UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
  
  FORM
10-Q
  
  QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF
 THE
SECURITIES EXCHANGE ACT OF 1934
  For
the quarterly period ended June 28, 2009
  Commission
File No. 000-24743
  
  BUFFALO
WILD WINGS, INC.
 (Exact
name of registrant as specified in its charter)
  
  Minnesota
                No.
      31-1455915(State
      or Other Jurisdiction of
                  Incorporation
      or Organization)
                (IRS
      Employer
                  Identification
      No.)
  5500
Wayzata Boulevard, Suite 1600, Minneapolis, MN 55416
 (Address
of Principal Executive Offices) (Zip Code)
  (952)
593-9943
 (Registrant’s
Telephone Number, Including Area Code)
 
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.    YES  x    NO   ̈
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).    YES   ̈    NO   ̈
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “accelerated filer”, “large accelerated filer”, and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 Large Accelerated
Filer   ̈    Accelerated
Filer  x    Non-Accelerated
Filer   ̈    Smaller
Reporting Company   ̈
  Indicate
by check mark whether the registrant is a shell company (as defined in Exchange
Act Rule 12b-2 of the Exchange Act).
    YES   ̈    NO  x
  The
number of shares outstanding of the registrant’s common stock as of July 31,
2009:  18,023,536 shares.
  
 
 
 TABLE
OF CONTENTS
  PagePART
      I – FINANCIAL INFORMATIONItem 1.
                Financial
      Statements
                3Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                11Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                19Item
      4.
                Controls
      and Procedures
                19PART
      II – OTHER INFORMATIONItem
      1.
                Legal
      Proceedings
                20Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                20Item
      6.
                Exhibits
                20Signatures
                21Exhibit
      Index
                22
  2
 PART
I. FINANCIAL INFORMATION
  ITEM
1. FINANCIAL STATEMENTS
  BUFFALO
WILD WINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 (Dollar
amounts in thousands)
 (unaudited)
  June
      28,
                                                        2009
                                                      
                                                      
                                                      December
      28,
                                                        2008AssetsCurrent
      assets:Cash
      and cash equivalents
                                                      
                                                      $
                                                      11,139
                                                      
                                                      
                                                      $
                                                      8,347Marketable
      securities
                                                      
                                                      
                                                      37,867
                                                      
                                                      
                                                      
                                                      36,157Accounts
      receivable – franchisees, net of allowance of $25
                                                      
                                                      
                                                      881
                                                      
                                                      
                                                      
                                                      895Accounts
      receivable – other
                                                      
                                                      
                                                      6,746
                                                      
                                                      
                                                      
                                                      5,759Inventory
                                                      
                                                      
                                                      3,359
                                                      
                                                      
                                                      
                                                      3,104Prepaid
      expenses
                                                      
                                                      
                                                      1,905
                                                      
                                                      
                                                      
                                                      3,294Refundable
      income taxes
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,611Deferred
      income taxes
                                                      
                                                      
                                                      2,741
                                                      
                                                      
                                                      
                                                      1,731Total
      current assets
                                                      
                                                      
                                                      64,638
                                                      
                                                      
                                                      
                                                      60,898Property
      and equipment, net
                                                      
                                                      
                                                      168,171
                                                      
                                                      
                                                      
                                                      154,432Restricted
      cash
                                                      
                                                      
                                                      10,707
                                                      
                                                      
                                                      
                                                      7,670Other
      assets
                                                      
                                                      
                                                      9,645
                                                      
                                                      
                                                      
                                                      9,846Goodwill
                                                      
                                                      
                                                      10,972
                                                      
                                                      
                                                      
                                                      10,972Total
      assets
                                                      
                                                      $
                                                      264,133
                                                      
                                                      
                                                      
                                                      243,818Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Unearned
      franchise fees
                                                      
                                                      $
                                                      2,680
                                                      
                                                      
                                                      
                                                      2,514Income
      tax payable
                                                      
                                                      
                                                      253
                                                      
                                                      
                                                      
                                                      —Accounts
      payable
                                                      
                                                      
                                                      12,778
                                                      
                                                      
                                                      
                                                      16,691Accrued
      compensation and benefits
                                                      
                                                      
                                                      14,245
                                                      
                                                      
                                                      
                                                      14,155Accrued
      expenses
                                                      
                                                      
                                                      5,606
                                                      
                                                      
                                                      
                                                      7,116Current
      portion of deferred lease credits
                                                      
                                                      
                                                      173
                                                      
                                                      
                                                      
                                                      56Total
      current liabilities
                                                      
                                                      
                                                      35,735
                                                      
                                                      
                                                      
                                                      40,532Long-term
      liabilities:Other
      liabilities
                                                      
                                                      
                                                      1,350
                                                      
                                                      
                                                      
                                                      1,270Marketing
      fund payables
                                                      
                                                      
                                                      10,707
                                                      
                                                      
                                                      
                                                      7,670Deferred
      income taxes
                                                      
                                                      
                                                      11,565
                                                      
                                                      
                                                      
                                                      8,916Deferred
      lease credits, net of current portion
                                                      
                                                      
                                                      14,799
                                                      
                                                      
                                                      
                                                      13,837Total
      liabilities
                                                      
                                                      
                                                      74,156
                                                      
                                                      
                                                      
                                                      72,225Commitments
      and contingencies (note 10)Stockholders’
      equity:Undesignated
      stock, 1,000,000 shares authorized; none issued
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —Common
      stock, no par value. Authorized 44,000,000 shares; issued and outstanding
      18,023,450 and 17,887,271 respectively
                                                      
                                                      
                                                      89,241
                                                      
                                                      
                                                      
                                                      86,318Retained
      earnings
                                                      
                                                      
                                                      100,736
                                                      
                                                      
                                                      
                                                      85,275Total
      stockholders’ equity
                                                      
                                                      
                                                      189,977
                                                      
                                                      
                                                      
                                                      171,593Total
      liabilities and stockholders’ equity
                                                      
                                                      $
                                                      264,133
                                                      
                                                      
                                                      
                                                      243,818
  See
accompanying notes to consolidated financial statements
 3
 BUFFALO
WILD WINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF EARNINGS
 (Dollar
and share amounts in thousands except per share data)
 (unaudited)
  Three months
      ended
                                                    
                                                    
                                                    Six months
      endedJune
      28,
                                                      2009
                                                    
                                                    
                                                    June
      29,
                                                      2008
                                                    
                                                    
                                                    June
      28,
                                                      2009
                                                    
                                                    
                                                    June
      29,
                                                      2008Revenue:Restaurant
      sales
                                                    
                                                    $
                                                    117,763
                                                    
                                                    
                                                    
                                                    87,462
                                                    
                                                    
                                                    
                                                    237,187
                                                    
                                                    
                                                    
                                                    174,358Franchise
      royalties and fees
                                                    
                                                    
                                                    11,859
                                                    
                                                    
                                                    
                                                    10,406
                                                    
                                                    
                                                    
                                                    23,990
                                                    
                                                    
                                                    
                                                    20,772Total
      revenue
                                                    
                                                    
                                                    129,622
                                                    
                                                    
                                                    
                                                    97,868
                                                    
                                                    
                                                    
                                                    261,177
                                                    
                                                    
                                                    
                                                    195,130Costs
      and expenses:Restaurant
      operating costs:Cost
      of sales
                                                    
                                                    
                                                    35,922
                                                    
                                                    
                                                    
                                                    26,248
                                                    
                                                    
                                                    
                                                    72,130
                                                    
                                                    
                                                    
                                                    52,663Labor
                                                    
                                                    
                                                    36,056
                                                    
                                                    
                                                    
                                                    27,020
                                                    
                                                    
                                                    
                                                    71,605
                                                    
                                                    
                                                    
                                                    52,878Operating
                                                    
                                                    
                                                    17,966
                                                    
                                                    
                                                    
                                                    13,857
                                                    
                                                    
                                                    
                                                    35,953
                                                    
                                                    
                                                    
                                                    27,132Occupancy
                                                    
                                                    
                                                    7,924
                                                    
                                                    
                                                    
                                                    5,902
                                                    
                                                    
                                                    
                                                    15,518
                                                    
                                                    
                                                    
                                                    11,599Depreciation
      and amortization
                                                    
                                                    
                                                    7,888
                                                    
                                                    
                                                    
                                                    5,510
                                                    
                                                    
                                                    
                                                    15,383
                                                    
                                                    
                                                    
                                                    10,749General
      and administrative (1)
                                                    
                                                    
                                                    11,773
                                                    
                                                    
                                                    
                                                    9,047
                                                    
                                                    
                                                    
                                                    23,193
                                                    
                                                    
                                                    
                                                    18,388Preopening
                                                    
                                                    
                                                    1,673
                                                    
                                                    
                                                    
                                                    1,758
                                                    
                                                    
                                                    
                                                    4,082
                                                    
                                                    
                                                    
                                                    2,943Loss
      on asset disposals and impairment
                                                    
                                                    
                                                    272
                                                    
                                                    
                                                    
                                                    385
                                                    
                                                    
                                                    
                                                    447
                                                    
                                                    
                                                    
                                                    1,138Total
      costs and expenses
                                                    
                                                    
                                                    119,474
                                                    
                                                    
                                                    
