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On Tuesday, November 12, 2013, Institutional Investor and SumZero, the worlds largest online
membership community of buy-side investment professionals, hosted an idea competition at
Columbia University Business Schools Uris Hall Auditorium.
Nineteen emerging managers were selected from within the SumZero community on the basis of
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Favorite Investment Book:
The Most Important Thing: Uncommon Sense for the
Thoughtful Investor by Howard Marks
Favorite Quote/Author:
Its not what you look at that matters, its what you see.
Thoreau
Most Attractive Area of the Market Right Now:
Small cap special situations
Least Attractive Area of the Market Right Now:
High multiple consumer concepts
Best Past Investment Made:
At inception, BCOR/INSP represented a highly asymmetric
opportunity to acquire an existing internet search business
for approximately 1.5x EBITDA along with a cash balance
equal to roughly 85% of the market cap and $800MM in
NOLs.
Worst Past Investment Made:
Long GDX/GDXJ
Personal Investing Style:
Value oriented with a preference for growth at a reasonable
price and special situations
Areas of Personal Expertise:
Small Cap Equities, Long Term Warrants, Consumer, Soft-
ware, Business services
Languages Spoken: English
Joshua Thomas Midsummer Capital, LLC
Age: 37 Title: Co-Managing Partner, Portfolio Manager Location: New York, NY
Education (Undergrad/Grad/Certications): Bachelor of Arts in Economics, Vanderbilt University
Previous Employers/Positions: Sanford Bernstein (Equity Research), ABN Amro and Merrill Lynch
(Investment Banking)
Bio: Mr. Joshua Thomas is a Co-Managing Partner of Midsummer Capital and the Portfolio Man-
ager of Midsummer Small Cap. He has over thirteen years of nancial markets experience, including principal investing,
capital raising for both public and private companies, and fundamental analysis. During his time at Midsummer, he has
served on the board of directors of several portfolio companies, structured and negotiated complex securities, and led
both operational and nancial restructurings. Mr. Thomas has primary responsibility for risk management and trading
as well as the sourcing, evaluation and monitoring of new investment opportunities. Prior to joining Midsummer in July
2004, Mr. Thomas held various positions in investment banking and equity analysis at Merrill Lynch, ABN Amro and
Sanford Bernstein. During his tenure in investment banking, he marketed and executed a variety of transactions, includ-
ing private placements, venture nancings, and mergers and acquisitions. In equity research at Sanford Bernstein, Mr.
Thomas covered broadline retailers and helped to initiate coverage on the department store sector. Mr. Thomas holds a
Bachelor of Arts degree in Economics from Vanderbilt University.
AUM: Fund $15MM / Firm $25MM Past Ideas Submitted on SumZero: OMX, JOSB
Firm Focus: Long/short U.S. listed small cap equities and warrants (typically <$1.5BN market cap)
Firm Strategy: Midsummer employs a research driven and value oriented investment process in U.S. listed small cap
equities. Midsummer focuses primarily on special situation/event driven longs with a near term catalyst to drive value
creation. The manager also invests in long term warrant positions which provide asymmetric exposure to high growth
sectors in the smallest end of its investing universe.
Fund Disclaimer: Please see section 8 of appendix.
Fund Description:
Midsummer Capital, LLC is a New York based investment manager specializing in U.S. listed small and micro-cap
equities. Midsummer has managed several successful funds/strategies in the small cap space since inception in 2002.
The rm employs a fundamental, value-oriented investment philosophy, leveraging a deep knowledge base of small cap
equities accumulated over 11 years. Midsummer Small Cap offers a unique strategy for accessing the small cap equity
markets, combining a long/short approach to equities with a long term warrant book. The long/short strategy pursues
an opportunistic, bottom up, value oriented approach with an emphasis on special situations and event driven returns.
The warrant book provides an attractive, differentiated, and asymmetric return prole in high growth sectors. We believe
that focusing exclusively on misunderstood, complex, or neglected small and micro cap securities provides a structural
advantage. Midsummers culture emphasizes capital preservation and maintaining a margin of safety, with a focus on
evaluating downside and risk as much as return.
Battle of the Buy-Side - Short Buffalo Wild Wings (BWLD)
733 Third Avenue, 19th Floor
New York, NY 10017
212.624.5030
2
This write-up was prepared by an employee of Midsummer Capital, LLC (MSC), to be used solely in
connection with SumZero. This example of a specific discrete investment is included merely to
illustrate the investment process and strategies which have been utilized by MSC. It is not an offer to
provide investment advice or a solicitation of such an offer. No one should rely on the information
contained in this write-up to make any investment decision. The write-up contains and is based upon
information that the author and MSC believe to be correct but they have not verified that information
and assume no liability if such information is incorrect. Neither MSC nor the author has any duty to
correct or update the information contained herein. MSCs clients [and certain MSC employees]
currently have a significant position in the security mentioned herein. MSC may buy, sell or sell short
the security at any time and without notice. It should not be assumed that recommendations made in
the future will be profitable or will equal the performance of the security discussed herein.

