A Financial Profile of Buffalo Wild Wings

A FINANCIAL PROFILE OF BUFFALO WILD WINGS

by

Jarvis Washington

Finance 319

Fall 2012

Background

Buffalo Wild Wings is a sports bar and restaurant famous for its extensive list of signature sauces and seasonings, chicken wings, and their funny commercials. Buffalo Wild Wings started out in Canton, OH in 1981. The company was founded by two friends, James Disbrow and Scott Lowery, during their search for a restaurant that served authentic Buffalo-style chicken wings. They opened up the first restaurant in Columbus, Ohio and has since expanded to almost 700 locations across 49 states, excluding Rhode Island. Buffalo Wild Wings is currently looking to expand into international territories such as Canada and Europe.

The other company in this profile, P.F. Chang's, is a Chinese cuisine family restaurant founded in 1993 by Paul Fleming and Philip Chang. The first restaurant opened up in Scottsdale, Arizona where the company's headquarters are currently located. P.F. Chang's main food focus is on Chinese American cuisine. The restaurant is easily identifiable due to the large horses on both sides of the entrance that symbolizes the Forbidden City in China.

Purpose

The purpose of this study is to compare Buffalo Wild Wings and P.F. Chang's in order to come to concrete conclusions about the status of the company.

Liquidity

Liquidity is a firm's ability to satisfy its short-term obligations as they come due. It also can be described as the ease to which a company can pay its bills. Calculating these ratios can point out early signs of cash flow problems or impending business failures. Following are the two liquidity ratios for Buffalo Wild Wings and P.F. Chang's.

BUFFALO WILD WINGS (YAHOO FINANCE, 2012)

Current Ratio Quick (Acid-Test) Ratio

1.30 0.90

P.F. CHANG'S (MacroAxis, 2012)

Current Ratio Quick (Acid-Test) Ratio

0.81 0.77

Activity

Activity ratios measure the speed with which various accounts are converted into sales or cash, whether they are inflows or outflows. Activity ratios measure how efficiently a firm operates along different dimensions such as inventory management, disbursements, and collections. In this profile, the inventory turnover and asset turnover ratios will be examined.

Inventory Turnover

Buffalo Wild Wings 127.3

P.F. Chang's N/A

Asset Turnover

Buffalo Wild Wings 1.86

P.F. Chang's 0.57

Debt

After conducting extensive research, Buffalo Wild Wings claims to have "little to no" debt and have a debt ratio of 0.0. P.F. Chang's total debt measures $1.28 million.

Profitability

By using profitability ratios,