                                                    89,727
                                                    
                                                    
                                                    
                                                    238,311
                                                    
                                                    
                                                    
                                                    177,490Income
      from operations
                                                    
                                                    
                                                    10,148
                                                    
                                                    
                                                    
                                                    8,141
                                                    
                                                    
                                                    
                                                    22,866
                                                    
                                                    
                                                    
                                                    17,640Investment
      income
                                                    
                                                    
                                                    413
                                                    
                                                    
                                                    
                                                    400
                                                    
                                                    
                                                    
                                                    489
                                                    
                                                    
                                                    
                                                    832Earnings
      before income taxes
                                                    
                                                    
                                                    10,561
                                                    
                                                    
                                                    
                                                    8,541
                                                    
                                                    
                                                    
                                                    23,355
                                                    
                                                    
                                                    
                                                    18,472Income
      tax expense
                                                    
                                                    
                                                    3,586
                                                    
                                                    
                                                    
                                                    2,926
                                                    
                                                    
                                                    
                                                    7,894
                                                    
                                                    
                                                    
                                                    6,332Net
      earnings
                                                    
                                                    $
                                                    6,975
                                                    
                                                    
                                                    
                                                    5,615
                                                    
                                                    
                                                    
                                                    15,461
                                                    
                                                    
                                                    
                                                    12,140Earnings per common share –
      basic
                                                    
                                                    $
                                                    0.39
                                                    
                                                    
                                                    
                                                    0.32
                                                    
                                                    
                                                    
                                                    0.86
                                                    
                                                    
                                                    
                                                    0.68Earnings
      per common share – diluted
                                                    
                                                    
                                                    0.39
                                                    
                                                    
                                                    
                                                    0.31
                                                    
                                                    
                                                    
                                                    0.86
                                                    
                                                    
                                                    
                                                    0.68Weighted
      average shares outstanding – basic
                                                    
                                                    
                                                    17,999
                                                    
                                                    
                                                    
                                                    17,810
                                                    
                                                    
                                                    
                                                    17,990
                                                    
                                                    
                                                    
                                                    17,788Weighted
      average shares outstanding – diluted
                                                    
                                                    
                                                    18,070
                                                    
                                                    
                                                    
                                                    17,906
                                                    
                                                    
                                                    
                                                    18,052
                                                    
                                                    
                                                    
                                                    17,893
  (1)
Includes stock-based compensation of $1,689, $904, $2,490, and $1,924,
respectively
 
 See
accompanying notes to consolidated financial statements
 
 4
 
 BUFFALO
WILD WINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Dollar
amounts in thousands)
 (unaudited)
  Six months
      endedJune
      28,
                                                        2009
                                                      
                                                      
                                                      June
      29,
                                                        2008Cash
      flows from operating activities:Net
      earnings
                                                      
                                                      $
                                                      15,461
                                                      
                                                      
                                                      
                                                      12,140Adjustments
      to reconcile net earnings to cash provided by operations:Depreciation
                                                      
                                                      
                                                      15,077
                                                      
                                                      
                                                      
                                                      10,749Amortization
                                                      
                                                      
                                                      306
                                                      
                                                      
                                                      
                                                      36Loss
      on asset disposals and impairment
                                                      
                                                      
                                                      447
                                                      
                                                      
                                                      
                                                      1,138Deferred
      lease credits
                                                      
                                                      
                                                      840
                                                      
                                                      
                                                      
                                                      1,113Deferred
      income taxes
                                                      
                                                      
                                                      1,639
                                                      
                                                      
                                                      
                                                      2,386Stock-based
      compensation
                                                      
                                                      
                                                      2,490
                                                      
                                                      
                                                      
                                                      1,924Excess
      tax benefit from the exercise of stock options
                                                      
                                                      
                                                      (31
                                                      )
                                                      
                                                      
                                                      (302
                                                      )Change
      in operating assets and liabilities:Trading
      securities
                                                      
                                                      
                                                      (1,204
                                                      )
                                                      
                                                      
                                                      (76
                                                      )Accounts
      receivable
                                                      
                                                      
                                                      (734
                                                      )
                                                      
                                                      
                                                      182Inventory
                                                      
                                                      
                                                      (255
                                                      )
                                                      
                                                      
                                                      (155
                                                      )Prepaid
      expenses
                                                      
                                                      
                                                      1,389
                                                      
                                                      
                                                      
                                                      1,098Other
      assets
                                                      
                                                      
                                                      (105
                                                      )
                                                      
                                                      
                                                      (79
                                                      )Unearned
      franchise fees
                                                      
                                                      
                                                      166
                                                      
                                                      
                                                      
                                                      89Accounts
      payable
                                                      
                                                      
                                                      (61
                                                      )
                                                      
                                                      
                                                      376Income
      taxes
                                                      
                                                      
                                                      1,895
                                                      
                                                      
                                                      
                                                      960Accrued
      expenses
                                                      
                                                      
                                                      20
                                                      
                                                      
                                                      
                                                      (928
                                                      )Net
      cash provided by operating activities
                                                      
                                                      
                                                      37,340
                                                      
                                                      
                                                      
                                                      30,651Cash
      flows from investing activities:Acquisition
      of property and equipment
                                                      
                                                      
                                                      (33,115
                                                      )
                                                      
                                                      
                                                      (24,643
                                                      )Purchase
      of marketable securities
                                                      
                                                      
                                                      (25,284
                                                      )
                                                      
                                                      
                                                      (68,578
                                                      )Proceeds
      of marketable securities
                                                      
                                                      
                                                      24,778
                                                      
                                                      
                                                      
                                                      69,852Net
      cash used in investing activities
                                                      
                                                      
                                                      (33,621
                                                      )
                                                      
                                                      
                                                      (23,369
                                                      )Cash
      flows from financing activities:Issuance
      of common stock
                                                      
                                                      
                                                      555
                                                      
                                                      
                                                      
                                                      562Tax
      payments for restricted stock units
                                                      
                                                      
                                                      (1,513
                                                      )
                                                      
                                                      
                                                      (989
                                                      )Excess
      tax benefit from the exercise of stock options
                                                      
                                                      
                                                      31
                                                      
                                                      
                                                      
                                                      302Net
      cash used in financing activities
                                                      
                                                      
                                                      (927
                                                      )
                                                      
                                                      
                                                      (125
                                                      )Net
      increase in cash and cash equivalents
                                                      
                                                      
                                                      2,792
                                                      
                                                      
                                                      
                                                      7,157Cash
      and cash equivalents at beginning of period
                                                      
                                                      
                                                      8,347
                                                      
                                                      
                                                      
                                                      1,521Cash
      and cash equivalents at end of period
                                                      
                                                      $
                                                      11,139
                                                      
                                                      
                                                      
                                                      8,678
  See
accompanying notes to consolidated financial statements
 
 5
 
 BUFFALO
WILD WINGS, INC. AND SUBSIDIARIES
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  FOR
THE THREE MONTHS AND SIX MONTHS ENDED JUNE 28, 2009 AND JUNE 29,
2008
 (Dollar
amounts in thousands except share and per share data)
  (1)
              Basis
      of Financial Statement Presentation
  The
consolidated financial statements as of June 28, 2009 and December 28, 2008, and
for the three-month and six-month periods ended June 28, 2009 and June 29, 2008,
have been prepared by Buffalo Wild Wings, Inc. pursuant to the rules and
regulations of the Securities and Exchange Commission (the “SEC”). The financial
information for the three-month and six-month periods ended June 28, 2009 and
June 29, 2008 is unaudited, but, in the opinion of management, reflects all
adjustments and accruals necessary for a fair presentation of the financial
position, results of operations, and cash flows for the interim periods. In
preparing the accompanying financial statements, we have evaluated subsequent
events through August 5, 2009, the issuance date of this Quarterly Report on
Form 10-Q. We have determined that no events or transactions have occurred
subsequent to June 28, 2009 which require recognition or disclosure in the
financial statements.
  References
in the remainder of this document to “Buffalo Wild Wings,” “we,” “us” and “our”
refer to the business of Buffalo Wild Wings, Inc. and our
subsidiaries.
 
