Bangalore, Oct 26 - Restaurant operator Buffalo Wild Wings' third-quarter profit is likely to edge past Wall Street estimates as falling costs are expected to offset increased chicken wing prices.
The operator of Buffalo Wild Wings Grill and Bar restaurants, which has drawn consumers amid a tough economic environment with its attractive prices, is also expected to post same-store sales growth for the quarter -- an anomaly in the casual dining space.
Energy, utility and food costs are expected to be lower, softening the impact of an estimated 40 percent to 45 percent increase in traditional chicken wing prices, which account for about 20 percent of the company's cost of goods.
"Everything, excluding chicken wing prices, looks favorable on a commodity cost basis," Sterne, Agee & Leach analyst Lynne Collier said.
The weak job market is expected to keep the company's employee turnover rates down, which in turn would keep training and recruitment costs in check, Collier said.
Buffalo Wild Wings should get a boost from diners' increasing appetite for its higher-margin boneless wings, which are made with breast meat, over the traditional chicken wings, Jesup & Lamont Securities analyst Greg Schroeder said.
The sports-oriented casual dining chain also historically sees better traffic in the second half of the year as it is a popular spot for fans to watch National Football League games.
Analysts on average are expecting the Minneapolis-based company to earn 38 cents a share, before items, on revenue of $136.7 million, according to Thomson Reuters I/B/E/S.
ALL EYES ON 2010
While analysts believe the company is on track to meet its 2009 goals, they will be paying close attention to Buffalo Wild Wings' 2010 forecast when it reports third-quarter results on Tuesday.
Analysts are expecting the company to earn $2.11 a share, before items, on revenue of $654.5 million in 2010.
Jesup & Lamont's Schroeder thinks the restaurant chain operator will see favorable comparisons in 2010 as it laps this year's high chicken wing prices.
"Those wing prices, if anything, I think they're going to decline in 2010, which should be beneficial for margins."