UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 4)*
|
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)
|
|
Copies to:
Richard M. Brand
Aly El Hamamsy
Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY 10281
(212) 504-6000
|
|
|
|
|
|
October 5, 2016
|
|
(Date of Event Which Requires Filing of this Statement)
|
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. ☐
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 2 of 11
|
|
1
|
NAME 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
|
NAME 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
|
NAME 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
|
|
|
||
|
260,396
|
|
|
|||
|
|
|
||||
|
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
|
0
|
|
|
|||
|
|
|
||||
|
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
|
260,396
|
|
|
|||
|
|
|
||||
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
|
260,396
|
|
|
|||
|
|
|
||||
|
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
|
NAME 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
|
|
|
||
|
26,009
|
|
|
|||
|
|
|
||||
|
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
|
0
|
|
|
|||
|
|
|
||||
|
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
|
26,009
|
|
|
|||
|
|
|
||||
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
|
26,009
|
|
|
|||
|
|
|
||||
|
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
|
NAME 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
|
|
|
||
|
663,595
|
|
|
|||
|
|
|
||||
|
9
|
SOLE DISPOSITIVE POWER
|
|
|
||
|
0
|
|
|
|||
|
|
|
||||
|
10
|
SHARED DISPOSITIVE POWER
|
|
|
||
|
663,595
|
|
|
|||
|
|
|
||||
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|
|
||
|
663,595
|
|
|
|||
|
|
|
||||
|
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
|
☐
|
||
|
|
|
|
|||
|
|
|
||||
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
||
|
3.6%
|
|
|
|||
|
|
|
||||
|
14
|
TYPE OF REPORTING PERSON
|
|
|
||
|
OO
|
|
|
|||
|
|
|
||||
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 7 of 11
|
|
1
|
NAME 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
|
This amendment No. 4 to Schedule 13D (this “Amendment No. 4”), amends and supplements the Schedule 13D (the “Initial 13D”) filed on July 25, 2016 (the Initial 13D and, as amended and supplemented through the date of this Amendment No. 4, collectively the “Schedule 13D”), by the Reporting Persons, relating to the Common Stock, no par value (the “Shares”), of the Issuer, a Minnesota corporation. Marcato, L.P., Marcato II, L.P., Marcato International Master Fund, Ltd. and Marcato NY LLC are collectively referred to herein as the “Funds.” Capitalized terms not defined in this Amendment No. 4 shall have the meaning ascribed to them in the Initial 13D.
The information set forth in response to each separate Item below shall be deemed to be a response to all Items where such information is relevant. The Schedule 13D is hereby supplementally amended as follows:
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 9 of 11
|
|
Item 3.
|
Source and Amount of Funds or Other Consideration.
|
The net investment costs (including commissions, if any) of the Shares referenced in Item 5 and 6 directly owned by the Funds is approximately $135,506,667. The Shares were purchased with the working capital of the Funds.
|
Item 4.
|
Purpose of Transaction.
|
Attached hereto at Exhibit G is a presentation made by Marcato at the "Sohn San Francisco Investment Conference" on October 5, 2016.
|
Item 5.
|
Interest in Securities of the Issuer
|
(a) – (e) As of the date hereof, (i) Marcato and Mr. McGuire may be deemed to be the beneficial owners of 950,000 Shares (the “Marcato Shares”), constituting approximately 5.2% of the Shares, (ii) Marcato, L.P. may be deemed to be the beneficial owner of 260,396 Shares, constituting approximately 1.4% of the Shares, (iii) Marcato II, L.P. may be deemed to be the beneficial owner of 26,009 Shares, constituting approximately 0.1% of the Shares (iv) Marcato International Master Fund, Ltd. may be deemed to be the beneficial owner of 663,595 Shares, constituting approximately 3.6% of the Shares and (v) Marcato NY LLC may be deemed to be the beneficial owner of 100 Shares (the “Marcato NY Shares”), constituting less than 0.01% of the Shares, each based upon 18,297,886 Shares outstanding as of July 25, 2016, as reported in the Issuer's Quarterly Report on Form 10-Q for the quarter ended June 26, 2016.
