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BAGR's New Buffalo Wild Wings Outlet

Zacks Equity Research

Southfield, MI-based restaurant operator and franchisee Diversified Restaurant Holdings, Inc. (BAGR) recently unveiled a restaurant under the Buffalo Wild Wings Inc. (BWLD) brand in the Lincoln Park neighborhood of Chicago, IL.

The Lincoln Park Buffalo Wild Wings restaurant has been relocated near the Clybourn Avenue. The close proximity of the high traffic area to central shopping plaza will drive additional footfall for the new unit.

The newly-opened restaurant is designed in an open “stadia” format to provide the experience of a stadium to its customers. Under this new set up, customers will be able to dine and watch games from any corner of the restaurant. It will be the first Buffalo Wild Wings franchised unit to have such a décor.

Diversified Restaurant is keen on selecting the best locations for new outlets that are in close proximity to entertainment venues across the state. Thus, we believe that the company will benefit immensely from the contemporary ambience of this spacious unit, thus adding to its sales.

As per the National Restaurant Association, Illinois’ restaurant industry contributes considerably to the state’s revenues. In 2013, Illinois’ restaurants are expected to record $21.7 billion in sales. Chicagoans’ inclination toward eating out frequently is favorable for the growth of the sector, which, we believe, has caught the attention of Diversified Restaurant.

Diversified Restaurant is considered one of biggest franchisees of Buffalo Wild Wings. Apart from Buffalo Wild Wings, the company operates Bagger Dave's Freshly-Crafted Burger Tavern restaurant concept in the U.S. As of Sep 23, the company boasts a total of 50 restaurants, of which 49 are corporate-owned and one franchised.

Recently, Diversified Restaurant unveiled its newest Bagger unit in Traverse City, MI. The company remains steadfast on its goal to expand its business. With three Bagger units to be launched in Indiana, the company will move a step closer to its target of operating a total of 18 corporate-owned Bagger units by the end of 2013.

Diversified Restaurant holds a Zacks Rank #4 (Sell). Other players in the restaurant industry that look attractive at the current levels include Jack in the Box Inc. (JACK) and Domino's Pizza, Inc. (DPZ). Both the restaurateurs carry a Zacks Rank #2 (Buy).

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