 The
financial information as of December 28, 2008 is derived from our audited
consolidated financial statements and notes thereto for the fiscal year ended
December 28, 2008, which is included in Item 8 in the Fiscal 2008 Annual Report
on Form 10-K and should be read in conjunction with such financial
statements.
  The
results of operations for the three-month and six-month periods ended June 28,
2009 are not necessarily indicative of the results of operations that may be
achieved for the entire year ending December 27, 2009.
  (2)
              Summary
      of Significant Accounting Policies
  (a)
                Inventories
  Inventories
are stated at the lower of cost or market. Cost is determined by the first-in,
first-out (FIFO) method.
  We
purchase our products from a number of suppliers and believe there are
alternative suppliers. We have minimum purchase commitments from some of our
vendors, but the terms of the contracts and nature of the products are such that
our purchase requirements do not create a market risk. The primary food product
used by our restaurants and our franchised restaurants is fresh chicken wings.
Fresh chicken wings are purchased by us at market prices. Material increases in
fresh chicken wing costs may adversely affect our operating results. For the
three-month periods ended June 28, 2009 and June 29, 2008, fresh chicken wings
were 25.5% and 20.4%, respectively, of restaurant cost of sales. For the
six-month periods ended June 28, 2009 and June 29, 2008, fresh chicken wings
were 24.5% and 21.5%, respectively, of restaurant cost of sales.
  (b)
                Fair
      Values of Financial
Instruments
 
 Fair
value is defined as the price at which an asset could be exchanged in a current
transaction between knowledgeable, willing parties or the amount that would be
paid to transfer a liability to a new obligor, not the amount that would be paid
to settle the liability with the creditor. Where available, fair value is based
on observable market prices or parameters or derived from such prices or
parameters. Where observable prices or inputs are not available, valuation
models are applied. These valuation techniques involve some level of management
estimation and judgment, the degree of which is dependent on the price
transparency for the instruments or market and the instruments’
complexity.
  Assets
recorded at fair value in our consolidated balance sheets are categorized based
upon the level of judgment associated with the inputs used to measure their fair
value. Hierarchical levels, defined by SFAS No. 157, “Fair Value Measurements,”
and directly related to the amount of subjectivity associated with the inputs to
fair valuation of these assets and liabilities, are as follows:
  6
 Level 1 –
Inputs were unadjusted, quoted prices in active markets for identical assets or
liabilities at the measurement date.
 
 Level 2 –
Inputs (other than quoted prices included in Level 1) were either directly or
indirectly observable for the asset or liability through correlation with market
data at the measurement date and for the duration of the instrument’s
anticipated life.
 
 Level 3 –
Inputs reflected management’s best estimate of what market participants would
use in pricing the asset or liability at the measurement date. Consideration was
given to the risk inherent in the valuation technique and the risk inherent in
the inputs to the model.
  Determining
which hierarchical level an asset falls within requires significant
judgment. We will evaluate our hierarchy disclosures each quarter. The
following table summarizes the financial instruments measured at fair value in
our consolidated balance sheet as of June 28, 2009:
  Fair
      Value MeasurementsLevel
      1
                                    
                                    Level
      2
                                    
                                    Level
      3
                                    
                                    TotalAssetsShort-term
      investments(1)
                                    
                                    $
                                    2,771
                                    
                                    
                                    $
                                    22,485
                                    
                                    
                                    $
                                    —
                                    
                                    
                                    $
                                    25,256
  (1)
                We
      classified a portion of our marketable securities as available-for-sale
      and trading securities which were reported at fair market value, using the
      “market approach” valuation technique. The “market approach” valuation
      method used prices and other relevant information observable in market
      transactions involving identical or comparable assets. Our trading
      securities are valued using theLevel
      1 approach. Our available-for-sale marketable securities are valued using
      a Level 2 approach.
 
 SFAS No.
157 requires separate disclosure of assets measured at fair value on a recurring
basis, as documented above, from those measured at fair value on a nonrecurring
basis. As of June 28, 2009, no assets or liabilities were measured at fair
value on a nonrecurring basis.
 
 (c)
                New
      Accounting
Pronouncements
  In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
141R, “Business Combinations.” SFAS No. 141R provides companies with principles
and requirements on how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, liabilities assumed, and any
noncontrolling interest in the acquiree as well as the recognition and
measurement of goodwill acquired in a business combination. SFAS No. 141R also
requires certain disclosures to enable users of the financial statements to
evaluate the nature and financial effects of the business combination.
Acquisition costs associated with the business combination will generally be
expensed as incurred. SFAS No. 141R is effective for business combinations
occurring in fiscal years beginning after December 15, 2008. We will apply SFAS
No. 141R to all future business combinations.
 
 In June
2008, the FASB issued FASB Staff Position (FSP) EITF 03-6-1, “Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities.” FSP EITF 03-6-1 provides that unvested share-based
payment awards that contain nonforfeitable rights to dividends are participating
securities and shall be included in the computation of earnings per share
pursuant to the two-class method. The two-class method is an earnings allocation
method for computing earnings per share when an entity’s capital structure
includes either two or more classes of common stock or common stock and
participating securities. FSP EITF 03-6-1 is effective for fiscal years
beginning after December 15, 2008. The adoption of FSP EITF 03-6-1 did not
have an impact on our consolidated financial statements.
 
 7
 (3)
                Marketable
      Securities
 
 Marketable
securities were comprised of the following:
  As
      ofJune
      28,
                                2009
                              
                              
                              December
      28,
                                2008Held-to-maturity:Municipal
      securities
                              
                              $
                              12,611
                              
                              
                              $
                              17,254Available-for-sale:Municipal
      securities
                              
                              
                              22,485
                              
                              
                              
                              17,336Trading:Mutual
      funds
                              
                              
                              2,771
                              
                              
                              
                              1,567Total
                              
                              $
                              37,867
                              
                              
                              $
                              36,157
 
 All
held-to-maturity debt securities are due within one year and had aggregate fair
values of $12,618 and $17,278 as of June 28, 2009 and December 28, 2008,
respectively. Trading securities represents investments held for future needs of
a non-qualified deferred compensation plan.
 
 (4)
              Property and
      Equipment
  Property
and equipment consisted of the following:
  As
      ofJune
      28,
                                      2009
                                    
                                    
                                    December
      28,
                                      2008Construction
      in-process
                                    
                                    $
                                    6,015
                                    
                                    
                                    $
                                    10,703Buildings
                                    
                                    
                                    13,237
                                    
                                    
                                    
                                    6,639Furniture,
      fixtures, and equipment
                                    
                                    
                                    106,697
                                    
                                    
                                    
                                    95,460Leasehold
      improvements
                                    
                                    
                                    136,815
                                    
                                    
                                    
                                    122,796262,764
                                    
                                    
                                    
                                    235,598Less
      accumulated depreciation
                                    
                                    
                                    (94,593
                                    )
                                    
                                    
                                    (81,166
                                    )$
                                    168,171
                                    
                                    
                                    $
                                    154,432
  (5)
              Derivative
      Instruments
  We use
commodities derivatives to manage our exposure to commodity price fluctuations.
We enter into options and future contracts to reduce our risk of natural gas
price fluctuations. These derivatives do not qualify for hedge accounting and
changes in fair value are included in current net income. These changes are
classified as a component of restaurant operating expenses. All changes in the
fair value of these contracts are recorded in earnings in the period in which
they occur. Net gains (losses) of ($253) and $33 were recognized in the first
six months of 2009 and 2008, respectively. The fair value of our derivative
instruments as of June 28, 2009 and December 28, 2008 was $176 and $461,
respectively, and is a liability in accrued expenses in the accompanying
consolidated balance sheets. As of June 28, 2009, the maximum length of time
over which we are hedging our exposure to the variability in future cash flows
related to the purchase of natural gas is ten months. As of June 28, 2008 and
December 28, 2008 we were party to natural gas swap contracts with notional
values of $2,413 and $5,797, respectively.
  (6)
              Stockholders’
      Equity
  (a)
                Stock
      Options
  We have
3.9 million shares of common stock reserved for issuance under the Equity
Incentive Plan (the plan) for employees, officers, and directors. The option
price for shares issued under this plan is to be not less than the fair market
value on the date of grant with respect to incentive and nonqualified stock
options. Incentive stock options become exercisable in four equal installments
from the date of the grant and have a contractual life of seven to ten years.
Nonqualified stock options issued pursuant to the plan have varying vesting
periods from immediately to one year and have a contractual life of seven to ten
years. In 2008, our shareholders approved amendments to the plan which extended
the plan to 2018. We issue new shares of common stock upon exercise of stock
options. Option activity is summarized for the six months ended June 28, 2009 as
follows:
  8
 Number
                              of
      shares
                            
                            
                            Weighted
                              average
                              exercise price
                            
                            
                            Average
      Remaining Contractual Life (years)
                            
                            
                            Aggregate
      Intrinsic ValueOutstanding,
      December 28, 2008
                            
                            
                            146,548
                            
                            
                            $
                            13.71
                            
                            
                            
                            4.5
                            
                            
                            $
                            1,627Granted
                            
                            
                            56,302
                            
                            
                            
                            30.90Exercised
                            
                            
                            (1,235
                            )
                            
                            
                            13.24Cancelled
                            
                            
                            (610
                            )
                            
                            
                            10.45Outstanding,
      June 28, 2009
                            
                            
                            201,005
                            
                            
                            $
                            18.54
                            
                            
                            
                            4.7
                            
                            
                            $
                            2,806Exercisable,
      June 28, 2009
                            
                            
                            102,349
                            
                            
                            
                            9.08
                            
                            
                            
                            3.4
                            
                            
                            
                            2,397
  The
aggregate intrinsic value in the table above is before applicable income taxes,
based on our closing stock price of $32.50 as of the last business day of the
quarter ended June 28, 2009, which would have been received by the optionees had
all options been exercised on that date. As of June 28, 2009, total unrecognized
stock-based compensation expense related to nonvested stock options was
approximately $1,121, which is expected to be recognized over a weighted average
period of approximately 1.8 years. During the six-month periods ended June 28,
2009 and June 29, 2008, the total intrinsic value of stock options exercised was
$26 and $867, respectively. During the six-month periods ended June 28, 2009 and
June 29, 2008, the total fair value of options vested was $5 and $24,
respectively.
 