Marcato, L.P. may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) 260,396 Shares. Marcato II, L.P. may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) 26,009 Shares. Marcato International Master Fund, Ltd. may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) 663,595 Shares. Marcato NY LLC may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the Marcato NY Shares. Marcato, as the investment adviser of Marcato, L.P., Marcato II, L.P. and Marcato International Master Fund, Ltd., may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the Marcato Shares. Marcato, L.P., as the sole member of Marcato NY LLC, may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the Marcato NY LLC Shares. By virtue of Mr. McGuire’s position as the managing partner of Marcato, Mr. McGuire may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the Marcato Shares and, therefore, Mr. McGuire may be deemed to be the beneficial owner of the Marcato Shares. By virtue of Marcato, L.P.’s position as the sole member of Marcato NY LLC, Marcato, L.P. may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the Marcato NY Shares and, therefore, Marcato, L.P. may be deemed to be the beneficial owner of the Marcato NY Shares.
The transactions by the Reporting Persons in the securities of the Issuer during the past sixty days are set forth in Exhibit E and Exhibit H, including certain portfolio rebalancing transactions among the Funds that do not change the number of shares beneficially owned by the Reporting Persons. Those transactions were effected for the accounts of the Reporting Persons, as further specified in Exhibit E and Exhibit H. Except as set forth in Exhibit E and Exhibit H attached hereto, within the last 60 days, no reportable transactions were effected by any Reporting Person.
The limited partners of (or investors in) each of Marcato, L.P., Marcato II, L.P., and Marcato International Master Fund, Ltd., or their respective subsidiaries or affiliated entities, for which Marcato or its affiliates acts as general partner and/or investment manager have the right to participate in the receipt of dividends from, or proceeds from the sale of, the Shares held for the accounts of their respective funds in accordance with their respective limited partnership interests (or investment percentages) in their respective funds.
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 10 of 11
|
|
Item 7.
|
Material to be Filed as Exhibits.
|
Exhibit A: Joint Filing Agreement*
Exhibit B: Schedule of Transactions in Shares*
Exhibit C: Letter, dated August 17, 2016*
Exhibit D: Presentation, dated August 25, 2016*
Exhibit E: Schedule of Transactions in Shares*
Exhibit F: Joinder Agreement*
Exhibit G: Presentation, dated October 5, 2016
Exhibit H: Schedule of Transactions in Shares
* Previously filed.
|
CUSIP No. 119848109
|
SCHEDULE 13D
|
Page 11 of 11
|
After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: October 6, 2016
|
|
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.
|
Exhibit G
SOHN SAN FRANCISCOOCTOBER 2016
DisclAIMER 1 This presentation (the “Presentation”) has been prepared by Marcato Capital Management LP (“Marcato”), an SEC registered investment advisor based in San Francisco, California. Marcato provides investment advisory services to proprietary private investment funds (collectively, the “Marcato Funds”) that may beneficially own and/or have an economic interest in shares of Buffalo Wild Wings, Inc. (the “Company”). This Presentation is for informational purposes only and should not be construed as investment advice for any person, and should not be relied upon for making any investment decision. The securities or investment ideas listed in this Presentation are not presented in order to suggest or show profitability of any or all transactions. There should be no assumption that an investment in any security identified or described in this Presentation was or will be profitable.The views expressed in this Presentation represent the views and opinions of Marcato and/or certain affiliates and are based on publicly available information and Marcato analyses. Certain financial information and other data used in this Presentation has been derived or obtained from filings made with the Securities and Exchange Commission (“SEC”) by