Buffalo Wild Wings Rises as Activist Marcato Reveals Proposals

  • Mick McGuire’s activist fund makes public 52-slide deck
  • Criticizes Minneapolis restaurant chain’s spending priorities

Buffalo Wild Wings Inc. rose after activist shareholder Marcato Capital Management LP released a presentation and letter detailing its improvement ideas for the restaurant chain.

In the 52-slide deck and five-page letter released Wednesday, the hedge fund criticized Buffalo Wild Wings for “a glaring deficiency of understanding” about deploying capital for growth that rewards shareholders. Marcato, run by Mick McGuire, railed against Buffalo Wild Wings’s plan to increase its share buyback program by $300 million, as well as its 2015 purchase of restaurants from franchisees.

The investor urged the Minneapolis-based beer-and-wings eatery to add relevant talent to its board and management; refocus on its core restaurant brand; end bets on other fast food concepts; improve execution and accountability; and overhaul how it makes decisions on capital allocation.

“We are confident that Buffalo Wild Wings is in a strong position to compete and succeed in the future,” McGuire wrote. “This opportunity will be squandered if our concerns highlighted here are not addressed with urgency. We look forward to a vigorous discussion of these factors with the board and management going forward.”

Buffalo Wild Wings said Wednesday its board, management and advisers had spoken with Marcato “numerous times” and reviewed McGuire’s presentations. The company “will continue to engage constructively with Marcato and we will also consider the input of our other shareholders,” it said in a statement. Shares rose 2.9 percent to $166.06 in New York.

Marcato, which owns about 5.2 percent of Buffalo Wild Wings, publicly disclosed its activist holding July 25, and has referred to meetings it’s held with the company since June. Buffalo Wild Wings responded last month by vowing to increase stock buybacks and accept input.

McGuire founded Marcato in 2010 with startup capital from Blackstone Group LP after leaving Bill Ackman’s firm, Pershing Square Capital Management. The fund primarily invests in small- and mid-size public companies and looks for ways to make them more valuable.