals costs and slumping product sales. That could make it vulnerable to a takeover. The stock is still down more than 5% in 2017 — despite Tuesday’s big pop.
Longtime CEO Sally Smith announced in June that she’d retire towards the end of the year after traders elected three applicants to the company’s panel who were backed by activist shareholder company Marcato Capital. Marcato owns in regards to a 6% stake in Buffalo Wild Wings.
Still, there have been most recent signs of a turnaround at Buffalo Wild Wings.
Shares soared after its latest earnings report found in October. Revenue of so-called boneless poultry wings helped boost gains. One of the problems that Buffalo Crazy Wings was facing was a spike in the purchase price it paid out suppliers because of its namesake wings.
By offering cheaper boneless wings, which are actually just breast meat trim to look similar to wings, Buffalo Crazy Wings was able to boost profit margins.
Related: Buffalo Crazy Wings spikes just after going boneless
You may still find concerns that ratings declines for National Football League games this year are hurting sales though. Papa John’s, the pizza spouse of the NFL, has already blamed the National Anthem protests by some players for poor sales.
Same-store sales, which gauge the performance at the business’s locations open at least a year, fell 2.3% from a year ago at the company-owned restaurants and were down 3.2% at franchise-run locations.
Buffalo Crazy Wings CFO Alexander Ware said during the company’s conference contact last month that he expected similar product sales declines found in the fourth quarter on Thursday nights, Sundays and Mon nights when the NFL has its games.
Therefore Buffalo Wild Wings may still be a enterprise that, like a defensive back struggling to covers a star wide receiver, gets a whole lot of penalty flags from Wall structure Street.
For that reason, several analysts feel that Buffalo Wild Wings will be wise to say yes to any offer from Roark.
“We believe Roark’s extensive restaurant experience could help Buffalo Crazy Wing’s turnaround and cash in-hand is complicated to carefully turn down unless traders believe a recovery has already been well underway,” stated BTIG’s Peter Saleh in a written report Tuesday.
Morgan Stanley analyst John Cup added in a written report that a offer is practical since it would supply the traders at Marcato an opportunity to quickly cash in on their investment.
Related: Panera bought by Krispy Kreme mother or father for $7.5 billion
Of course, it remains to be observed whether a takeover actually happens or not.
But a Buffalo Wild Wings acquisition would you need to be the latest offer in what’s been a remarkably busy year for cafe mergers. Private equity firms and other investment corporations have already been hungry for deals.
Oak Hill Capital bought Checkers. Golden Gate Capital ate up Bob Evans Eating places. And Krispy Kreme owner JAB acquired Panera.
Publicly traded restaurant chains appear wanting to grow aswell. Burger King parent Restaurant Brands (QSR) scooped up Popeyes Louisiana Home this year while Olive Backyard owner Darden (DRI) gobbled up Cheddar’s Scratch Home.