 The plan
has 775,381 shares available for grant as of June 28, 2009.
  (b)
                Restricted
      Stock Units
  We have a
stock-based performance plan under which restricted stock units are granted
annually at the discretion of the Board of Directors. For restricted stock units
granted prior to 2008, units vest annually upon achievement of performance
targets. The performance targets for these restricted stock units are annual
income targets set by our Board of Directors at the beginning of the year. We
record compensation expense for these restricted stock units if vesting is
probable, based on the achievement of the performance targets. These restricted
stock units may vest one-third annually over a ten-year period as determined by
meeting performance targets. However, the second one-third of the restricted
stock units is not subject to vesting until the first one-third has vested and
the final one-third is not subject to vesting until the first two-thirds of the
award have vested.
 
 In 2008,
we granted restricted stock units subject to cumulative one-year, two-year, and
three-year net earnings targets. The number of units that vest each year is
based on performance against those cumulative targets. These restricted stock
units are subject to forfeiture if they have not vested at the end of the
three-year period. Stock-based compensation is recognized for the expected
number of units vesting at the end of each annual period. Restricted stock units
expected to vest at the end of the first year are fully expensed in the first
year. Restricted stock units expected to vest at the end of the second year are
expensed during the first and second years. Restricted stock units expected to
vest at the end of the third year are expensed over all three
years.
 
 In 2009,
we granted restricted stock units subject to three-year cliff vesting and a
cumulative three-year earnings target. The number of units which vest at the end
of the three-year period is based on performance against the target. These
restricted stock units are subject to forfeiture if they have not vested at the
end of the three-year period. Stock-based compensation is recognized for the
expected number of units vesting at the end of the period and is expensed over
the three-year period.
 
 For each
grant, restricted stock units meeting the performance criteria will vest as of
the end of our fiscal year. The distribution of vested restricted stock units as
common stock typically occurs in March of the following year. The common stock
is issued to participants net of the number of shares needed for the required
minimum employee withholding taxes. We issue new shares of common stock upon the
disbursement of restricted stock units. Restricted stock units are contingently
issuable shares, and the activity for fiscal 2009 is as follows:
 
 9
 
 Number
                          of
      shares
                        
                        
                        Weighted
                          average
                          grant
      date
                          fair
      valueOutstanding,
      December 28, 2008
                        
                        
                        284,845
                        
                        
                        $
                        20.19Granted
                        
                        
                        340,124
                        
                        
                        
                        33.34Vested
                        
                        
                        (10,440
                        )
                        
                        
                        34.48Cancelled
                        
                        
                        (2,386
                        )
                        
                        
                        21.28Outstanding,
      June 28, 2009
                        
                        
                        612,143
                        
                        
                        $
                        27.25
 
 As of
June 28, 2009, the total stock-based compensation expense related to nonvested
awards not yet recognized was $7,547, which is expected to be recognized over a
weighted average period of 1.4 years. During the six-month periods ended June
28, 2009 and June 29, 2008, the total fair value of shares vested was $360 and
$420, respectively. The weighted average grant date fair value of restricted
stock units granted during the six months ended June 29, 2008 was
$23.10.
  (c)
                Employee
      Stock Purchase Plan
  We have
reserved 600,000 shares of common stock for issuance under the Employee Stock
Purchase Plan (ESPP). The ESPP is available to substantially all employees
subject to employment eligibility requirements. Participants may purchase our
common stock at 85% of the beginning or ending closing price, whichever is
lower, for each six-month period ending in May and November. During the first
six months of 2009 and 2008, we issued 29,183 and 17,974 shares of common stock
under the plan. As of June 28, 2009, we have 359,892 shares available for future
issuance under the ESPP.
 
 (7)
              Earnings Per
      Share
  The
following is a reconciliation of basic and fully diluted earnings per share for
the three-month and six-month periods ended June 28, 2009 and June 29,
2008:
 
 Three
      months ended June 28, 2009Earnings
                                          (numerator)
                                        
                                        
                                        Shares
                                          (denominator)
                                        
                                        
                                        Per-share
                                          amountNet
      earnings
                                        
                                        $
                                        6,975Earnings
      per common share – basic
                                        
                                        
                                        6,975
                                        
                                        
                                        
                                        17,999,324
                                        
                                        
                                        $
                                        0.39Effect
      of dilutive securities – stock options
                                        
                                        
                                        —
                                        
                                        
                                        
                                        70,487Earnings
      per common share – diluted
                                        
                                        $
                                        6,975
                                        
                                        
                                        
                                        18,069,811
                                        
                                        
                                        $
                                        0.39
  Three
      months ended June 29, 2008Earnings
                                            (numerator)
                                          
                                          
                                          Shares
                                            (denominator)
                                          
                                          
                                          Per-share
                                            amountNet
      earnings
                                          
                                          $
                                          5,615Earnings
      per common share – basic
                                          
                                          
                                          5,615
                                          
                                          
                                          
                                          17,810,391
                                          
                                          
                                          $
                                          0.32Effect
      of dilutive securities – stock options
                                          
                                          
                                          —
                                          
                                          
                                          
                                          96,085Earnings
      per common share – diluted
                                          
                                          $
                                          5,615
                                          
                                          
                                          
                                          17,906,476
                                          
                                          
                                          $
                                          0.31
  Six
      months ended June 28, 2009Earnings
                                          (numerator)
                                        
                                        
                                        Shares
                                          (denominator)
                                        
                                        
                                        Per-share
                                          amountNet
      earnings
                                        
                                        $
                                        15,461Earnings
      per common share – basic
                                        
                                        
                                        15,461
                                        
                                        
                                        
                                        17,989,591
                                        
                                        
                                        $
                                        0.86Effect
      of dilutive securities – stock options
                                        
                                        
                                        —
                                        
                                        
                                        
                                        62,758Earnings
      per common share – diluted
                                        
                                        $
                                        15,461
                                        
                                        
                                        
                                        18,052,349
                                        
                                        
                                        $
                                        0.86
  10
 Six
      months ended June 29, 2008Earnings
                                          (numerator)
                                        
                                        
                                        Shares
                                          (denominator)
                                        
                                        
                                        Per-share
                                          amountNet
      earnings
                                        
                                        $
                                        12,140Earnings
      per common share – basic
                                        
                                        
                                        12,140
                                        
                                        
                                        
                                        17,788,361
                                        
                                        
                                        $
                                        0.68Effect
      of dilutive securities – stock options
                                        
                                        
                                        —
                                        
                                        
                                        
                                        104,341Earnings
      per common share – diluted
                                        
                                        $
                                        12,140
                                        
                                        
                                        
                                        17,892,702
                                        
                                        
                                        $
                                        0.68
 
 Shares
excluded from the fully diluted calculation because the effect on net earnings
per share would have been antidilutive were 658,445 shares and 501,430 shares
for the three-month periods ended June 28, 2009 and June 29, 2008, respectively,
and 705,659 shares and 486,382 shares for the six-month periods ended June 28,
2009 and June 29, 2008, respectively.
  (8)
              Supplemental Disclosures of
      Cash Flow Information
  Six months
      endedJune
      28,
                          2009
                        
                        
                        June
      29,
                          2008Cash
      paid during the period for:Income
      taxes
                        
                        $
                        4,434
                        
                        
                        
                        3,023Noncash
      financing and investing transactions:Property
      and equipment not yet paid for
                        
                        
                        (3,852
                        )
                        
                        
                        5,811
  (9)
              Income Taxes
  We
adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes” (FIN 48), on January 1, 2007. The total
unrecognized tax benefits reflected on our consolidated balance sheet as of June
28, 2009, and December 28, 2008 were $502 and $442 respectively. The increase
was due to additions based on tax positions related to the current year. We
recognize potential accrued interest and penalties related to unrecognized tax
benefits in income tax expense. Interest and penalties related to unrecognized
tax benefits totaled $96 at June 28, 2009. Included in the balance at June 28,
2009 and December 28, 2008, are unrecognized tax benefits of $326 and $287,
respectively, which if recognized, would affect the annual effective tax rate.
We do not anticipate any significant change to the total unrecognized tax
benefits prior to June 27, 2010.
 
 The
Internal Revenue Service completed their examination of our 2005 U.S. Income Tax
Return in 2008. No changes to the tax return were reported. With few exceptions,
we are no longer subject to state income tax examinations for years before
2005.
  (10)
              Contingencies
  We are
involved in various legal actions arising in the ordinary course of business. In
the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on our consolidated financial position, results
of operations, or cash flows.
 
 ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes included in Item 1 of Part 1 of this Quarterly
Report and the audited consolidated financial statements and related notes and
Management’s Discussion and Analysis of Financial Condition and Results of
Operations contained in our Annual Report on Form 10-K for the fiscal year ended
December 28, 2008. This discussion and analysis contains certain statements that
are not historical facts, including, among others, those relating to our
anticipated financial performance for 2009, cash requirements, and our expected
store openings. Such statements are forward-looking and speak only as of the
date on which they are made. There are risks and uncertainties including, but
not limited to, those discussed in this Form 10-Q under Item 2 of Part I as well
as in Item 1A of Part I of the fiscal 2008 Form 10-K.
  11
 Critical
Accounting Policies and Use of Estimates
  Our most
critical accounting policies, which are those that require significant judgment,
include: valuation of long-lived assets and store closing reserves, goodwill,
vendor allowances, revenue recognition from franchise operations, self-insurance
liability, and stock-based compensation. An in-depth description of these can be
found in our Annual Report on Form 10-K for the fiscal year ended December 28,
2008. There have been no changes to those policies during this
period.
  Overview
  As of
June 28, 2009, we owned and operated 215 company-owned and franchised an
additional 383 Buffalo Wild Wings® Grill
& Bar restaurants in 40 states. Of the 598 system-wide restaurants, 85 are
located in Ohio. The restaurants have elements of both the quick casual and
casual dining styles, both of which are part of a growing industry. Our
long-term focus is to grow to a national chain of over 1,000 locations in the
United States, continuing the strategy of developing both company-owned and
franchised restaurants.
  Our
growth targets for 2009 are 15% unit growth, 25% revenue growth, and 20% to 25%
net earnings growth. Our growth and success depend on several factors and
trends. First, we continue to monitor and react to changes in our cost of goods
sold. The cost of goods sold is difficult to predict, as it has ranged from
29.3% to 30.5% of restaurant sales per quarter in our 2008 fiscal year and
year-to-date in 2009. We are working to counteract the volatility of chicken
wing prices with the introduction of popular new menu items, effective marketing
promotions, focused efforts on food costs and waste, and menu price increases.
We will continue to monitor the cost of fresh chicken wings, as it can
significantly change our cost of sales and cash flow from company-owned
restaurants. We are also exploring purchasing strategies to lessen the severity
of cost increases and fluctuations. We are currently purchasing chicken wings at
market prices. If a satisfactory long-term price agreement for chicken wings
were to arise, we would consider locking in prices to reduce our price
volatility.
  A second
factor is our success in new markets. There are inherent risks in opening new
restaurants, especially in new markets, for various reasons, including the lack
of experience, logistical support, and brand awareness. These factors may result
in lower than anticipated sales and cash flow for new restaurants in new
markets. In 2009, we plan to develop the majority of our company-owned
restaurants primarily in markets where we currently have either company-owned or
franchised restaurants. We believe this development focus, together with our
focus on our new restaurant opening procedures, will help mitigate the overall
risk associated with opening restaurants in new markets.
 
 Third, we
will continue our focus on trends in company-owned and franchised same-store
sales as an indicator of the continued acceptance of our concept by consumers.
We also review the overall trend in average weekly sales as an indicator of our
ability to increase the sales volume and, therefore, cash flow per location. We
remain committed to high quality operations and guest hospitality.
 
 Our
revenue is generated by:
 
 •
              Sales
      at our company-owned restaurants, which were 91% of total revenue in the
      second quarter of 2009. Food and nonalcoholic beverages accounted for 77%
      of restaurant sales. The remaining 23% of restaurant sales was from
      alcoholic beverages. The menu item with the highest sales volume is
      chicken wings at 20% of total restaurant
sales.
  •
              Royalties
      and franchise fees received from our
  franchisees.
  We
generate cash from the operation of company-owned restaurants and from franchise
royalties and fees. We highlight the specific costs associated with the on-going
operation of our company-owned restaurants in the consolidated statement of
earnings under “Restaurant operating costs.” Nearly all of our depreciation
expense relates to assets used by our company-owned restaurants. Preopening
costs are those costs associated with opening new company-owned restaurants and
will vary quarterly based on the number of new locations opened and under
construction. Loss on asset disposals and impairment expense is related to
company-owned restaurants and includes the impairment of assets due to a
relocation and the write-down of miscellaneous assets. Certain other expenses,
such as general and administrative, relate to both company-owned and franchising
operations.
  We
operate on a 52 or 53-week fiscal year ending on the last Sunday in December.
Both of the second quarters of 2009 and 2008 consisted of thirteen
weeks.
  12
 Quarterly
Results of Operations
  Our
operating results for the periods indicated are expressed below as a percentage
of total revenue, except for the components of restaurant operating costs, which
are expressed as a percentage of restaurant sales. The information for each
three-month and six-month period is unaudited, and we have prepared it on the
same basis as the audited financial statements. In the opinion of management,
all necessary adjustments, consisting only of normal recurring adjustments, have
been included to present fairly the unaudited quarterly results.
  Quarterly
and annual operating results may fluctuate significantly as a result of a
variety of factors, including increases or decreases in same-store sales,
changes in commodity prices, the timing and number of new restaurant openings
and related expenses, asset impairment charges, store closing charges, general
economic conditions, stock-based compensation, and seasonal fluctuations. As a
result, our quarterly results of operations are not necessarily indicative of
the results that may be achieved for any future period.
  Three
      months ended
                                                    
                                                    
                                                    Six
      months endedJune
      28,
                                                      2009
                                                    
                                                    
                                                    June
      29,
                                                      2008
                                                    
                                                    
                                                    June
      28,
                                                      2009
                                                    
                                                    
                                                    June
      29,
                                                      2008Revenue:Restaurant
      sales
                                                    
                                                    
                                                    90.9
                                                    %
                                                    
                                                    
                                                    89.4
                                                    %
                                                    
                                                    
                                                    90.8
                                                    %
                                                    
                                                    
                                                    89.4
                                                    %Franchising
      royalties and fees
                                                    
                                                    
                                                    9.1
                                                    
                                                    
                                                    
                                                    10.6
                                                    
                                                    
                                                    
                                                    9.2
                                                    
                                                    
                                                    
                                                    10.6Total
      revenue
                                                    
                                                    
                                                    100.0
                                                    
                                                    
                                                    
                                                    100.0
                                                    
                                                    
                                                    
                                                    100.0
                                                    
                                                    
                                                    
                                                    100.0Costs
      and expenses:Restaurant
      operating costs:Cost
      of sales
                                                    
                                                    
                                                    30.5
                                                    
                                                    
                                                    
                                                    30.0
                                                    
                                                    
                                                    
                                                    30.4
                                                    
                                                    
                                                    
                                                    30.2Labor
                                                    
                                                    
                                                    30.6
                                                    
                                                    
                                                    
                                                    30.9
                                                    
                                                    
                                                    
                                                    30.2
                                                    
                                                    
                                                    
                                                    30.3Operating
                                                    
                                                    
                                                    15.3
                                                    
                                                    
                                                    
                                                    15.8
                                                    
                                                    
                                                    
                                                    15.2
                                                    
                                                    
                                                    
                                                    15.6Occupancy
                                                    
                                                    
                                                    6.7
                                                    
                                                    
                                                    
                                                    6.7
                                                    
                                                    
                                                    
                                                    6.5
                                                    
                                                    
                                                    
                                                    6.7Depreciation
      and amortization
                                                    
                                                    
                                                    6.1
                                                    
                                                    
                                                    
                                                    5.6
                                                    
                                                    
                                                    
                                                    5.9
                                                    
                                                    
                                                    
                                                    5.5General
      and administrative
                                                    
                                                    
                                                    9.1
                                                    
                                                    
                                                    
                                                    9.2
                                                    
                                                    
                                                    
                                                    8.9
                                                    
                                                    
                                                    
                                                    9.4Preopening
                                                    
                                                    
                                                    1.3
                                                    
                                                    
                                                    
                                                    1.8
                                                    
                                                    
                                                    
                                                    1.6
                                                    
                                                    
                                                    
                                                    1.5Loss
      on asset disposals and impairment
                                                    
                                                    
                                                    0.2
                                                    
                                                    
                                                    
                                                    0.4
                                                    
                                                    
                                                    
                                                    0.2
                                                    
                                                    
                                                    
                                                    0.6Total
      costs and expenses
                                                    
                                                    
                                                    92.2
                                                    
                                                    
                                                    
                                                    91.7
                                                    
                                                    
                                                    
                                                    91.2
                                                    
                                                    
                                                    
                                                    91.0Income
      from operations
                                                    
                                                    
                                                    7.8
                                                    
                                                    
                                                    
                                                    8.3
                                                    
                                                    
                                                    
                                                    8.8
                                                    
                                                    
                                                    
                                                    9.0Investment
      income
                                                    
                                                    
                                                    0.3
                                                    
                                                    
                                                    
                                                    0.4
                                                    
                                                    
                                                    
                                                    0.2
                                                    
                                                    
                                                    
                                                    0.4Earnings
      before income taxes
                                                    
                                                    
                                                    8.1
                                                    
                                                    
                                                    
                                                    8.7
                                                    
                                                    
                                                    
                                                    8.9
                                                    
                                                    
                                                    
                                                    9.5Income
      tax expense
                                                    
                                                    
                                                    2.8
                                                    
                                                    
                                                    
                                                    3.0
                                                    
                                                    
                                                    
                                                    3.0
                                                    
                                                    
                                                    
                                                    3.2Net
      earnings
                                                    
                                                    
                                                    5.4
                                                    
                                                    
                                                    
                                                    5.7
                                                    
                                                    
                                                    
                                                    5.9
                                                    
                                                    
                                                    
                                                    6.2
 
 The
number of company-owned and franchised restaurants open are as
follows:
  As
      ofJune
      28,
                          2009
                        
                        
                        June
      29,
                          2008Company-owned
      restaurants
                        
                        
                        215
                        
                        
                        
                        169Franchised
      restaurants
                        
                        
                        383
                        
                        
                        
