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How Buffalo Wild Wings is at The Mercy of McDonald's

Stocks in this article: BWLD CMG MCD

How many chicken wings did you sell on Super Bowl?

Smith: I can tell you what we sold last year, we're still waiting for the numbers to come in from Sunday. Last year we sold 8.8 million. We do know that with more locations and positive same-store sales we expect that that number will increase over prior year and its always a big takeout day for us as well as in-restaurant. Last year takeout was 45% of our sales and we'll have a little bit more color on that hopefully the by the end of the week.

Are you feeling the pressure from fast-casual chains like Chipotle (CMG)? Is the full service dining model still en vogue?

Smith: I do think there is still that occasion [dining]. I think that fast casual has done a really nice job of providing some other opportunities maybe [when] you don't want to take quite as much time. But I can't really answer what the competition are doing. I think our occasion is perhaps a little bit different in that you're not going to get that same experience in a fast-casual restaurant. I mean if you're going to go watch a sporting event or get together with friends and family, which is what our guests tell us they like to use Buffalo Wild Wings for, I don't know that you're going to get that same feel [at] fast casual.

You spoke on the call about potential investments by Buffalo Wild Wings in additional concepts and later talked about preferring fast-casual concepts? Why fast casual?

Smith: As we look at the segment -- quick service, fast casual, casual and fine dining -- we don't really have experience in quick service or fine dining and it doesn't meet our parameters in terms of ease of kitchen -- that kind of thing so it leaves fast casual and casual dining. If we saw the right small casual dining we'd certainly take a look at that. It just seems that more of the emerging brands happening today tend to be a little bit more in that fast-casual arena.

We're always looking and as soon as we have a deal we're certainly going to announce it.

Let's talk chicken wing prices. As I understood it from the call, prices actually went down compared to last year?

Smith: [Last year there were] probably some of the highest chicken wing prices we've seen in a decade.

How does changing chicken wing prices affect the bottom line?

Smith: What it did was really helped our cost of sales this year. Last year cost of sales was 32% [of restaurant sales]; this year 29.8%, so it was really a big impact for us.

What about looking at the rest of 2014?

Smith: We've always floated with the market on wings and we've been able to manage that, I think it depends on what McDonald's (MCD) does. If they're going to roll out "Mighty Wings" this year. I think that did drive some of the cost pressure last year. In typical years, and I don't know if we've seen a typical year in a few years prices moderate throughout the summer and then start climbing as we move into what we call ham and turkey season and that demand on sporting events and football.

What about technology? You spoke of tablet rollouts (the company plans to have tablets in all of its company-owned stores by the end of 2014), can you share a little more on how Buffalo Wild Wings plans to use them?

Smith: Tablet rollouts will be used in a variety of ways, if you've been to a Buffalo Wild Wings you know that trivia in our restaurants is big and its online real time at all our locations across the country. We were working with Buzztime and they're the ones that are developing this tablet with us so that you can play trivia; you're also going to be able to play arcade games; you're going to be able to order music and play what typically used to be a jukebox as well as order - [it will] eventually have the full menu on it. Right now we're testing the buttons that says "Wing Me" or "Beer Me," meaning I want more wings, I want more beer. And then we hope that tablet can be the go-to place for sporting news as well.

What about mobile payments?

Smith: Yes I should have mentioned that. When I think of ordering I always think of mobile payments kind of in the same brow.

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