Buffalo Wild Wings, Inc.
|
(Name of Issuer)
|
Common Stock, no par value
|
(Title of Class of Securities)
|
119848109
|
(CUSIP Number)
|
Richard T. McGuire III
Marcato Capital Management LP
Four Embarcadero Center, Suite 2100
San Francisco, CA 94111
(415) 796-6350
|
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
|
Copy to:
Richard M. Brand
Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY 10281
(212) 504-6000
|
|
|
December 6, 2016
|
(Date of Event Which Requires Filing of this Statement)
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 2 of 11
|
1
|
NAMES OF REPORTING PERSON OR
|
|
|
||
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
|
|
|||
Marcato Capital Management LP
|
|
|
|||
|
|
||||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a)
|
☐
|
||
(b)
|
☒
|
||||
|
|
||||
3
|
SEC USE ONLY
|
|
|
||
|
|
|
|||
|
|
||||
4
|
SOURCE OF FUNDS
|
|
|
||
AF
|
|
|
|||
|
|
||||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
|
☐
|
||
|
|
||||
|
|
||||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
|
|
|
||
Delaware
|
|
|
|||
|
|
||||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
|
|
|
|
0
|
|
|
|||
|
|
||||
8
|
SHARED VOTING POWER
|
|
|
||
950,000
|
|
|
|||
|
|
||||
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
0
|
|
|
|||
|
|
||||
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
950,000
|
|
|
|||
|
|
||||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
950,000
|
|
|
|||
|
|
||||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
|
☐
|
||
|
|
||||
|
|
||||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
||
5.2%
|
|
|
|||
|
|
||||
14
|
TYPE OF REPORTING PERSON
|
|
|
||
IA
|
|
|
|||
|
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 3 of 11
|
1
|
NAMES OF REPORTING PERSON OR
|
|
|
||
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
|
|
|||
Richard T. McGuire III
|
|
|
|||
|
|
||||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a)
|
☐
|
||
(b)
|
☒
|
||||
|
|
||||
3
|
SEC USE ONLY
|
|
|
||
|
|
|
|||
|
|
||||
4
|
SOURCE OF FUNDS
|
|
|
||
AF
|
|
|
|||
|
|
||||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
|
☐
|
||
|
|
||||
|
|
||||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
|
|
|
||
United States of America
|
|
|
|||
|
|
||||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
|
|
|
|
0
|
|
|
|||
|
|
||||
8
|
SHARED VOTING POWER
|
|
|
||
950,000
|
|
|
|||
|
|
||||
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
0
|
|
|
|||
|
|
||||
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
950,000
|
|
|
|||
|
|
||||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
950,000
|
|
|
|||
|
|
||||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
|
☐
|
||
|
|
||||
|
|
||||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
||
5.2%
|
|
|
|||
|
|
||||
14
|
TYPE OF REPORTING PERSON
|
|
|
||
IN
|
|
|
|||
|
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 4 of 11
|
1
|
NAMES OF REPORTING PERSON OR
|
|
|
||
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
|
|
|||
Marcato, L.P.
|
|
|
|||
|
|
||||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a)
|
☐
|
||
(b)
|
☒
|
||||
|
|
||||
3
|
SEC USE ONLY
|
|
|
||
|
|
|
|||
|
|
||||
4
|
SOURCE OF FUNDS
|
|
|
||
WC
|
|
|
|||
|
|
||||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
|
☐
|
||
|
|
||||
|
|
||||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
|
|
|
||
Delaware
|
|
|
|||
|
|
||||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
|
|
|
|
0
|
|
|
|||
|
|
||||
8
|
SHARED VOTING POWER
|
|
|
||
256,787
|
|
|
|||
|
|
||||
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
0
|
|
|
|||
|
|
||||
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
256,787
|
|
|
|||
|
|
||||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
256,787
|
|
|
|||
|
|
||||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
|
☐
|
||
|
|
||||
|
|
||||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
||
1.4%
|
|
|
|||
|
|
||||
14
|
TYPE OF REPORTING PERSON
|
|
|
||
PN
|
|
|
|||
|
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 5 of 11
|
1
|
NAMES OF REPORTING PERSON OR
|
|
|
||
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
|
|
|||
Marcato II, L.P.