                        346
  The
restaurant sales for company-owned and franchised restaurants are as follows
(amounts in thousands):
  Three months
      ended
                        
                        
                        Six months
      endedJune
      28,
                          2009
                        
                        
                        June
      29,
                          2008
                        
                        
                        June
      28,
                          2009
                        
                        
                        June
      29,
                          2008Company-owned
      restaurant sales
                        
                        $
                        117,763
                        
                        
                        $
                        87,462
                        
                        
                        $
                        237,187
                        
                        
                        $
                        174,358Franchised
      restaurant sales
                        
                        
                        238,490
                        
                        
                        
                        206,718
                        
                        
                        
                        480,607
                        
                        
                        
                        413,606
  13
 Increases
in comparable same-store sales are as follows (based on restaurants operating at
least fifteen months):
  Three months ended
                        
                        
                        Six months endedJune
      28,
                          2009
                        
                        
                        June
      29,
                          2008
                        
                        
                        June
      28,
                          2009
                        
                        
                        June
      29,
                          2008Company-owned
      same-store sales
                        
                        
                        2.8
                        %
                        
                        
                        8.3
                        %
                        
                        
                        4.6
                        %
                        
                        
                        6.1
                        %Franchised
      same-store sales
                        
                        
                        3.7
                        
                        
                        
                        4.5
                        
                        
                        
                        4.9
                        
                        
                        
                        3.3
  The
quarterly average prices paid per pound for fresh chicken wings are as
follows:
  Three months ended
                      
                      
                      Six months endedJune
      28,
                        2009
                      
                      
                      June
      29,
                        2008
                      
                      
                      June
      28,
                        2009
                      
                      
                      June
      29,
                        2008Average
      price per pound
                      
                      $
                      1.69
                      
                      
                      
                      1.17
                      
                      
                      
                      1.66
                      
                      
                      
                      1.25
  Results
of Operations for the Three Months Ended June 28, 2009 and June 29,
2008
  Restaurant
sales increased by $30.3 million, or 34.6%, to $117.8 million in 2009 from $87.5
million in 2008. The increase in restaurant sales was due to a $27.8 million
increase associated with 19 new company-owned restaurants that opened in 2009, 9
stores acquired from our franchisee in Nevada in 2008, and 32 company-owned
restaurants opened before 2009 that did not meet the criteria for same-store
sales for all or part of the three-month period and $2.5 million related to a
2.8% increase in same-store sales.
  Franchise
royalties and fees increased by $1.5 million, or 14.0%, to $11.9 million in 2009
from $10.4 million in 2008. The increase was primarily due to additional
royalties collected from 22 new franchised restaurants that opened in 2009 and
29 franchised restaurants that opened in the last six months of 2008. Same-store
sales for franchised restaurants increased 3.7% in 2009.
  Cost of
sales increased by $9.7 million, or 36.9%, to $35.9 million in 2009 from $26.2
million in 2008 due primarily to more restaurants being operated in 2009. Cost
of sales as a percentage of restaurant sales increased to 30.5% in 2009 from
30.0% in 2008. The increase in cost of sales as a percentage of restaurant sales
was primarily due to higher fresh chicken wing prices partially offset by menu
mix changes. The steady shift from traditional wings to boneless wings also
lowered our cost of goods percentage. Traditional wings accounted for 20% of our
restaurant sales for the second quarter of 2009, down from 22% in the second
quarter of 2008. Boneless wings, which are a better margin item than traditional
wings, increased to 19% of sales, from 16% in 2008. For the second quarter of
2009, wing prices averaged $1.69 per pound which was a 44.4% increase over the
same period in 2008.
  Labor
expenses increased by $9.0 million, or 33.4%, to $36.1 million in 2009 from
$27.0 million in 2008 due primarily to more restaurants being operated in 2009.
Labor expenses as a percentage of restaurant sales decreased to 30.6% in 2009
from 30.9% in 2008. The decrease in labor expenses as a percentage of restaurant
sales was primarily due to lower hourly labor partially offset by higher
workers’ compensation costs.
  Operating
expenses increased by $4.1 million, or 29.7%, to $18.0 million in 2009 from
$13.9 million in 2008 due primarily to more restaurants being operated in 2009.
Operating expenses as a percentage of restaurant sales decreased to 15.3% in
2009 from 15.8% in 2008. The decrease in operating expenses as a percentage of
restaurant sales is primarily due to lower natural gas charges.
  Occupancy
expenses increased by $2.0 million, or 34.3%, to $7.9 million in 2009 from $5.9
million in 2008 due primarily to more restaurants being operated in 2009.
Occupancy expenses as a percentage of restaurant sales remained consistent at
6.7% in 2009 and 2008.
  Depreciation
and amortization increased by $2.4 million, or 43.2%, to $7.9 million in 2009
from $5.5 million in 2008. The increase was primarily due to the additional
depreciation on 19 new restaurants opened in 2009 and the 22 new restaurants
that opened in the last six months of 2008.
  General
and administrative expenses increased by $2.7 million, or 30.1%, to $11.8
million in 2009 from $9.0 million in 2008 primarily due to additional headcount
and higher incentive compensation costs and event-related costs. General and
administrative expenses as a percentage of total revenue decreased to 9.1% in
2009 from 9.2% in 2008. Exclusive of stock-based compensation, we reduced our
general and administrative expenses as a percentage of revenue to 7.8% from 8.3%
due to better leverage of our wage-related expenses against higher
revenue.
  14
 Preopening
costs decreased by $85,000, to $1.7 million in 2009 from $1.8 million in 2008.
In 2009, we incurred costs of $1.5 million for nine new company-owned
restaurants opened in the second quarter of 2009 and costs of $143,000 for
restaurants that will open in the second half of 2009. In 2008, we incurred
costs of $988,000 for five new company-owned restaurants opened in the second
quarter of 2008 and costs of $674,000 for restaurants that opened in the second
half of 2008. In 2009, we expect average preopening costs per restaurant to be
$230,000.
  Loss on
asset disposals and impairment decreased by $113,000 to $272,000 in 2009 from
$385,000 in 2008. In 2009, the loss was related to the write-off of
miscellaneous equipment. In 2008, the loss was related to HDTV upgrades and
write-off of miscellaneous equipment.
  Investment
income increased by $13,000 to $413,000 in 2009 from $400,000 in 2008. The
increase was primarily due to gains on investments held for a deferred
compensation plan partially offset by decreases in interest income due to lower
interest rates and lower cash and marketable securities balances. Cash and
marketable securities balances at the end of the quarter totaled $49.0 million
in 2009 compared to $74.0 million at the end of the second quarter of 2008. The
change in cash and marketable securities balances was primarily due to the
acquisition of nine Buffalo Wild Wings franchised restaurants located in Las
Vegas, Nevada during the third quarter of 2008.
  Provision
for income taxes increased $660,000 to $3.6 million in 2009 from $2.9 million in
2008. The effective tax rate as a percentage of income before taxes decreased to
34.0% in 2009 from 34.3% in 2008. The 2009 income tax rate was lower due to an
increase in employer tax credits and a decrease in state taxes which were
partially offset by a decrease in tax exempt interest income. For 2009, we
believe our effective tax rate will be approximately 34%.
  Results
of Operations for the Six Months Ended June 28, 2009 and June 29,
2008
  Restaurant
sales increased by $62.8 million, or 36.0%, to $237.2 million in 2009 from
$174.4 million in 2008. The increase in restaurant sales was due to a $55.0
million increase associated with 19 new company-owned restaurants that opened in
2009, 9 stores acquired from our franchisee in Nevada in 2008, and 46
company-owned restaurants opened before 2009 that did not meet the criteria for
same-store sales for all or part of the six-month period and $7.8 million
related to a 4.6% increase in same-store sales.
  Franchise
royalties and fees increased by $3.2 million, or 15.5%, to $24.0 million in 2009
from $20.8 million in 2008. The increase was primarily due to additional
royalties collected from 22 new franchised restaurants that opened in 2009 and
29 franchised restaurants that opened in the last six months of 2008. Same-store
sales for franchised restaurants increased 4.9% in 2009.
  Cost of
sales increased by $19.5 million, or 37.0%, to $72.1 million in 2009 from $52.7
million in 2008 due primarily to more restaurants being operated in 2009. Cost
of sales as a percentage of restaurant sales increased to 30.4% in 2009 from
30.2% in 2008. The increase in cost of sales as a percentage of restaurant sales
was primarily due to higher fresh chicken wing prices partially offset by menu
mix changes. The steady shift from traditional wings to boneless wings also
lowered our cost of goods percentage. Traditional wings accounted for 20% of our
restaurant sales for the first six months of 2009, down from 22% in the first
six months of 2008. Boneless wings, which are a better margin item than
traditional wings, increased to 19% of sales in 2009, from 15% in 2008. For the
first half of 2009, wing prices averaged $1.66 per pound which was a 32.8%
increase over the same period in 2008.
  Labor
expenses increased by $18.7 million, or 35.4%, to $71.6 million in 2009 from
$52.9 million in 2008 due primarily to more restaurants being operated in 2009.
Labor expenses as a percentage of restaurant sales decreased to 30.2% in 2009
from 30.3% in 2008. The decrease in labor expenses as a percentage of restaurant
sales was primarily due to lower hourly and management labor costs partially
offset by higher store bonuses and health insurance costs.
  Operating
expenses increased by $8.8 million, or 32.5%, to 36.0 million in 2009 from $27.1
million in 2008 due primarily to more restaurants being operated in 2009.
Operating expenses as a percentage of restaurant sales decreased to 15.2% in
2009 from 15.6% in 2008. The decrease in operating expenses as a percentage of
restaurant sales is primarily due to lower natural gas charges, cable, and
televised sport package costs partially offset by higher repair and maintenance
costs.
  Occupancy
expenses increased by $3.9 million, or 33.8%, to $15.5 million in 2009 from
$11.6 million in 2008 due primarily to more restaurants being operated in 2009.
Occupancy expenses as a percentage of restaurant sales decreased to 6.5% in 2009
from 6.7% in 2008.
  Depreciation
and amortization increased by $4.6 million, or 43.1%, to $15.4 million in 2009
from $10.7 million in 2008. The increase was primarily due to the additional
depreciation on 19 new restaurants opened in 2009 and the 22 new restaurants
that opened in the last six months of 2008.
  15
 General
and administrative expenses increased by $4.8 million, or 26.1%, to $23.2
million in 2009 from $18.4 million in 2008 primarily due to additional headcount
and higher incentive compensation costs and professional fees. General and
administrative expenses as a percentage of total revenue decreased to 8.9% in
2009 from 9.4% in 2008. Exclusive of stock-based compensation, we reduced our
general and administrative expenses as a percentage of revenue to 7.9% from 8.4%
due to better leverage of our wage-related expenses with the higher
revenue.
  Preopening
costs increased by $1.1 million, to $4.1 million in 2009 from $2.9 million in
2008. In 2009, we incurred costs of $3.9 million for 19 new company-owned
restaurants opened in the first six months of 2009 and costs of $144,000 for
restaurants that will open in the third or fourth quarters of 2009. In 2008, we
incurred costs of $1.9 million for nine new company-owned restaurants opened in
the first six months of 2008 and costs of $990,000 for restaurants that opened
in the third or fourth quarters of 2008. In 2009, we expect average preopening
costs per restaurant to be $230,000.
  Loss on
asset disposals and impairment decreased by $691,000 to $447,000 in 2009 from
$1.1 million in 2008. In 2009, the loss was related to the write-off of
miscellaneous equipment. In 2008, we impaired the assets of one of our Texas
restaurants due to a relocation for $395,000. The remaining loss was related to
the HDTV upgrades and write-off of miscellaneous equipment.
  Investment
income decreased by $343,000 to $489,000 in 2009 from $832,000 in 2008. The
decrease was primarily due to lower cash and marketable securities balances and
lower interest rates. Cash and marketable securities balances at the end of the
quarter totaled $49.0 million in 2009 compared to $74.0 million at the end of
the second quarter of 2008. The change in cash and marketable securities
balances was primarily due to the acquisition of nine Buffalo Wild Wings
franchised restaurants located in Las Vegas, Nevada during the third quarter of
2008.
  Provision
for income taxes increased $1.6 million to $7.9 million in 2009 from $6.3
million in 2008. The effective tax rate as a percentage of income before taxes
decreased to 33.8% in 2009 from 34.3% in 2008. The 2009 income tax rate was
lower due to an increase in employer tax credits and a decrease in state taxes
which were partially offset by a decrease in tax exempt interest income. For
2009, we believe our effective tax rate will be approximately 34%.
  Liquidity
and Capital Resources
  Our
primary liquidity and capital requirements have been for new restaurant
construction, remodeling and maintaining our existing company-owned restaurants,
working capital, and other general business needs. We fund these expenses
primarily with cash from operations. The cash and marketable securities balance
at June 28, 2009 was $49.0 million. We invest our cash balances in debt
securities with the focus on protection of principal, adequate liquidity, and
return on investment based on risk. As of June 28, 2009, nearly all excess cash
was invested in high-quality municipal securities.
  For the
six months ended June 28, 2009, net cash provided by operating activities was
$37.3 million. Net cash provided by operating activities consisted primarily of
net earnings adjusted for non-cash expenses and decreases in prepaid expenses
and refundable income taxes. The change in prepaid expenses was due to the
timing of insurance payments. The change in income taxes was due to the timing
of income tax payments.
  For the
six months ended June 29, 2008, net cash provided by operating activities was
$30.7 million. Net cash provided by operating activities consisted primarily of
net earnings adjusted for non-cash expenses, a decrease in prepaid expenses and
refundable income taxes, and a decrease in accrued expenses. The decrease in
prepaid expenses was due to the timing of insurance payments. The decrease in
income taxes was due to the timing of income tax payments. The decrease in
accrued expenses was due to the payout of year-end incentive
compensation.
  For the
six months ended June 28, 2009 and June 29, 2008, net cash used in investing
activities was $33.6 million and $23.4 million, respectively. Investing
activities included purchases of property and equipment related to the opening
of new company-owned restaurants and restaurants under construction in both
periods. During the first six months of 2009 and 2008, we opened 19 restaurants
and 9 restaurants, respectively. In 2009, we expect capital expenditures for
approximately 35 new company-owned restaurants to cost approximately $1.7
million per location and expenditures to be approximately $22.5 million for the
maintenance and remodel of existing restaurants. In 2009, we purchased $25.3
million of marketable securities and received proceeds of $24.8 million as these
investments matured or were sold. In 2008, we purchased $68.6 million of
marketable securities and received proceeds of $69.9 million as these
investments matured or were sold.
  For the
six months ended June 28, 2009 and June 29, 2008, net cash used in financing
activities was $927,000 and $125,000, respectively. Net cash used in financing
activities for 2009 resulted primarily from tax payments for restricted stock
units of $1.5 million partially offset by proceeds from the exercise of stock
options of $555,000. No additional funding from the issuance of common stock
(other than from the exercise of options and purchase of stock under the
employee stock purchase plan) is anticipated for the remainder of 2009. Net cash
used in financing activities for 2008 resulted primarily from tax payments for
restricted stock units of $989,000, offset by proceeds from the exercise of
stock options of $562,000 and the excess tax benefit from stock issuance of
$302,000.
  16
 Our
liquidity is impacted by minimum cash payment commitments resulting from
operating lease obligations for our restaurants and our corporate offices. Lease
terms are generally 10 to 15 years with renewal options and generally require us
to pay a proportionate share of real estate taxes, insurance, common area
maintenance, and other operating costs. Some restaurant leases provide for
contingent rental payments based on sales thresholds. We own the buildings in
which 23 of our restaurants operate and, therefore, have very limited ability to
enter into sale-leaseback transactions as a potential source of
cash.
  The
following table presents a summary of our contractual operating lease
obligations and commitments as of June 28, 2009:
  Payments Due
      By Period (in thousands)Total
                                    