This document contains forward-looking statements based on the authors expectations and projections.
Those statements are sometimes indicated by words such as expects, believes, will and similar
expressions. In addition, any statements that refer to expectations, projections or characterizations of
future events or circumstances, including any underlying assumptions, are forward-looking statements.
Such statements are not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual returns could differ
materially and adversely from those expressed or implied in any forward-looking statements as a result
of various factors
DISCLAIMER
3
INVESTMENT THESIS: SHORT BWLD
GROWTH MODEL IS BROKEN: INFLECTION POINT IN CONCEPTS LIFECYCLE DUE TO MARKET SATURATION
Store base is set to transition from consistent double-digit unit growth to decelerating, single-digit unit growth (i.e., Middle
Age)

As the concept reaches Middle Age, it will be unable to support historical rates of company EPS growth of +20%
The Street believes, even if the core concept decelerates, lost growth can be replaced through the incubation of new concepts
Due to aggressive and impetuous capital allocation decisions, we believe prior rates of EPS growth cannot be replicated going
forward
THE PRICE OF PAST GROWTH : MORTGAGING THE FUTURE
BWLD stores generate mediocre returns on capital; in order to manufacture high rates of EPS growth, management
consistently reinvested >200% of earnings into growth CapEx
Accelerated reinvestment was made possible by maintenance CapEx levels (per store) that were considerably below depreciation,
given the youth of the store base
In essence, the company mortgaged its existing asset/store base to fund elevated levels of growth CapEx, creating an off-balance
sheet liability
The last meaningful re-model cycle was in 2008 and we believe older stores will require fresh capital injections, lest traffic and
same-store-sales suffer at the expense of new concept/unit growth (i.e. The CapEx Wall; see Brinker Intl)
We believe the company will inevitably be faced with choosing one of two options, neither of which is attractive for the stock
Trading at nearly 40X EPS, the Market is extrapolating BWLDs historical growth rates far into the
future. We believe the companys growth algorithm is fundamentally broken and the stock is poised for
multiple compression as EPS growth decelerates.
4
INVESTMENT THESIS: SHORT BWLD (CONTD)
ALTERNATIVE #1: TRANSITION TO CASH FLOW; PROTECT THE BRAND, ACCEPT MORE MODEST EARNINGS GROWTH,
AND LIKELY A LOWER MULTIPLE
Buffalo Wild Wings represents a valuable brand and asset base; the responsible course of action would be to transition the
company from growth mode to cash flow mode; decelerate unit growth, abandon efforts to incubate/invest in new concept(s),
accumulate cash to prepare for remodel campaigns to protect the brand, with the result being a reduction in earnings growth to
the low teens
Under this scenario (base case), we believe the intrinsic value of the business is approximately $80 to $100/share
ALTERNATIVE #2: THE MID-LIFE CRISIS; CONTINUE THE PURSUIT OF GROWTH AT ANY COST, RISK PERMANENT
DAMAGE TO THE CORE CONCEPT
Given management's obsession with (maintaining) the companys growth image, we believe management is suffering from a mid-
life crisis as the core concept approaches saturation; continued investment in new company stores leads to weaker incremental
returns and slower EPS growth
If, in the pursuit of new avenues for growth (i.e. new concepts), the store base is neglected, same-store-sales could suffer;
Restaurants represent a high operating leverage (incremental margins) business; loss of sales could force earnings to de-lever over
a high fixed-cost base
Under such a scenario, intrinsic value could be materially impaired from our base case, leading to further declines in the stock
We are already observing signs that this is the path that management has chosen

