Buffalo Wild Wings 2009 Annual Report Download - page 49

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Occupancy expenses increased by $7.2 million, or 28.6%, to $32.4 million in 2009 from $25.2 million in 2008 due primarily
to more restaurants being operated in 2009. Occupancy expenses as a percentage of restaurant sales was flat at 6.6% for both 2009 and
2008.
Depreciation and amortization increased by $9.0 million, or 38.0%, to $32.6 million in 2009 from $23.6 million in 2008. The
increase was primarily due to the additional depreciation on 36 new restaurants in 2009 and 40 new restaurants opened in 2008 and
operated for a full year in 2009.
General and administrative expenses increased by $9.3 million, or 23.0%, to $49.4 million in 2009 from $40.2 million in
2008. General and administrative expenses as a percentage of total revenue decreased to 9.2% in 2009 from 9.5% in 2008. Exclusive
of stock-based compensation, our general and administrative expenses decreased to 8.0% of total revenue in 2009 from 8.3% in 2008.
This decrease was primarily due better leverage of our wage-related expenses.
Preopening costs decreased by $228,000, or 2.9%, to $7.7 million in 2009 from $7.9 million in 2008. In 2009, we incurred
costs of $7.4 million for 36 new company-owned restaurants opened in 2009 and costs of $242,000 for restaurants opening in 2010. In
2008, we opened 31 new company-owned restaurants, incurred costs of approximately $490,000 for restaurants opening in 2009, and
incurred $197,000 related to the acquisition of the nine franchised restaurants located in Nevada. Average preopening cost per
restaurant in 2009 was $220,000. Preopening costs for 2008 averaged $203,000 per restaurant, excluding the eight Don Pablo’s
conversions which averaged $316,000.
Loss on asset disposals and impairment decreased by $155,000 to $1.9 million in 2009 from $2.1 million in 2008. The
expense in 2009 represented the asset impairment of one underperforming restaurant of $237,000, closure costs for one restaurant of
$31,000, and $1.6 million for the write-off of miscellaneous equipment. The expense in 2008 represented the asset impairment of one
relocated restaurant of $395,000 and two underperforming restaurants of $154,000, the closure costs for three relocated restaurants of
$85,000, and $1.4 million for the write-off of miscellaneous equipment.
Investment income increased by $107,000 to $1.1 million in 2009 from $970,000 in 2008. The majority of our investments
were in short-term municipal securities. The increase in investment income was primarily due to higher rates of return on our
investments related to our deferred compensation plan partially offset by lower rates of return on our cash and marketable securities
balances. Cash and marketable securities balances at the end of the year were $53.2 million in 2009 compared to $44.5 million in
2008.
Provision for income taxes increased $2.8 million to $14.8 million in 2009 from $11.9 million in 2008. The effective tax rate
as a percentage of income before taxes decreased to 32.5% in 2009 from 32.8% in 2008. The rate decrease was primarily due to higher
employee related federal tax credits offset partially by a reduction in tax exempt interest income. For 2010, we believe our effective
tax rate will be between 32.5% and 33.5%.
Fiscal Year 2008 Compared to Fiscal Year 2007
Restaurant sales increased by $86.9 million, or 29.7%, to $379.7 million in 2008 from $292.8 million in 2007. The increase
in restaurant sales was due to a $70.6 million increase associated with the opening of 40 new company-owned restaurants in 2008,
which includes eight locations acquired from Avado Brands, Inc. and nine restaurants acquired from our franchisee in Nevada, and the
34 company-owned restaurants opened before 2008 that did not meet the criteria for same-store sales for all, or part, of the year. A
5.9% increase in same-store sales accounted for $16.3 million of the increase in restaurant sales.
Franchise royalties and fees increased by $5.9 million, or 16.0%, to $42.7 million in 2008 from $36.8 million in 2007. The
increase was due primarily to additional royalties collected from the 46 new franchised restaurants that opened in 2008 and a full year
of operations for the 46 franchised restaurants that opened in 2007. Same-store sales for franchised restaurants increased 2.8%.
Cost of sales increased by $23.2 million, or 25.8%, to $113.3 million in 2008 from $90.1 million in 2007 due primarily to
more restaurants being operated in 2008. Cost of sales as a percentage of restaurant sales decreased to 29.8% in 2008 from 30.8% in
2007. The decrease in cost of sales as a percentage of restaurant sales was primarily due to the leverage of food and alcohol costs as a
result of menu price increases and lower chicken wing prices. Chicken wing costs dropped to $1.22 per pound in 2008 from $1.28 per
Source: BUFFALO WILD WINGS INC, 10-K, February 26, 2010 Powered by Morningstar® Document Research℠