the issuer or other companies that Marcato considers comparable. Marcato has not sought or obtained consent from any third party to use any statements or information indicated in the Presentation as having been obtained or derived from a third party, and the inclusion of such third party statements or information should not be viewed as indicating the support of such third party for the views expressed in this Presentation. While Marcato believes that the information contained in this Presentation is accurate in all material respects, such information has not been independently verified by Marcato, and Marcato disclaims any and all liability as to the completeness or accuracy of the information and for any omissions of material facts. Marcato disclaims any obligation to correct, update or revise this Presentation or to otherwise provide any additional materials to recipients of this Presentation. Neither Marcato nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy, fairness or completeness of the information contained herein and the recipient agrees and acknowledges that it will not rely on any such information. The Marcato Funds are in the business of trading—buying and selling—securities. There may be developments in the future that cause one or more of the Marcato Funds to engage in transactions that change the beneficial and/or economic interest in the Company. The Marcato Funds may buy or sell or otherwise change the form or substance of any of their investments at any time in any manner permitted by law, and expressly disclaims any obligation to notify any recipient of the Presentation of any such changes. This Presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that reflect Marcato’s views with respect to, among other things, future events and financial performance, and actual results may vary materially from the results discussed in this Presentation. Forward-looking statements are subject to various risks and uncertainties and assumptions and there can be no assurance that any idea or assumption contained in this Presentation is, or will be proven, correct. Forward-looking statements should not be regarded as a representation by Marcato that the future plans, estimates or expectations contemplated will ever be achieved. Under no circumstances is this Presentation to be used or considered as an offer to sell or a solicitation of an offer to buy any security, including, without limitation, any interest in any Marcato Fund. Any offer to purchase an interest in a Marcato Fund would only be made at the time a qualified offeree receives the Confidential Explanatory Memorandum of such fund. Any investment in the Marcato Funds is speculative and involves substantial risk, including the risk of losing all or substantially all of such investment.This document is the property of Marcato and may not be published or distributed, in whole or in part, without the express prior written consent of Marcato.
Buffalo Wild Wings (“BWLD”): a growing, distinctive restaurant brand Differentiated concept focused on “wings, beer, and sports”Long history of industry-leading SSS growth ~1,200 units with long-term potential to grow to 1,700 units in US & Canada and 400+ units internationally (75% future unit growth) 2 Consensus Estimates:2017E EPS: ~$6.80 per share2017E EBITDA: ~$350 million Valuation (’17E):P / E: 20.7xEV / EBITDA: 7.7x Ticker: “BWLD”Recent Stock Price: $141 Source: Company filings, CapitalIQ. Market data as of 9/30/16. Capitalization:Market Cap: $2.6 billionEnterprise Value: $2.7 billion
Why we invested in buffalo wild wings Differentiated concept with long runway for growthSSS declines and capital allocation missteps have hurt sharesOpportunity to create substantial shareholder value by:Transitioning to a 90%+ franchised modelImproving “4-wall” profitability and returnsOptimizing capital structure 3
I. Highlights from Marcato’s recent 13-D 4
Multiple has compressed as traffic has slowed and costs continue to rise 5 P / e (NTM) | 2011 – 2016 …once Drove Ev / ebitdA Multiple expansion 22.9x 8.1x Avg.: 9.6x Avg.: 25.9x pricing power best-in-class SSS Growth… Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 2014 2015 ‘16 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 5-yr. Avg.: 5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011 2012 2013 2014 2015 ‘16 Avg.: 21.5% Source: Company filings, CapitalIQ, Bloomberg. Market data as of 9/30/16. 1 …offsetting cost inflation… 2