Growth to date has been the result of overinvestment of earnings and a long runway for unit growth,
neither of which is sustainable at this juncture. As EPS growth decelerates, we believe the depth of
stocks decline will be determined by how the slow down is managed and which alternative is chosen.
5
INVESTMENT THESIS: SHORT BWLD (CONTD)
VALUATION
At nearly 40X EPS, the stock is priced for perfection; Despite decelerating growth at the core concept and efforts to incubate
new concepts, stock is trading at the highest P/E multiple in 5 years
Applying comp multiples to franchise and company-owned businesses suggest at least -30% downside
Restaurant industry trading at historically peak cyclical levels; Industry multiple compression offers further downside (up to -45%)
WHY DOES THIS OPPORTUNITY EXIST?
BWLD represents the goldilocks choice for growth and GARP investors; company is exhibiting attractive revenue, SSS, EPS
and unit growth but does not trade at nosebleed multiples of other high-growth consumer names (e.g., CMG @ P/E >50X; WFM
@ P/E ~45X)
One time benefits in input costs/pricing have buoyed earnings:
Collapse in chicken wing prices provided margin reprieve and easy comparisons
BWLD is (currently) benefitting from what is effectively a large price increase by eliminating wing orders by the count
The Street supports the stock/story; emphasizes the income statement and focuses on EPS growth, believing the model is self
funding and +20% EPS growth can be maintained. Looks at flawed cash-on-cash (EBITDA/Build-Out) metric. Believes 1,700 store
count is achievable and excited by the prospect of emerging brands. Growth multiple is justified
VARIANT PERCEPTION
Management has painted itself into a corner in the uncompromising effort/fixation to manufacture consistent +20% EPS growth;
refresh the existing asset base and slow growth or gamble on unproven concepts at the expense of neglecting older stores
Prior years of robust EPS growth were achieved by >200% reinvestment of earnings, which is unsustainable
Management has grown reactive and short-term oriented, placing the concept and company at risk;
The Street support is based on faulty premises; As system approaches maturity, BWLD will face a maintenance CapEx wall (e.g.,
Brinker/Chilis); marked deceleration in franchisee growth is a leading indicator and telling of saturation (True market TAM is
below 1,700 stores); Correct unit analysis methodology demonstrates stores generate returns below the cost of capital and
inferior to fast casual alternatives; growth multiple is not justified
We view BWLD as a compelling short opportunity and set a price target range
of $80-$100/share over the coming 12-24 months.
6
COMPANY DESCRIPTION
Buffalo Wild Wings, Inc. (BWLD)
BWLD is an owner, operator and franchisor of Buffalo Wild Wings Grill & Bar restaurants
Casual dining concept with menu centered around New York-style chicken wings and wide beer selection (20-
30 on tap) with layout/atmosphere focused on viewing sporting events
Locations are typically ~5,700 sq. ft., outfitted with 50 HD TVs and up to 10 projection screens
Founded in 1982 near Ohio State University
Franchising program began in 1991
Completed initial public offering in 2003
Over 900 restaurants (>400 company-owned) across 49 states and Canada
TTM Revenue of $1.2bn (93% restaurant sales; 7% franchise royalties and fees); TTM Adj. EBITDA of $179mm

93%
7%
Revenues by Segment
Restaurant sales Total Franchise revenue
Source: Company Filings, Bloomberg Estimates
Financial Summary
Fiscal Year Ending 12/31
($ in millions) 10/31/2013 2010A 2011A 2012A 2013E 2014E
Share Price $142.58 Revenue $613 $784 $1,041 $1,268 $1,492
52 Week Low / High $69.72 / $126.36 % Growth 27.9% 32.6% 21.9% 17.7%
FD Shares Outstanding (M) 18.9 EV/Revenue 2.5x 2.1x 1.8x
Equity Value $2,693
Net Debt/(Cash) (44) EBITDA $98 $125 $153 $186 $229
Enterprise Value $2,649 % Margin 15.9% 15.9% 14.7% 14.7% 15.4%
EV / EBITDA 17.3x 14.2x 11.6x
12-Month Target Price $90.00
Downside -37% EPS $2.10 $2.73 $3.06 $3.68 $4.56
P/E 46.6x 38.7x 31.3x
Projections reflect consensus estimates
7
MARKET PERCEPTION VERSUS ECONOMIC REALITY
Source: Bloomberg
Source: Company Filings
Over the past year, the market price of BWLD has meaningfully diverged from fundamentals. In spite
of lower profit expectations, the stocks cash P/E multiple has expanded >85%.
The table above depicts key data points since just before the company issued Q312 results and
provided initial 2013 EPS Guidance
Profit expectations have declined 4%, despite the largest input cost dropping 25% and the
acquisition of 21 restaurants from franchisees
Cumulative free cash flow in the 5 quarters since has been negative, with balance sheet cash
declining by nearly 43%
In addition, the company has taken on a line of credit for $100MM, even though the company had not
previously carried any debt in its history as a public company

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Last Price 2013 Consensus EPS
8
INFLECTION POINT: SIGNS OF STALLED GROWTH
In four consecutive 10-Ks (2007-2010), management cited a desired system mix target of approximately 40%
company-owned restaurants and approximately 60% franchised restaurants.

