Buffalo Wild Wings 2006 Annual Report Download - page 23

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The restaurant sales for company-owned and franchised restaurants are as follows (in thousands of dollars):
Fiscal Years Ended
Dec. 3 1,
2006
Dec. 2 5,
2005
Dec. 2 6,
2004
Company-owned restaurant sales $ 247,150 $ 185,823 $ 152,221
Franchised restaurant sales 621,897 470,667 359,175
Increases in comparable same-store sales are as follows (based on restaurants operating at least fifteen months):
Fiscal Years Ended
Dec. 3 1,
2006
Dec. 2 , 5
2005
Dec. 2 6,
2004
Company-owned same-store sales 10.4% 3.2% 9.7%
Franchised same-store sales 6.1 2.2 7.6
The annual average prices paid per pound for fresh chicken wings are as follows:
Fiscal Years Ended
Dec. 3 1,
2006
Dec. 2 , 5
2005
Dec. 2 6,
2004
Annual average price per pound $ 1.17 $ 1.20 $ 1.39
Fiscal Year 2006 Compared to Fiscal Year 2005
Restaurant sales increased by $61.3 million, or 33.0%, to $247.2 million in 2006 from $185.8 million in 2005. The
increase in restaurant sales was due to a $37.6 million increase associated with the opening of 18 new company-owned
restaurants in 2006 and the 29 company-owned restaurants opened before 2006 that did not meet the criteria for same-store
sales and $18.1 million increase caused by a 10.4% increase in same-store sales, and $5.7 million related to sales in the 53rd
week of fiscal 2006.
Franchise royalties and fees increased by $7.2 million, or 30.0%, to $31.0 million in 2006 from $23.9 million in 2005.
The increase was due primarily to additional royalties collected from the 45 new franchised restaurants that opened in 2006
and a full year of operations for the 47 franchised restaurants that opened in 2005. Same-store sales for franchised restaurants
increased 6.1%. In the 53rd week of fiscal 2006, we recognized $768,000 of franchise royalties and fees.
Cost of sales increased by $17.3 million, or 29.5%, to $76.1 million in 2006 from $58.8 million in 2005 due primarily
to more restaurants being operated in 2006. Cost of sales as a percentage of restaurant sales decreased to 30.8% in 2006 from
31.6% in 2005. The decrease in cost of sales as a percentage of restaurant sales was primarily due to the reduction of chicken
wing prices and the leverage of food costs related to menu price increases. Fresh chicken wings were 24% of cost of goods
sold in 2006 compared to 27% in 2005. This decrease was primarily due to the decrease in average wing costs to $1.17 per
ound in 2006 from $1.20 per pound in 2005 and menu price increases taken in the fall of 2006. p
Labor expenses increased by $17.6 million, or 31.8%, to $73.0 million in 2006 from $55.4 million in 2005 due
primarily to more restaurants being operated in 2006. Labor expenses as a percentage of restaurant sales decreased to 29.5%
in 2006 from 29.8% in 2005. Labor costs for our restaurants were lower than the prior year primarily due to lower health
insurance costs partially offset by higher incentive compensation costs.
Operating expenses increased by $11.4 million, or 38.3%, to $41.1 million in 2006 from $29.7 million in 2005 due
primarily to more restaurants being operated in 2006. Operating expenses as a percentage of restaurant sales increased to
16.6% in 2006 from 16.0% in 2005. The increase in operating expenses as a percentage of restaurant sales was primarily due
to the 0.5% increase in contributions to the advertising fund. Increases in other operating costs, such as credit card fees, repair
and maintenance costs, and supplies were offset by lower insurance and utility costs.
Occupancy expenses increased by $3.4 million, or 23.7%, to $17.5 million in 2006 from $14.2 million in 2005 due
primarily to more restaurants being operated in 2006. Occupancy expenses as a percentage of restaurant sales decreased to
7.1% in 2006 from 7.6% in 2005. The decrease in occupancy expense as a percentage of restaurant sales was primarily due to
etter leverage of costs with the higher sales levels. b
Depreciation increased by $2.7 million, or 23.2%, to $14.5 million in 2006 from $11.8 million in 2005. The increase
was primarily due to the additional depreciation on 18 new restaurants opened in 2006 and 19 restaurants opened in 2005 and
operated for a full year in 2006.
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