When growth slowed, BWLD acquired franchised stores for high multiples 6 Make slide TotalAcquisitionExpense $33.7m $43.6m $4.3m $30.5 $205.2m # Units Acquired: 18 18 3 13 54 – – – 2 1 --Existing BWW --Existing R Taco – – – – 4 --BWW under Construction Estimated acquisition cost per restaurant | 2011 – 2016 Avg. Replacement Cost: $2,300 Source: Company filings, Marcato estimates. Franchise rights for Rusty Taco included in purchase price. 2014 calculation assumes full ownership of all restaurants acquired.(1) 2015 acquisition included franchise rights of $99m. BWLD’s franchisee acquisitions in 2015 valued acquired stores ~80% above prior four-year averageand ~50% above replacement cost I would replace the rusty taco box with anAnnotation that shows EBITDA multiple for 2015 18 18 3 15 59
incentive structure rewards growth at any cost 7 Source: Company filings. Cash incentive Program performance metrics Equity incentive Program composition Aggregate Growth Metrics Profitability / Per-Share Metrics Majority of at-risk executive compensation is linked to aggregate growth irrespective of capital deployment
underperformance driven by SSS slowdown and poor capital allocation 8 TSR | 5-year TSR | 1-year Source: Company filings, CapitalIQ, Bloomberg. Market data as of 9/30/16. +138% +164% (27%) (2%) [ ] 10/28/15:SSS & earnings missLarge acquisition to blameGuidance lowered for 2015Shares fell ~17%
Growth in auvs and unit profits mask declining returns on capital deployed BWLD points to “dollar growth”… 9 new unit upfront investment ($000s) Net income | 2021E “4-wall” EBITDA, adj. for rents ($000s) Est. “Cash on cash” returns, adj. for rents (%) At IPO (c. 2003) FY 2015 Source: Company filings, Marcato estimates. Upfront investment includes cash investment plus pre-opening expenses, assuming building is leased. “4-wall” EBITDA and cash on cash return shown as adjusted, assuming an additional 6% of sales charged for building leases on 24% of company stores. Include? Equity becomes negative Average unit volumes ($000s) At IPO (c. 2003) FY 2015 At IPO (c. 2003) FY 2015 At IPO (c. 2003) FY 2015 +2.2x +2.1x +3.1x -925 bps …without explaining greater capital intensity % Buildings Owned % Buildings Owned – ~24% – ~24%
Not all earnings growth is created equal 10 BWLD’s Cost of Capital (~9.5%) High Multiple High ROIC Low ROIC Low Multiple Franchisee acquisitions at premium multiples Non-core brand investments Opening Company-Owned Stores Franchising + High Growth Potentially revise r a a a a r High Earnings Growth Medium Earnings Growth Low Earnings Growth a Franchising + Low Growth Declining ROIC will pressure multiple for any given rate of growth 10
Franchise businesses command higher multiples 11 BWLD’s franchise operation = a high margin royalty stream that grows without capital Restaurant Operator Restaurant Franchisor Contribution Margins Mid-teens [90%+] Earnings Sensitivity to Changes in SSS High Minimal Effect of Cost Inflation Pressures Margins ↑ Franchise Fees Maintenance CapEx High None Unit Growth Capital Intensive Requires No Capital 70+% mix = higher multiplesBWLD is one of few “in the middle”BWLD’s growth would command a premium multiple if it were more highly franchised 2 3 4 1 Source: Company filings, CapitalIQ. Market data as of 9/30/16. EBITDA multiples shown on an “NTM” basis, based on Wall Street consensus estimates. (1) On April 15, 2015, Panera announced that it had made significant progress on its earlier goal of refranchising 50-150 stores in 2015, as well as achieving G&A savings. The ≤ 5% EBITDA growth (’16-’17E) 5-9% EBITDA growth (’16-’17E ) 9+% EBITDA growth (’16-’17E) ↑ Franchise Mix=↑ Margin =↑ ROIC =↑ Multiple >70% FranchisedL: 10.2x M: 13.2x H: 20.2x < 30% FranchisedL: 4.1x M: 8.1x H: 9.6x 30 - 70% FranchisedL: 8.1x M: 8.4x H: 11.5x Company announced an increased share repurchase program of $750m, with $500m to be executed in the remainder of 2015, funded from cash flow and $500m of new debt as well as proceeds from the sale of company-owned stores to franchisees. Panera cited its engagement in constructive dialogue with Luxor Capital Group, LP.