During the same period, annual franchised unit growth was largely commensurate with managements overall system
growth target
In 2011, franchise unit growth decelerated sharply. We believe this reflects the concept approaching
market saturation (by 2011, BWLDs system reached 817 stores or 82% of managements original goal of
over 1,000 restaurants in the united states) and unappealing unit economics, particularly when compared
to emerging fast casual options.
Franchise unit growth is a strong leading indicator; franchisees have their own capital as risk (versus
shareholders) and thus tend to be better stewards of capital (than management)
To maintain system growth targets, management dramatically accelerated company-owned unit growth, on a
proportional (to franchised), absolute and percentage basis, while also breaching the supposed target of a
60/40 franchise/company mix.
The language referencing this mix target was subsequently removed from the 2011 and 2012 10-K

Year 2007 2008 2009 2010 2011 2012 2013-YTD
Company-Owned Stores 161 197 232 259 319 381 415
Growth 16% 22% 18% 12% 23% 19% 9%
Franchised Stores 332 363 420 473 498 510 534
Growth 14% 9% 16% 13% 5% 2% 5%
Total Stores 493 560 652 732 817 891 949
System Growth 15% 14% 16% 12% 12% 9% 7%
System Growth Target 15% 15% 15% 14% 13% 11% 11%
Company-Owned Mix 33% 35% 36% 35% 39% 43% 44%
Franchised Mix 67% 65% 64% 65% 61% 57% 56%
Until 2011, system % growth was consistently double-digits, requiring an increasing number of new
stores built each year, which no longer appears feasible as the concept approaches market saturation.
9
INFLECTION POINT: SIGNS OF STALLED GROWTH
Specifically, in the companys 2011 10-K, management set a target of 60 new company-owned units in 2012.
Through the first nine months of 2012, BWLD opened 27 units (on a gross basis)
In 4Q12, the company purchased 18 stores for $44mm and opened 22 units
Gross store count for the year grew by 68 stores
Without the acquisition, gross store count grew by 49 stores compared to 48 stores in 2011 (excl.
acquisitions), missing managements target by nearly 20%
In BWLDs 2012 10-K, management reiterated the 60 unit target for 2013; on the 3Q conference call,
management guided to 54 openings (implied) for 2013 and 45 openings for 2014
Based on updated Q3 guidance, the company will miss its target again for 2013, confirming a trend that
system % growth has fallen to mid to high single digits
Likely to continue as the company reduces the absolute number of units opened going forward

Year 2007 2008 2009 2010 2011 2012 2013-YTD
Company-Owned Stores 161 197 232 259 319 381 415
Growth 16% 22% 18% 12% 23% 19% 9%
Franchised Stores 332 363 420 473 498 510 534
Growth 14% 9% 16% 13% 5% 2% 5%
Total Stores 493 560 652 732 817 891 949
System Growth 15% 14% 16% 12% 12% 9% 7%
System Growth Target 15% 15% 15% 14% 13% 11% 11%
Company-Owned Mix 33% 35% 36% 35% 39% 43% 44%
Franchised Mix 67% 65% 64% 65% 61% 57% 56%
BWLD does not appear to possess the operational wherewithal to execute the company-owned store
growth necessary to recreate historical growth levels (or the market cannot support it).
10
INFLECTION POINT: SIGNS OF STALLED GROWTH
Managements (re)stated system target of 1,700+ units strikes us as aggressive
Chilis a concept we view as similar in terms of occasion and menu positioning system growth stalled at
~1,300 units and has declined modestly since, with company/franchise mix of ~65%/35%
(10)
EAT Management understood and acknowledged the store base reaching maturity; transitioned running the
company for maximum cash flow rather than growth
"I'd like to outline to you how our financial strategies will support this continued transformation from
Brinker's history primarily as a unit growth story to, now, what is a consistent, reliable and diversified
earnings growth story.
(11)
"So when we met with you in March 2010, we laid out a plan for our turnaround.At the time, we were
willing to acknowledge what no one else in the casual dining would acknowledge, that the casual dining
segment was entering maturity and the history experienced when the quick-service segment matured in the
early 2000s was now repeating itself in casual dining
(12)

Source: Brinker International Filings
(11) & (12): CFO & EVP Guy Constant, 2/27/13, Brinker Analyst Day

