Scream as loud as you want, no one will hear you - at Buffalo Wild Wings

We ran the numbers - several times, in fact. If your kids are under the age of 14 or so, they will never agree on the number of televisions on the wall. 35? 37? IDK guys, I haven’t checked myself - why don’t you try again while Dad has a Tall Wild Herd Kolsch (tm) (exclusively available at Buffalo Wild Wings, for a mere four dollars a glass).

This inexplicable quantitative discrepancy is just the internal version of a wider external conflict. Have you actually priced out fast food lately? Chick-fil-a for the family, you’re talking sixty bucks. What if I told you the BWW Classic Chicken Sandwich (tm), a magnificent slab of hand-breaded chicken on a challah roll, is a mere $9.50? Would you like some Blazin’ (tm) sauce on that? Yes, yes I would. Would you care to guess the price of a flacid, challah-less Original Chicken Sandwich Meal at the Chick-fil-a drive through? $9.85. Owned. The nightmare is over, at Buffalo Wild Wings.

There is a gutter bum knife fight right now in the QSR world (you call it fast food, because you are a vulgar prole who can’t even into market segments, hence the “fast food” to begin with). Everyone is sucking air - no one can hire staff, which means the job sucks, which means they can’t hire, which means peak rush throughput sucks, which means they don’t have money for staff. The low-end casual dining segment (your Red Lobsters, your BDubs, and so on) somewhat externalizes this relationship via tipping - staff are directly incentivized to show up for BOGO Wing Tuesday because in a sense they have equity in the operation via a direct cut of revenue. Is this ancapi-syndicalism? There is a reason why there are no BDubs in France. There is a reason why European real interest rates are still negative. There is a reason why Spanish youth unemployment is like 30%. These things are related - American supremacy in beer, wings, and sports promotes the same underlying economic dynamism you get from the Shenzhen integrated industrial base, but without the apartment towers made of cornstarch. No tipping, no growth.

(NB: The “get one” component of BOGO was quietly devalued to “get one [half off]” during the bat flu era, but in a Domitian-esque move of long term prudence was recently revised to the proper “get one [free]”, for Blazin’ (tm) Rewards members. This drives the cost per wing to about 75 cents, which is dangerously close to what Costco charges for the raw ingredients.)

If you compare something like McDonald’s to something like Darden Restaurants (parent of the Olive Garden), you’ll see McD’s operating margin is vastly higher, because they are mostly an IP and logistics concern, vs an operating franchise. An actual McDonald’s franchise is lucky to hit 5% operating margin, versus Big Mac’s 30%. Darden manages 10%, because they combine what would be backend licensing with frontend operation.

Arguably the developer-owner-operator model is less capital efficient during high-growth times than the franchise model, but that is not where we find ourselves - instead, with limited aggregate growth, every chain is ruthlessly probing ecological niches in the American gut with bizarre experiments like the “Bird Dawg” (tm), a chicken tendie in a hot dog bun (!?). Franchises, bluntly, would not stand for it - only a vertically integrated chicken merchant can afford such long shots.

The long term trend for fast food is downwards. Without a price advantage, they are left purely exploiting ultra high time preference on both the supply and demand side - employees who couldn’t hack it at Red Robin, and customers one nugget away from an aggravated assault (are “no cash bail” policies bullish or bearish for MCD? Discuss). The feedback loop will kill the concept, unless you have some structural advantage like In-n-out (menu simplicity) or Chick-fil-a (blessed by God) that allows you to pay an above-market efficiency wage. At one point, during the “fight for $15”, it was gleefully hypothesized by Ben Shapiro types that automation would eliminate labor altogether, the drive thru would become an automat, and the SOCIALISTS would become unemployed. But in a positive interest rate environment, there’s no way to justify deploying that much concentrated capital to serve drive thru volumes at a 5% margin - you can do better buying T-bills, and with far less hassle.

American casual dining chains have been trying to square the circle between Fast Food (drive thru, a fully pipelined preparation time measured in seconds, low-end labor) and Casual Dining (sit-down, prep time in minutes, mid-tier labor) for decades. Most BDubs and Chilis have a dedicated takeout entrance, and theoretically the extra volume afforded by this business makes the operation as a whole more efficient, as you can better saturate kitchen utilization and revenue per square foot. Applebee’s is on the cusp of cutting out the “waiter” altogether, with tablet based ordering and payment systems. The downfall has been the inability to hit drive thru levels of latency, and unwillingness to restructure the physical footprint (both in terms of location and layout) to enable this. But it’s not technically infeasible with the right menu restrictions and kitchen rearrangements - plenty of restaurants manage fried chicken in a QSR format.

The future of Buffalo Wild Wings resembles other quintessentially American businesses that manage to sell the same basic product to two different customer bases at two different prices - you can dine Spirit Air style through the drive thru, or roll Centurion Lounge style in the pit as you enjoy The Game. Either way, you get the same beef-tallow fried, keto-friendly wings. We won’t miss McDonald’s.