II. Where do we stand? 12
Marcato’s key recommendations to BWLD Improve “4-wall” Ebitda & returns Marcato recommendation: Target 90% mix by 2020; presentation articulates value creation from franchisingBWLD management: Still working with advisors to determine optimal mixOver 2 months have passed since initial discussions; no update since Increase capital allocation discipline Marcato recommendation: Engage operational consultants to prioritize areas for maximizing unit-level profitBWLD management: Announced 20% 4-wall margin target at Analyst Day, no explanation of targeted expense areas, timeline, or plan of actionUnclear whether consultants have been contacted Transition to a 90% franchised model Marcato recommendation: Target appropriate mix of debt and equity, framework for evaluating capital planning decisionsBWLD management: Leveraged buyback announced at Analyst Day (no timeline); potentially busted math“Framework” offered by management is vague, prioritizes growth over ROIC 13 I. B. C. We asked:Optimize cap structureImprove core bizRefranchise Transition to a 90% Franchised Model Improve “4-Wall” Profitability and Returns Optimize Capital Structure II. III. Strategic & financial drivers impact to value ImproveReturns on Capital ReduceCost of Capital CreateEconomic Value + =
Status of marcato’s proposal Improve “4-wall” Ebitda & returns Marcato recommendation: Target 90% mix by 2020; presentation articulates value creation from franchisingBWLD management: Still working with advisors to determine optimal mixOver 2 months have passed since initial discussions; no update since Increase capital allocation discipline Marcato recommendation: Engage operational consultants to prioritize areas for maximizing unit-level profitBWLD management: Announced 20% 4-wall margin target at Analyst Day, no explanation of targeted expense areas, timeline, or plan of actionUnclear whether consultants have been contacted Transition to a 90% franchised model Marcato recommendation: Target appropriate mix of debt and equity, framework for evaluating capital planning decisionsBWLD management: Leveraged buyback announced at Analyst Day (no timeline); potentially busted math“Framework” offered by management is vague, prioritizes growth over ROIC 14 III. B. C. We asked:Optimize cap structureImprove core bizRefranchise Optimize Capital Structure Announced leverage target of 1.5x Debt / EBITDA; total of $375m in authorized share repurchasesNo timeline for reaching target or completing buybacksFocus on gross debt instead of net debt is puzzlingMath does not work: with ~$350m of EBITDA (2017E), current net debt of ~$85m, and interim FCF of ~$170m, BWLD will need to return ~$610m to reach target by year-end 2017No discussion of capital budget for new units or franchisee buyouts
Status of marcato’s proposal (Cont’d) Improve “4-wall” Ebitda & returns Marcato recommendation: Target 90% mix by 2020; presentation articulates value creation from franchisingBWLD management: Still working with advisors to determine optimal mixOver 2 months have passed since initial discussions; no update since Increase capital allocation discipline Marcato recommendation: Engage operational consultants to prioritize areas for maximizing unit-level profitBWLD management: Announced 20% 4-wall margin target at Analyst Day, no explanation of targeted expense areas, timeline, or plan of actionUnclear whether consultants have been contacted Transition to a 90% franchised model Marcato recommendation: Target appropriate mix of debt and equity, framework for evaluating capital planning decisionsBWLD management: Leveraged buyback announced at Analyst Day (no timeline); potentially busted math“Framework” offered by management is vague, prioritizes growth over ROIC 15 II. B. C. We asked:Optimize cap structureImprove core bizRefranchise Improve “4-Wall” Profitability and Returns In June, we encouraged BWLD to engage operations consultantsEstimated “4-wall” margin opportunity of several hundred bpsNo observable plan or outside engagement yet disclosedPer Analyst Day, aspiring to 20% “4-wall” margins (~18.6% LTM)No specific opportunities identified or quantifiedNo timeline for implementation or achievementRecent commentary implies margin “improvement” goals may primarily be result of plan to sell restaurants with below average margins rather than improved profitability of existing portfolio