Year F2006 F2007 F2008 F2009 F2010 F2011 F2012 F2013
Total Chili's Domestic Stores 1,085 1,220 1,291 1,292 1,293 1,299 1,279 1,265
Growth 12.4% 5.8% 0.1% 0.1% 0.5% -1.5% -1.1%
Company-Owned Mix 84% 75% 69% 66% 64% 63% 64% 65%
Rather than gracefully transitioning from a hyper-growth phase to a decelerating growth/cash flow
phase, management wishes to maintain its growth mantle, stating very recently, Buffalo Wild Wings is
a growth company and weve begun implementing strategies tosustain long-term growth
11
Assuming a build-out cost of $2mm, pre-opening expense of $285k and an initial franchisee fee of $40k, it
costs over $2.3mm to build a new store

Assuming $60K in average weekly sales (in-line w/ the system avg.), restaurant level margins of 20% (a
generous +200bp lift from estimated BWLD stores), 3.5% of sales committed to advertising and 5% of sales
paid as a royalty to BWLD, we estimate after-tax operating profit of less than $100K.
This equates to roughly a 4% after-tax return on invested capital
Given such paltry returns, a modest decline in AUV due to cannibalization resulting from market saturation
could send franchise growth into negative territory

INFLECTION POINT: DECLINE IN FRANCHISE GROWTH
Domestic franchisee store growth has decelerated ahead of company-owned growth. We believe this is
due to unattractive unit economics both on an absolute basis (due to market saturation)
Notes
2013E Avg. Weekly Sales 60,000 $ Franchise System Avg.
(x) Weeks 52
Average Unit Volume (mm) 3.120 $
(x) Restaurant-Level Margin 20.0% +200bp above 2013E BWLD store margin
'Store-Level' EBITDA 0.624 $
(-) Royalty to BWLD 0.156 5% of Sales; Company Filings
Store Cash Flow, ex-Royalty 0.468
(-) Advertising Fee 0.125 3.5% of Sales; Company Filings
(-) Depreciation 0.200 10-Year Depreciable Life of Capital Investment
Operating Income 0.143 $
(-) Taxes 0.050 35% Tax Rate
NOPAT 0.093 $
Build-Out 2.000 Company filings
Pre-Opening Expense 0.285 Company filings
Franchise Fee 0.040 Company filings
Invested Capital (mm) 2.325 $
Return on Invested Capital 4.0%
BWLD Franchise Unit Economics
12
INFLECTION POINT: DECLINE IN FRANCHISE GROWTH
Alternative fast-casual concepts are likely to divert capital investment away from casual dining over time,
as they tend to offer superior economics
By our estimates, a PNRA restaurant would cost a franchisee nearly half as much to build as a BWLD
location, yet would generate over +20% more in after-tax operating profit
PNRA franchises yield an unlevered return of >9% vs. a return on BWLD stores of ~4%
We suspect other privately-held companies concepts (e.g. Smashburger, FiveGuys) offer similarly attractive economics
to franchisees
In addition to superior unit economics, we believe PNRA has a more differentiated concept and is thus more
likely to stand the test of time
Running a fast-casual concept where lunch is the main day-part offers a more attractive/normal
lifestyle/schedule for operators
Source: Company Filings
Source: Panera Bread Company Filings

And on a relative basis (proliferation of fast-casual concepts). As an example, compare investing in a
BWLD franchise vs. a PNRA franchise:

(in millions) BWLD PNRA
Average Unit Volume $3.120 $2.457
Store-Level EBITDA $0.624 $0.479
Margin 20.0% 19.5%
NOPAT $0.093 $0.115
Invested Capital/Build-Out $2.325 $1.235
Return on Capital 4.0% 9.3%
13
As an example, assuming 20% equity down, a 10-year debt amortization schedule and 5% cost of debt, a
franchisee could magnify a 4% unlevered, after-tax return into a 7% return-on-equity or a 10% cash flow yield
in year one
However, if borrowing rates increased +200bps, that levered return would compress to 2% return-on-equity
or a 5% cash flow yield in year 1
Source: Company Filings