|
|
|
|||
|
|
||||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a)
|
☐
|
||
(b)
|
☒
|
||||
|
|
||||
3
|
SEC USE ONLY
|
|
|
||
|
|
|
|||
|
|
||||
4
|
SOURCE OF FUNDS
|
|
|
||
WC
|
|
|
|||
|
|
||||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
|
☐
|
||
|
|
||||
|
|
||||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
|
|
|
||
Delaware
|
|
|
|||
|
|
||||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
|
|
|
|
0
|
|
|
|||
|
|
||||
8
|
SHARED VOTING POWER
|
|
|
||
26,270
|
|
|
|||
|
|
||||
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
0
|
|
|
|||
|
|
||||
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
26,270
|
|
|
|||
|
|
||||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
26,270
|
|
|
|||
|
|
||||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
|
☐
|
||
|
|
||||
|
|
||||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
||
0.1%
|
|
|
|||
|
|
||||
14
|
TYPE OF REPORTING PERSON
|
|
|
||
PN
|
|
|
|||
|
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 6 of 11
|
1
|
NAMES OF REPORTING PERSON OR
|
|
|
||
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
|
|
|||
Marcato International Master Fund, Ltd.
|
|
|
|||
|
|
||||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a)
|
☐
|
||
(b)
|
☒
|
||||
|
|
||||
3
|
SEC USE ONLY
|
|
|
||
|
|
|
|||
|
|
||||
4
|
SOURCE OF FUNDS
|
|
|
||
WC
|
|
|
|||
|
|
||||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
|
☐
|
||
|
|
||||
|
|
||||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
|
|
|
||
Cayman Islands
|
|
|
|||
|
|
||||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
|
|
|
|
0
|
|
|
|||
|
|
||||
8
|
SHARED VOTING POWER
|
|
|
||
666,943
|
|
|
|||
|
|
||||
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
0
|
|
|
|||
|
|
||||
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
666,943
|
|
|
|||
|
|
||||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
666,943
|
|
|
|||
|
|
||||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
|
☐
|
||
|
|
||||
|
|
||||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
||
3.7%
|
|
|
|||
|
|
||||
14
|
TYPE OF REPORTING PERSON
|
|
|
||
OO
|
|
|
|||
|
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 7 of 11
|
1
|
NAMES OF REPORTING PERSON OR
|
|
|
||
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
|
|
|
|||
Marcato NY LLC
|
|
|
|||
|
|
||||
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a)
|
☐
|
||
(b)
|
☒
|
||||
|
|
||||
3
|
SEC USE ONLY
|
|
|
||
|
|
|
|||
|
|
||||
4
|
SOURCE OF FUNDS
|
|
|
||
OO
|
|
|
|||
|
|
||||
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
|
|
☐
|
||
|
|
||||
|
|
||||
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
|
|
|
||
New York
|
|
|
|||
|
|
||||
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
|
|
|
|
0
|
|
|
|||
|
|
||||
8
|
SHARED VOTING POWER
|
|
|
||
100
|
|
|
|||
|
|
||||
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
0
|
|
|
|||
|
|
||||
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
100
|
|
|
|||
|
|
||||
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
100
|
|
|
|||
|
|
||||
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
|
☐
|
||
|
|
||||
|
|
||||
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
||
Less than 0.1%
|
|
|
|||
|
|
||||
14
|
TYPE OF REPORTING PERSON
|
|
|
||
OO
|
|
|
|||
|
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 8 of 11
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 9 of 11
|
Item 4.
|
Purpose of Transaction.
|
Item 5.
|
Interest in Securities of the Issuer
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 10 of 11
|
Item 7.
|
Material to be Filed as Exhibits.
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 11 of 11
|
|
Marcato Capital Management LP¨
|
|
|
By: | Marcato Holdings LLC, its General Partner | ||
|
|
|
|
|
By:
|
/s/ Richard T. McGuire III
|
|
|
|
Richard T. McGuire III, Authorized Person
|
|
|
|
|
|
|
|
|
|
|
/s/ Richard T. McGuire III¨
|
|
|
Richard T. McGuire III
|
|
|
|
|
|
|
|
|
Marcato, L.P.
|
|
|
|
|
|
|
|
By:
|
MCM General Partner LLC, its General Partner
|
|
|
|
|
|
|
By:
|
/s/ Richard T. McGuire III
|
|
|
|
Richard T. McGuire III, Authorized Person
|
|
|
|
|
|
|
|
|
|
|
Marcato II, L.P.
|
|
|
|
|
|
|
|
By:
|
MCM General Partner LLC, its General Partner
|
|
|
|
|
|
|
By:
|
/s/ Richard T. McGuire III
|
|
|
|
Richard T. McGuire III, Authorized Person
|
|
|
|
|
|
|
|
|
|
|
Marcato International Master Fund, Ltd.
|
|
|
|
|
|
|
|
By:
|
/s/ Richard T. McGuire III
|
|
|
|
Richard T. McGuire III, Director
|
|
|
|
|
|
Marcato NY LLC
|
|||
By:
|
Marcato, L.P., its Sole Member
|
||
By:
|
/s/ Richard T. McGuire III
|
||
Richard T. McGuire III, Authorized Person
|
¨
|
This reporting person disclaims beneficial ownership of these reported securities except to the extent of its pecuniary interest therein, and this report shall not be deemed an admission that any such person is the beneficial owner of these securities for purposes of Section 16 of the U.S. Securities Exchange Act of 1934, as amended, or for any other purpose.
