Buffalo Wild Wings 2007 Annual Report Download - page 24

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The annual average price paid per pound for fresh chicken wings for company-owned restaurants is as follows:
Fiscal Years Ended
Dec. 30,
2007
Dec. 31,
2006
Dec. 25,
2005
Annual average price per pound $ 1.28 $ 1.17 $ 1.20
Fiscal Year 2007 Compared to Fiscal Year 2006
Restaurant sales increased by $45.7 million, or 18.5%, to $292.8 million in 2007 from $247.2 million in 2006. The
increase in restaurant sales was due to a $35.5 million increase associated with the opening of 23 new company-owned
restaurants in 2007 and the 27 company-owned restaurants opened before 2007 that did not meet the criteria for same-store
sales and $15.7 million related to a 6.9% increase in same-store sales. The 53rd week of 2006 resulted in sales of $5.7 million
and contributed approximately $0.08 of earnings per diluted share.
Franchise royalties and fees increased by $5.8 million, or 18.7%, to $36.8 million in 2007 from $31.0 million in 2006.
The increase was due primarily to additional royalties collected from the 48 new franchised restaurants that opened in 2007
and a full year of operations for the 45 franchised restaurants that opened in 2006. Same-store sales for franchised restaurants
increased 3.9%.
Cost of sales increased by $14.0 million, or 18.4%, to $90.1 million in 2007 from $76.1 million in 2006 due primarily
to more restaurants being operated in 2007. Cost of sales as a percentage of restaurant sales remained steady at 30.8% in both
2007 and 2006. Cost of sales as a percentage of restaurant sales was steady with higher fresh chicken wing costs offsetting
favorable product mix changes. Fresh chicken wing costs rose to $1.28 per pound in 2007 from $1.17 per pound in 2006.
Also, boneless wings sales have increased as a part of our menu mix, providing better margins and a corresponding lower
cost of goods percentage.
Labor expenses increased by $14.8 million, or 20.2%, to $87.8 million in 2007 from $73.0 million in 2006 due
primarily to more restaurants being operated in 2007. Labor expenses as a percentage of restaurant sales also increased to
30.0% in 2007 compared to 29.5% in 2006. Labor costs in our restaurants was higher than prior year due to restaurants
having higher hourly wages and management salaries along with slightly higher medical costs but were partially offset by
lower workers’ compensation costs.
Operating expenses increased by $6.9 million, or 16.8%, to $48.0 million in 2007 from $41.1 million in 2006 due
primarily to more restaurants being operated in 2007. Operating expenses as a percentage of restaurant sales decreased to
16.4% in 2007 from 16.6% in 2006. The decrease in operating expenses as a percentage of restaurant sales was primarily due
to lower credit card fees and utility costs partially offset by higher cable costs.
Occupancy expenses increased by $2.5 million, or 14.0%, to $20.0 million in 2007 from $17.5 million in 2006 due
primarily to more restaurants being operated in 2007. Occupancy expenses as a percentage of restaurant sales decreased to
6.8% in 2007 from 7.1 % in 2006, primarily due to better leverage of rent expense with the higher sales levels.
Depreciation increased by $2.5 million, or 17.2%, to $17.0 million in 2007 from $14.5 million in 2006. The increase
was primarily due to the additional depreciation on 23 new restaurants in 2007 and 18 new restaurants opened in 2006 and
operated for a full year in 2007.
General and administrative expenses increased by $5.4 million, or 17.7%, to $35.7 million in 2007 from $30.4 million
in 2006. General and administrative expenses as a percentage of total revenue decreased to 10.8 % in 2007 from 10.9% in
2006. Exclusive of stock based compensation, our general and administrative expenses decreased to 9.7% of total revenue in
2007 from 9.8% in 2006. This decrease was primarily due to lower cash incentive compensation partially offset by higher
medical costs.
Preopening costs increased by $1.4 million, or 46.9%, to $4.5 million in 2007 from $3.1 million in 2006. In 2007, we
opened 23 new company-owned restaurants and incurred cost of approximately $47,000 for restaurants opening in 2008. In
2006, we opened 18 new company-owned restaurants, incurred costs of approximately $29,000 for restaurants opening in
2007. Average preopening cost per restaurant increased to $195,000 in 2007 from $170,000 in 2006.
Loss on asset disposals and impairment decreased by $21,000, or 2.1%, to $987,000 in 2007 from $1.0 million in 2006.
During the fourth quarter of 2007 we closed one underperforming restaurant in North Carolina resulting in store closing costs
and a write down of equipment costs for $183,000. The remaining 2007 expense was for write-offs of miscellaneous
equipment. The expense in 2006 represented the asset impairment of one underperforming restaurant in Atlanta of $481,000,
the disposal of miscellaneous equipment and the closure costs for one restaurant.