Status of marcato’s proposal (Cont’d) Improve “4-wall” Ebitda & returns Marcato recommendation: Target 90% mix by 2020; presentation articulates value creation from franchisingBWLD management: Still working with advisors to determine optimal mixOver 2 months have passed since initial discussions; no update since Increase capital allocation discipline Marcato recommendation: Engage operational consultants to prioritize areas for maximizing unit-level profitBWLD management: Announced 20% 4-wall margin target at Analyst Day, no explanation of targeted expense areas, timeline, or plan of actionUnclear whether consultants have been contacted Transition to a 90% franchised model Marcato recommendation: Target appropriate mix of debt and equity, framework for evaluating capital planning decisionsBWLD management: Leveraged buyback announced at Analyst Day (no timeline); potentially busted math“Framework” offered by management is vague, prioritizes growth over ROIC 16 I. B. C. We asked:Optimize cap structureImprove core bizRefranchise Transition to a 90% Franchised Model Management has questioned feasibility of achieving 90% mix by 2020We have engaged multiple industry-leading refranchising advisors who have reinforced feasibility and market attractiveness:Market is deep, mature, and eager to absorb refranchised unitsBWLD is one of the most desirable casual brands in the market Franchisee operating companies & institutional buyers are interested in assets of this type and are able to transact at favorable multiplesFranchisees are incentivized to be better operators and to fuel new unit growthOur timeline (90% mix by 2020) is viewed by experts as conservative
Marcato has engaged The Cypress Group for industry-specific guidance 17 The Cypress Group has led the multi-unit franchise industry in M&A transactions, including refranchising programs, for more than 25 yearsCypress has successfully executed refranchising and reorganization efforts for:Wendy’s International (~1,000 units refranchised)TGI Fridays / Sentinel Partners (~175 units refranchised)Burger King (~ 600 restaurants restructured or refranchised)Cypress has deep experience in working with all segments of the multi-unit restaurant industry, including BWLD
Don’t take marcato’s word for it 18 “We are highly confident BWLD could refranchise their owned stores at a multiple of 6.0x or higher and estimate a refranchising process to 90% could take as few as 18-24 months” – Cypress Group
Cypress feels BWLD refranchising would be well received 19 Franchisee market is strong and has grown significantly in the last decadeMore than 150 companies with >$50m in revenue and purchasing power in excess of $100m per companyHundreds of additional entities with individual BWLD market acquisition capacity of $30m to $100mInstitutional capital attracted to franchise-related investments (decades of strong returns, proven operating model, “Amazon-proof”) Current franchise M&A environment is at historic highs for transaction sizes and valuationsRefranchising can enhance BWLD’s brand and operating model as well as maximize future system growth by ceding development to franchiseesCypress has expertise in maximizing current value, franchisee operational selection, and commitments for future growth and reimaging
BWLD Units should receive attractive multiples based on best in class metrics Source: Company filings, Marcato estimates. Multiple ranges based on management disclosures and Cypress Group input (TGI Fridays only). Unit growth estimates shown net of closures, based on Wall Street research. # of StoresRefranchised 1,139 ~175 479 380 Program Duration 3.5 yrs. ~1 yr. ~5 yrs. ~6 yrs. Brand Strength / Differentiation SSS Growth(’06 – ‘15 Avg.) Ease of Operations Future Unit Growth(’15A – ’17E) EBITDA Multiples Received ~5-6x ~5-6x ~5-6x ~6x 20 ~6-7x ~2-5 yrs. 664 Executed During Credit Crisis 1.2% NA (0.5%) 0.3% 5.4% “4-Wall” Margins(Pre-Refranchising) ~14% ~11% ~12% ~14% ~19% “4-Wall” Margins(Pre-Refranchising) 15.1%(’13) 11.4%(’13) 12.5%(’06) 13.6%(’06) 18.6%(’15) ~0% ~0% ~0% ~2% ~10%+ Year Commenced 2013 2014 2007 2007 NA
Pool of interested buyers nearly 30x the size of BWLD stores to be sold 21 Size of potential buyers | 2015 Revenues ($bn) maximum allocation per investment, and 35% equity / TEV ratio per investment, based on input from Cypress. BWLD franchised system revenues based on 2015 company-owned AUVs, multiplied by the expected number of units to be refranchised by 2021. ~150 most likely to be interested “The universe of potential buyers is highly acquisitive and scaled: a BWLD refranchising would be an attractive and financeable investment for both existing franchisee operating companies and institutional buyers with proven track records in the industry” – Cypress Group Represents 3.7% of the addressable buyer pool Source: Franchise Times. Note: Franchisees from Top 200 likely to be interested shown as determined by Cypress Group. Smaller Franchisee Operating Companies assumes 300 such groups averaging ~$25m in revenues each. Private Equity and Family Offices based on $69.5bn of total fund size among top 100 firms seeking exposure to restaurants/consumer space, assuming 8%
