- PizzaRev is the company's fast-casual pizza chain.
- The news confirms my opinion that the chain is a potential wild card not priced into Buffalo Wild Wings stock.
- The expectation was for this second location to open during this month, but the comments caught me by surprise in a good way.
Buffalo Wild Wings (NASDAQ:BWLD) opened its first PizzaRev location in Minnesota. On August 21, the company announced the opening of its second location also in Minnesota. The parent beer-and-wing company is a full-service restaurant, while PizzaRev is fast-casual. As the release states,
"Guests will "craft their own" 11" artisanal-quality pizzas loaded with 30+ fresh, premium ingredients of their choosing, and served piping hot from a custom-built, 9,600 pound, open-flame, stone-bed oven in less than three minutes, for just $7.95."
Perhaps more interestingly, executive vice president Kathy Benning stated (with my emphasis added),
"We're really excited to open our second location of PizzaRev, bringing this fresh approach to the pizza category to more Minnesotans - and soon, to guests across the country."
"Soon" and "across the country" is music to my ears as a Buffalo Wild Wings long who firmly believes the PizzaRev wild card isn't priced in the stock at all. In fact, I believe the stock is undervalued without even factoring in any future benefits from PizzaRev. While the chain currently adds no material benefit, long term I think that could change, and Buffalo Wild Wings management knows how to successfully build out a chain.
So what would a successful PizzaRev chain bring to Buffalo Wild Wings in terms of valuation? It's hard to say, especially with no publicly traded fast-casual pizza chains that I'm aware of to compare to. I must note, though, that Chipotle Mexican Grill (NYSE:CMG) is launching its own similar concept called Pizzeria Locale. Given Chipotle's credibility with success, it would seem there is certainly a potential nationwide market for such.
In a best-case scenario, a pizza fast-casual chain like PizzaRev could take on a life of its own and become a major chain. Consider at one point that Chipotle was a tiny chain owned by McDonald's (NYSE:MCD). Now, Chipotle has a market cap of over $20 billion.
With Buffalo Wild Wings' much more modest $2.7 billion market cap at the time of this writing, PizzaRev doesn't need to be the next Chipotle by any stretch. Even a tiny success could add materially to the top and bottom line of Buffalo Wild Wings. At this early stage, I'm not going to even try to guess what those numbers will ultimately be, but I continue to be confident that the valuation will be something significantly north of the zero valuation the market currently seems to be assigning it.