INFLECTION POINT: DECLINE IN FRANCHISE GROWTH
We also believe franchisee growth, as a function of returns on equity, is sensitive to interest rates and the
availability of financing.
Notes
2013E Avg. Weekly Sales 60,000 $ Franchise System Avg.
(x) Weeks 52
Average Unit Volume (mm) 3.120 $
(x) Restaurant-Level Margin 20.0% +200bp above 2013E BWLD store margin
'Store-Level' EBITDA 0.624 $
(-) Royalty to BWLD 0.156 5% of Sales; Company Filings
Store Cash Flow, ex-Royalty 0.468
(-) Advertising Fee 0.125 3.5% of Sales; Compnay Filings
(-) Depreciation 0.200 10-Year Depreciable Life of Capital Investment
Operating Income (EBIT) 0.143 $
(-) Interest Expense 0.093 5% Interest Rate; 80% Debt Capital
Pre-Tax Income 0.050 $
(-) Taxes 0.018 35% Tax Rate
Net Income 0.033 $
Build-Out 2.000 Company filings
Pre-Opening Expense 0.285 Company filings
Franchise Fee 0.040 Company filings
Invested Capital (mm) 2.325 $
Debt-to-Capital 4.0X 10-Year Debt Amortization Schedule
Franchisee Equity Investment 0.465 $
Return on Franchisee Equity 7.0%
Cash Flow: Year 1 0.047 $ EBIT+D&A-Interest-Taxes-Debt Amort.
Cash Flow to Equity 10.0%
Franchise Unit Economics
Notes
2013E Avg. Weekly Sales 60,000 $ Franchise System Avg.
(x) Weeks 52
Average Unit Volume (mm) 3.120 $
(x) Restaurant-Level Margin 20.0% +200bp above 2013E BWLD store margin
'Store-Level' EBITDA 0.624 $
(-) Royalty to BWLD 0.156 5% of Sales; Company Filings
Store Cash Flow, ex-Royalty 0.468
(-) Advertising Fee 0.125 3.5% of Sales; Compnay Filings
(-) Depreciation 0.200 10-Year Depreciable Life of Capital Investment
Operating Income (EBIT) 0.143 $
(-) Interest Expense 0.130 7% Interest Rate; 80% Debt Capital
Pre-Tax Income 0.013 $
(-) Taxes 0.005 35% Tax Rate
Net Income 0.008 $
Build-Out 2.000 Company filings
Pre-Opening Expense 0.285 Company filings
Franchise Fee 0.040 Company filings
Invested Capital (mm) 2.325 $
Debt-to-Capital 4.0X 10-Year Debt Amortization Schedule
Franchisee Equity Investment 0.465 $
Return on Franchisee Equity 1.8%
Cash Flow: Year 1 0.022 $ EBIT+D&A-Interest-Taxes-Debt Amort.
Cash Flow to Equity 4.8%
Franchise Unit Economics
+200bps
rise in rates
14
THE PRICE OF GROWTH PAST: MORTGAGING THE FUTURE
Without additional outside capital, a company can only reinvest >100% of earnings if maintenance
capital expenditures, over the life of the asset, are truly and materially below stated depreciation,
which we do not believe is the case for BWLD
How, then, has BWLD maintained its growth trajectory despite unimpressive ROICs?
BWLDs store base is relatively young, as >40% of stores are 3 years old or less, so maintenance
capital needs have been low
As these stores age, inevitably they will require significant amounts of capital to refresh/reimage

Source: Company Filings
Reinvestment Rates 2009 2010 2011 2012* 2013E
New Stores 35 35 48 49 54
Implied Cash Investment/Store 1.5 1.8 1.8 2.0 2.1
Implied Growth CapEx 52.5 61.3 86.4 99.3 115.4
Acquistion CapEx - - 33.7 43.6 10.3
Total Growth CapEx 52.5 61.3 120.1 142.9 125.7
Prior Year Net Income 24.9 30.7 38.4 50.4 68.4
Reinvestment % 211% 200% 313% 283% 184%
Previously high rates of EPS growth were achieved by reinvesting >200% of earnings into growth
CapEx. This was made possible by maintenance CapEx levels (per store) that were considerably below
depreciation, given the youth of the store base.
15
THE PRICE OF GROWTH PAST: MORTGAGING THE FUTURE
Since 2008, the company has spent very little in the way of maintenance capital expenditures on
per store basis, relative to stated depreciation
While existing assets may not demand capital at this moment, we view growth CapEx in excess of
earnings as borrowing against legacy stores to fuel growth
Chronically under-spending on existing stores, effectively, creates an off-balance sheet liability in
terms of future maintenance CapEx needs
Since 2009, maintenance CapEx per store has fallen nearly -40%, while build-out costs (plus pre-
opening) and depreciation per store have risen nearly +40%; this strikes us as an enormous
disconnect