BWLD’s refranchising is a small portion of the total franchised universe 22 Domestic sales of franchise systems| 2014/15 Revenues ($bn) Source: GE Capital 2015 Chain Restaurant Industry Review. Franchise system revenues based on 2014 sales per unit, by concept. BWLD franchised system revenues based on 2015 company-owned AUVs, multiplied by the expected number of units to be refranchised by 2021. BWLD’s multi-year refranchising would represent just 1.4% of the estimated $153bn of domestic franchise system sales in 2014 for the top 100 chains Domestic Franchised Units 664 131,898
franchise industry Bank Lending is 35x AMOUNT REQUIRED TO FINANCE BWLD REFRANCHSING 23 Domestic sales of franchise systems| 2014/15 Revenues ($bn) Source: Cypress Group. Assumptions and calculations for assumed gross proceeds to BWLD detailed on p. 38 of Marcato’s 13-D/A filed 8/17/16. “There is more-than-ample lending capacity to finance a BWLD refranchising” – Cypress Group Estimated current franchisee bank debt outstanding Top 14 Franchise-Focused Lenders Add’lGeneralist Lenders
Industry diligence confirms a refranchising is highly feasible Improve “4-wall” Ebitda & returns Marcato recommendation: Target 90% mix by 2020; presentation articulates value creation from franchisingBWLD management: Still working with advisors to determine optimal mixOver 2 months have passed since initial discussions; no update since Increase capital allocation discipline Marcato recommendation: Engage operational consultants to prioritize areas for maximizing unit-level profitBWLD management: Announced 20% 4-wall margin target at Analyst Day, no explanation of targeted expense areas, timeline, or plan of actionUnclear whether consultants have been contacted Transition to a 90% franchised model Marcato recommendation: Target appropriate mix of debt and equity, framework for evaluating capital planning decisionsBWLD management: Leveraged buyback announced at Analyst Day (no timeline); potentially busted math“Framework” offered by management is vague, prioritizes growth over ROIC 24 B. C. We asked:Optimize cap structureImprove core bizRefranchise Marcato has engaged multiple industry experts, including dedicated investment bankers who specialize in refranchising M&AExperts are consistently confident in BWLD’s ability to refranchise:Strong market appetite for refranchised restaurantsBWLD’s brand is in unique demand for its growth and differentiationDeep and experienced universe of potential buyersAbundant lending capacity, especially for large-scale transactionsSale multiples for refranchised stores likely to be favorableTiming expectation of 4-5 years is potentially conservative
We believe BWLD’s stock price could rise by more than 2-3x under marcato’s proposal Potential value creation for buffalo wild wings| 2015A – 2021E Source: Company filings, Bloomberg, Marcato estimates. Market data as of 9/30/16. Status quo case assumes no refranchising and no recapitalization. 49% 54% 63% 72% 81% 90% 90% 8.1x 13.0x Franchise Mix EV/EBITDA(NTM) 26.9x 20.3x Implied P/E 18.3 15.7 13.7 11.8 8.8 7.0 6.6 Basic Share Count 25 Status Quo Current / LTM 2016E 2017E 2018E 2019E 2020E 2021E High: $311 @ 10.0x EBITDA Mid: $265 @ 8.5x EBITDA Low: $218 @ 7.0x EBITDA 90% Franchised High: $458 @ 14.5x EBITDA Mid: $402 @ 13.0x EBITDA Low: $346 @ 11.5x EBITDA +82% +60% Δ Current - ’21 (25%) (64%) Current: $141 7.9% 9.2% 9.8% 11.1% 14.5% 21.1% 26.9% EBIT Margin +242%
Exhibit H
TRANSACTIONS
Exhibit E to the Schedule 13D is incorporated herein by reference. Together with Exhibit E, the following table sets forth all transactions with respect to Shares effected in the last sixty days by the Reporting Persons or on behalf of the Reporting Persons in respect of the Shares, inclusive of any transactions effected through 4:00 p.m., New York City time, on October 5, 2016. Except as otherwise noted below, all such transactions were purchases or sales of Shares effected in the open market, and the table includes commissions paid in per share prices.
|
Fund
|
Trade Date
|
Transaction
|
Shares
Bought (Sold)
|
Unit Proceeds/Cost
|
Security
|
|
Marcato, L.P.
|
10/03/2016
|
Buy
|
4,656
|
$140.74
|
Common
Stock*
|
|
Marcato II, L.P.
|
10/03/2016
|
Buy
|
2,544
|
$140.74
|
Common
Stock*
|
|
Marcato International Master Fund, Ltd.
|
10/03/2016
|
Sell
|
(7,200)
|
$140.74
|
Common
Stock*
|
*All transactions noted by an * are rebalancing transactions.