                                    
                                    Less than
                                      One
      year
                                    
                                    
                                    1-3 years
                                    
                                    
                                    3-5 years
                                    
                                    
                                    After 5
                                      yearsOperating
      lease obligations
                                    
                                    $
                                    224,966
                                    
                                    
                                    
                                    26,723
                                    
                                    
                                    
                                    50,458
                                    
                                    
                                    
                                    45,604
                                    
                                    
                                    
                                    102,181Lease
      commitments for restaurants under development
                                    
                                    
                                    31,283
                                    
                                    
                                    
                                    1,325
                                    
                                    
                                    
                                    3,905
                                    
                                    
                                    
                                    3,939
                                    
                                    
                                    
                                    22,114Total
                                    
                                    $
                                    256,249
                                    
                                    
                                    
                                    28,048
                                    
                                    
                                    
                                    54,363
                                    
                                    
                                    
                                    49,543
                                    
                                    
                                    
                                    124,295
  We
believe the cash flows from our operating activities and our balance of cash and
marketable securities will be sufficient to fund our operations and building
commitments and meet our obligations for the foreseeable future. Our future cash
outflows related to income tax uncertainties amount to $502,000. These amounts
are excluded from the contractual obligations table due to the high degree of
uncertainty regarding the timing of these liabilities.
 
 Off-Balance
Sheet Arrangements
 
 As of
June 28, 2009, we had no off-balance sheet arrangements or
transactions.
 