Source: Company Filings
In essence, the company mortgaged its existing asset/store base to fund elevated levels of growth
CapEx .
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
New Stores 15 19 19 17 23 39 35 35 48 49
Cash Investment per Store ($mm) 0.80 1.00 1.1 1.2 1.4 1.5 1.5 1.8 1.8 2.0
Implied Growth CapEx 12.0 19.0 20.9 20.4 32.2 58.5 52.5 61.3 86.4 99.3
Total CapEx 10.7 23.3 21.9 23.8 41.4 90.5 73.7 73.4 130.1 130.5
Tech Spend - - - - - - - - 4.0 10.0
Implied Maintenance CapEx NMF 4.3 1.0 3.4 9.2 32.0 21.2 12.1 39.7 21.2
BOP Stores 70 84 103 122 139 161 197 232 259 319
MCX/Store NMF 0.051 0.010 0.028 0.066 0.199 0.108 0.052 0.153 0.067
Depreciation/Avg. Store 0.106 0.112 0.117 0.135 0.152 0.164 0.179 0.200
16
THE PRICE OF GROWTH PAST: MORTGAGING THE FUTURE
EATs (Brinker) recent capital allocation is instructive; though the store count has remained largely static
(implying most expenditures are maintenance in nature), CapEx per store has doubled and is now
commensurate with D&A per store
Per EATs 10-K: Capital expenditures increaseddriven primarily by the ongoing Chili's reimage program,
purchases of new and replacement restaurant furniture and increased investments in new equipment and
technology related to our kitchen retrofit initiative
(19)

Managements estimates, that our capital expenditures during fiscal 2014 will be approximately $150
million to $160 million, despite the projection, both our company-owned and franchise domestic Chilis
system to see unit growth of 1% to 2% each year
(20)
.
This implies maintenance CapEx per store will exceed depreciation per store; we believe this supports
our view that D&A expense, while non-cash, must be viewed as a reasonable proxy for ongoing
maintenance expenditures over time

Source: Brinker International Company Reports

Year F2009 F2010 F2011 F2012 F2013
Company stores 1,024 871 868 865 877
D&A 147.4 136.3 132.8 143.4 134.5
Per Store 0.144 0.156 0.153 0.166 0.153
CapEx 88.2 60.9 70.4 125.2 131.5
Per Store 0.086 0.070 0.081 0.145 0.150
The last meaningful re-model cycle was in 2008 and we believe older stores will require fresh capital
injections, lest traffic and same-store-sales suffer at the expense of new concept/unit growth.
17
THE PRICE OF GROWTH PAST: CAPITAL (MIS)ALLOCATION
In spite of a large franchisee base providing high-margin, annuity-like royalty stream, to which there little-
to-no capital intensity, BWLD has generated negative free cash flow over the trailing 5 and 10-year periods
Implicitly, the company has reinvested all of the cash flow from the royalty business into the company-
owned business
While an imprecise exercise, backing out estimated operating income from the royalty/franchise business,
allows us to approximate the return profile of the company-owned business
Historically, this segment has generated returns commensurate with the industrys cost of capital; not overly attractive
If we were able to back out the impact of SSS growth (which flows through at high margins), we suspect the
implied returns on new stores would be worse

Source: Company Filings
Free Cash Flow calculated as Cash from Operations less additions to PP&E and acquisitions of franchisee stores
2008 2009 2010 2011 2012
Franchise Revenues 42.7 50.2 58.1 67.1 76.6
Estimated Operating Margin 75% 75% 75% 75% 75%
Estimated Operating Income 32.0 37.7 43.6 50.3 57.4
Consolidated EBIT* 45.7 54.0 66.8 89.3 100.5
Implied Restaurant EBIT 13.6 16.3 23.2 39.0 43.1
Taxes @ 32% 4.4 5.2 7.4 12.5 13.8
Restaurant NOPAT 9.3 11.1 15.8 26.5 29.3
Assets 243.8 309.1 380.4 495.4 591.1
(-) Marketable Securities 36.2 43.6 56.8 40.0 9.6
(-) Restricted Cash 7.7 24.4 32.9 42.7 52.8
(-) Goodwill 11.0 11.2 11.2 17.8 32.4
(-) NIBCLs 40.5 42.3 45.1 70.0 89.3
Invested Capital 148.5 187.5 234.3 324.9 407.0
Estimated Company-Owned ROIC 6% 6% 7% 8% 7%
* - Excludes pre-opening and impairment charges
Given managements uninspiring history of capital allocation, we do not think it is likely a new growth
engine will be constructed in a way that is accretive to shareholders
Cumulative Free Cash Flow ('03-'12) ($31)
Cumulative Free Cash Flow ('08-'12) ($47)
18
THE PRICE OF GROWTH PAST: CAPITAL (MIS)ALLOCATION
BWLD made two large acquisitions
from franchisees in 4Q11 and 4Q12
consisting of 15 and 18 stores,
respectively, for a total of $78mm
(21)
We estimate these acquisitions, in
total, were accretive to earnings by
~$2.2mm, representing a 3% return
on equity
The economics of these transactions
appear even more unattractive than
building stores outright due to the
loss of the high margin royalty
stream, which the market implicitly
affords a higher multiple
The second acquisition came in 4Q12
when the company would have
otherwise missed its unit growth
guidance