|
·
|
Franchising will be the top priority of the business, and the franchisor will no longer be conflicted by aspirations of company-operated unit expansion.
|
·
|
Guest initiatives and related investments such as tablet order and pay, Guest Experience Captains, and loyalty programs will be vetted for franchisee feedback, ROIC analysis, and business improvement. Initiatives that do not deliver measurable and compelling results should not be rolled out.
|
·
|
Franchisees will receive equal and immediate access to new systems, tools, marketing initiatives, and operational improvements that are proven at company-operated units.
|
·
|
The result will be a franchisee-oriented corporate partner, with a leaner structure that can be more responsive to your needs.
|
·
|
We believe all stakeholders would benefit from seeing the system transition to a 90% or higher franchise mix. To achieve this target, approximately 600+ company units would be refranchised, inclusive of expected future system growth.
|
·
|
Refranchising company-owned stores provides you an opportunity to reinvest your cash flow into additional units, leveraging your operating expertise, managerial infrastructure, and local marketing resources. Qualified existing franchisees will be favorably positioned to acquire company units in new, overlapping, or adjacent markets.
|
·
|
Seasoned, well-capitalized operators from other brands will have a unique opportunity to participate in refranchising, allowing for cross-pollination of operations best practices and sales-driving ideas, and engendering greater system diversity.
|
·
|
International growth will be a significantly larger focus of time and resources to take advantage of this largely untapped growth opportunity.
|
·
|
New unit development has been constrained due to ever-increasing capital costs and pre-opening expenses, which have reduced the number of potential locations that can achieve the volumes to justify the required investment. Our plan would initiate a value-engineering review to reduce the costs of new unit development, improve ROIC, and expand the addressable market for BWW franchisee units.
|
·
|
Capital for expensive Stadia remodels should be deployed only where supported by observable returns. The cost of these remodels should simultaneously be minimized through our proposed value-engineering process.
|
·
|
“4-wall” profitability should have pride-of-place over Average Unit Volumes through initiatives to reinvigorate the mix of alcohol sales and to reexamine the current menu design and labor model.
|
·
|
Marketing campaigns will be:
|
✓
|
Considered an important financial investment evaluated through the lens of ROIC.
|
✓
|
Measured against specific business objectives (comp sales / traffic, day part patterns, improved mix, etc.).
|
✓
|
Data-driven so that resources can be redirected to only those programs that demonstrate quantifiable success.
|
·
|
Investments in technology, take-out, and delivery should be structured to minimize upfront cost and maximize incremental profits without cannibalizing in-store visits and high-margin alcohol sales.
|
·
|
This framework will drive higher returns on existing units, open more opportunities for profitable growth, and enhance the brand’s attractiveness to potential buyers of franchisee networks.
|
·
|
The Company’s tendency to exercise its Right of First Refusal (ROFR) option reduces the universe of interested buyers who fear that their time and energy is being wasted as a stalking horse bidder.
|
·
|
A committed refranchising program would dramatically increase the demand for BWW franchisee networks, both in number and purchasing power of interested buyers. These well-funded buyers have been forced to focus on other, potentially less-desirable restaurant investment opportunities due to the low availability of BWW acquisition candidates, limited growth potential in current franchised markets, and overly-restrictive franchisee policies at Buffalo Wild Wings.
|
·
|
Availability of new Area Development Agreements would add value to your network, with a known and contractual development opportunity.
|
·
|
We have engaged multiple M&A advisors specializing in franchise transactions who believe that there is tremendous appetite for BWW franchise platforms and that the market would enthusiastically absorb any and all units to be refranchised, bringing fresh growth-oriented capital into the system.
|
·
|
The Board of Directors must include directors with real restaurant operating experience; with the financial acumen to appropriately evaluate the business considerations of BWW’s brand and strategy development; and with an appreciation for the importance of a healthy and prosperous franchise system.
|
·
|
Management incentives must be redesigned to deliver on these goals.
|
Fund
|
|
Trade Date
|
|
Transaction
|
Shares
Bought (Sold) |
|
Unit Proceeds/Cost
|
|
Security
|
||||||||||
Marcato, L.P.
|
11/1/2016 |
Sell
|
(3,609)
|
$145.65
|
Common Stock*
|
||||||||||||||
Marcato II, L.P.
|
11/1/2016 |
Buy
|
261
|
$145.65
|
Common Stock*
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Marcato International Master Fund, Ltd.
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11/1/2016 |
Buy
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3,348
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$145.65
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Common Stock*
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