 Risk
Factors/Forward-Looking Statements
  The
foregoing discussion and other statements in this report contain various
“forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Forward-looking statements are based on current expectations or
beliefs concerning future events. Such statements can be identified by the use
of terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“may,” “could,” “possible,” “plan,” “project,” “will,” “forecast” and similar
words or expressions. Our forward-looking statements generally relate to our
expected restaurant openings for 2009 and the longer term, our efforts to manage
the cost of fresh chicken wings and other costs of sales, our growth strategy in
new and existing markets, our expectations and beliefs with respect to the
impact of certain accounting pronouncements on our financial statements, our
estimated tax rates for 2009, our anticipated capital expenditures, our
expectations regarding pre-opening costs, sources of funding and cash
requirements, our expectations and beliefs regarding various legal actions
arising in the ordinary course of business, and our beliefs relating to
commodity price and investment risks. Although it is not possible to foresee all
of the factors that may cause actual results to differ from our forward-looking
statements, such factors include, among others, the following risk factors (each
of which is discussed in greater detail in our Annual Report on Form 10-K for
the fiscal year ended December 28, 2008):
 
 ·
              Fluctuations
      in chicken wing prices could reduce our operating
  income.
  ·
              If
      we are unable to successfully open new restaurants, our revenue growth
      rate and profits may be reduced.
  ·
              We
      must identify and obtain a sufficient number of suitable new restaurant
      sites for us to sustain our revenue growth
rate.
  ·
              Our
      restaurants may not achieve market acceptance in the new geographic
      regions we enter.
  ·
              New
      restaurants added to our existing markets may take sales from existing
      restaurants.
  ·
              Implementing
      our expansion strategy may strain our
resources.
  ·
              We
      are dependent on franchisees and their
success.
  17
 ·
              Franchisees
      may take actions that could harm our
business.
  ·
              We
      could face liability from our
franchisees.
  ·
              We
      may be unable to compete effectively in the restaurant
      industry.
  ·
              A
      reduction in vendor allowances currently received could affect our costs
      of goods sold.
  ·
              Our
      quarterly operating results may fluctuate due to the timing of special
      events and other factors, including the recognition of impairment
      losses.
  ·
              We
      may not be able to attract and retain qualified personnel to operate and
      manage our restaurants.
  ·
              We
      may not be able to obtain and maintain licenses and permits necessary to
      operate our restaurants.
  ·
              Changes
      in employment laws or regulation could harm our
    performance.
  ·
              Changes
      in consumer preferences, consumer confidence, or discretionary consumer
      spending could harm our
performance.
  ·
              We
      are susceptible to adverse trends in
Ohio.
  ·
              Changes
      in public health concerns may impact our
  performance.
  ·
              A
      decline in visitors to any of the business districts near the locations of
      our restaurants could negatively affect our restaurant
    sales.
  ·
              The
      acquisition of existing restaurants from our franchisees or other
      acquisitions may have unanticipated consequences that could harm our
      business and our financial
condition.
  ·
              Improper
      food handling may affect our business
adversely.
  ·
              Complaints
      or litigation may hurt us.
  ·
              Our
      current insurance may not provide adequate levels of coverage against
      claims.
  ·
              Natural
      disasters and other events could harm our
  performance.
  ·
              We
      may not be able to protect our trademarks, service marks or trade
      secrets.
  Investors
are cautioned that all forward-looking statements involve risk and uncertainties
and speak only as of the date on which they are made.
  18
 ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  We are
exposed to market risk related to our cash and cash equivalents and marketable
securities. We invest our excess cash in highly liquid short-term investments
with maturities of less than one year. These investments are not held for
trading or other speculative purposes. Changes in interest rates affect the
investment income we earn on our cash and cash equivalents and marketable
securities and, therefore, impact our cash flows and results of operations. We
also hold investments in mutual funds for the future needs of a non-qualified
deferred compensation plan.
  Financial
Instruments
  Financial
instruments that potentially subject us to concentrations of credit risk consist
principally of municipal securities. We do not believe there is a significant
risk of non-performance by these municipalities because of our investment policy
restrictions as to acceptable investment vehicles.
  Inflation
  The
primary inflationary factors affecting our operations are food, labor, and
restaurant operating costs. Substantial increases in these costs could impact
operating results to the extent that such increases cannot be passed along
through higher menu prices. A large number of our restaurant personnel are paid
at rates based on the applicable federal and state minimum wages, and increases
in the minimum wage rates and tip-credit wage rates could directly affect our
labor costs. Many of our leases require us to pay taxes, maintenance, repairs,
insurance, and utilities, all of which are generally subject to inflationary
increases.
  Commodity
Price Risk
  Many of
the food products purchased by us are affected by weather, production,
availability, and other factors outside our control. We believe that almost all
of our food and supplies are available from several sources, which helps to
control food product risks. We negotiate directly with independent suppliers for
our supply of food and paper products. We use members of UniPro Food Services,
Inc., a national cooperative of independent food distributors, to distribute
these products from the suppliers to our restaurants. We have minimum purchase
requirements with some of our vendors, but the terms of the contracts and nature
of the products are such that our purchase requirements do not create a market
risk. The primary food product used by company-owned and franchised restaurants
is fresh chicken wings. We work to counteract the effect of the volatility of
chicken wing prices, which can significantly change our cost of sales and cash
flow, with the introduction of popular new menu items, effective marketing
promotions, focused efforts on food costs and waste, and menu price increases.
We also explore purchasing strategies to reduce the severity of cost increases
and fluctuations. We currently purchase chicken wings at market prices. If a
satisfactory long-term price agreement for chicken wings were to arise, we would
consider locking in prices to reduce our price volatility. If there is a
significant rise in the price of fresh chicken wings, and we are unable to
successfully adjust menu prices or menu mix or otherwise make operational
adjustments to account for the higher wing prices, our operating results could
be adversely affected. Fresh chicken wings accounted for approximately 25.5% and
20.4% of our cost of sales in the second quarter of 2009 and 2008, respectively,
with a quarterly average price per pound of $1.69 and $1.17,
respectively.
  ITEM
4. CONTROLS AND PROCEDURES
  Management’s
Report on Internal Control Over Financial Reporting
 
 As of the
end of the period covered by this report, we conducted an evaluation, under the
supervision and with the participation of our principal executive officer and
principal financial officer, of our disclosure controls and procedures as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934 (“the Exchange Act”). Based on this evaluation, the principal executive
officer and principal financial officer concluded that our disclosure controls
and procedures are effective to ensure that information required to be disclosed
by us in the reports we file or submit under the Exchange Act is accumulated and
communicated to our management, including our principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding
required disclosure and recorded, processed, summarized and reported within the
time periods specified in Securities and Exchange Commission rules and
forms.
 
 Changes
in Internal Control Over Financial Reporting
 
 There
were no changes in our internal controls over financial reporting during our
most recently completed fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.
  19
 
 PART
II – OTHER INFORMATION
  ITEM
1. LEGAL PROCEEDINGS
  Occasionally,
we are a defendant in litigation arising in the ordinary course of our business,
including claims arising from personal injuries, contract claims,
franchise-related claims, dram shop claims, employment-related claims and claims
from guests or employees alleging injury, illness or other food quality, health
or operational concerns. To date, none of these types of litigation, most of
which are typically covered by insurance, has had a material effect on us. We
have insured and continue to insure against most of these types of claims. A
judgment significantly in excess of our insurance coverage or involving punitive
damages, which may not be covered by insurance, could materially adversely
affect our financial condition or results of operations.
 
 ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  At the
Annual Shareholders meeting held on May 21, 2009, we submitted to a vote of our
shareholders the following matters. Each proposal received the votes as
indicated below, with shareholders approving proposals 1 through 3 and not
approving proposal 4.
  1.
              Approved
      setting the number of members of the Board of Directors at seven
      (7):
 
 For:  16,056,634
              Against:
      62,675
              Abstain:  48,277
              Broker
      Non-Vote:  0
  2.
              Election
      of Directors:
 
 For:
                    
                    
                    Withheld:Sally
      J. Smith
                    
                    
                    15,734,553
                    
                    
                    
                    433,033Dale
      M. Applequist
                    
                    
                    15,731,648
                    
                    
                    
                    435,938Robert
      W. MacDonald
                    
                    
                    15,943,300
                    
                    
                    
                    224,286Warren
      E. Mack
                    
                    
                    15,475,759
                    
                    
                    
                    691,827J.
      Oliver Maggard
                    
                    
                    15,983,850
                    
                    
                    
                    183,736Michael
      P. Johnson
                    
                    
                    15,906,276
                    
                    
                    
                    261,310James
      Damian
                    
                    
                    15,987,854
                    
                    
                    
                    179,732
 
  3.
              Ratified
      appointment of KPMG LLP as our independent registered public accounting
      firm for fiscal year ending December 27,
2009:
 
 For:  15,814,960
              Against:
      326,952
              Abstain:  25,674
              Broker
      Non-Vote:  0
 
 4.
              Shareholder
      proposal to encourage the Company to give purchasing preference to certain
      suppliers was not approved:
 
 For:  540,718
              Against:
      5,734,389
              Abstain:  3,935,710
              Broker
      Non-Vote:  5,956,769
  ITEM 6. EXHIBITS
  See
Exhibit Index following the signature page of this report.
  
 20
  SIGNATURES
  In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
  Date:
      August 5, 2009
                    BUFFALO
      WILD WINGS, INC.By:
                    /s/
      Sally J. SmithSally
      J. Smith, President and Chief Executive Officer
                      (principal
      executive officer)By:
                    /s/
      Mary J. TwinemMary
      J. Twinem, Executive Vice President, Chief
                      Financial
      Officer and Treasurer (principal financial and
                      accounting
      officer)
  
 21
 EXHIBIT
INDEX
  BUFFALO
WILD WINGS, INC.
 FORM
10-Q FOR QUARTER ENDED JUNE 28, 2009
  Exhibit
                        Number
                      
                      Description3.1
                      
                      Amended
      and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Current
      Report on Form 8-K filed on May 27, 2009)31.1
                      
                      Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act31.2
                      
                      Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act32.1
                      
                      Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act32.2
                      
                      Certification
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act
  
  22