Source: Company Filings

In response to dwindling system growth driven by saturated markets, management has continued
ahead with acquiring growth, in spite of generating de minimis returns.
Franchise Acquistion (4Q11)
Locations Purchased 15
Purchase Price 34
Per Location 2.2
EBITDA 4.6
"Cash-on-Cash" Return 13.5%
EBITDA Multiple 7.4X
EBIT 1.6
Pre-Tax ROIC 4.6%
Net Income 0.9
Return on Equity 2.8%
EPS Accretion $0.05
Franchise Acquistion (4Q12)
Locations Purchased 18
Purchase Price 44
Per Location 2.4
EBITDA 5.8
"Cash-on-Cash" Return 13.2%
EBITDA Multiple 7.6X
EBIT 2.2
Pre-Tax ROIC 4.9%
Net Income 1.3
Return on Equity 3.0%
EPS Accretion $0.07
19
THE PRICE OF GROWTH PAST: CAPITAL (MIS)ALLOCATION
With a fully equitized capital structure, returns on new stores are sufficiently below a reasonable required
rate of return and value-destroying relative to the foregone free cash flow (i.e., opportunity cost)
Returns appear comparable to what the company might reasonably expect, in terms of yield, if it issued
bonds (i.e., no benefit to leveraging the balance sheet to lower the cost of capital in the pursuit of growth)
The company would be better off returning free cash flow to shareholders and focusing on the franchise
business, which offers virtually infinite returns on capital

Source: Company Filings
Notes
2013E Avg. Weekly Sales 56,000 $ Company-Owned System Avg.
(x) Weeks 52
Average Unit Volume (mm) 2.912 $
(x) Restaurant-Level Margin 18.0% 2013E Store-Level Margin
'Store-Level' EBITDA 0.524 $
(-) Incremental G&A 0.116 4% of Sales
(-) Depreciation 0.200 10-Year Depreciable Life of Capital Investment
Operating Income 0.208 $
(-) Taxes 0.066 32% Tax Rate
NOPAT 0.141 $
Build-Out 2.000 Company filings
Pre-Opening Expense 0.285 Company filings
Invested Capital (mm) 2.285 $
Return on Invested Capital 6.2%
New Store Unit Economics
Incremental ROIC Profile 2009 2010 2011 2012*
New Stores 35 35 48 49
Implied Cash Investment/Store 1.5 1.8 1.8 2.0
Implied Growth CapEx 52.5 61.3 86.4 99.3
Acquistion CapEx - - 33.7 43.6
Total Growth CapEx 52.5 61.3 120.1 142.9
Prior Year Net Income 24.9 30.7 38.4 50.4
Reinvestment % 211% 200% 313% 283%
Growth Investment 52.5 61.3 120.1 142.9
Pre-Opening Exp. 7.7 8.4 14.6 14.6
Cash Investment 60.2 69.6 134.7 157.5
EBIT (Ex-Pre-Opening) 8.1 12.7 22.6 9.9
Taxes @ 32% 2.6 4.1 7.2 3.2
NOPAT 5.5 8.6 15.4 6.7
ROIC (Incremental) 9.1% 12.4% 11.4% 4.3%
* 2012 includes a 53rd week
New company stores do not earn their cost of capital (EVA-destroying), and Sell-sides view of
attractive cash-on-cash return convention (~25%) ignores incremental G&A costs,
depreciation/maintenance and taxes.
20
DECISION POINT: MANAGEMENT & THE 20-MILE MARCH
True to the spirit of Amundsens strategy (our Alternative #1), former Chairman and CEO of BJRI, Jerry
Deitchle said it best
Were going to continue to carefully balance our six pipelines for growth. Those six are capital, real estate, restaurant
management, support infrastructure, brewing capacity and our supply chain structure, so that we dont outrun our
headlights when it comes to setting [the] optimal pace of high-quality, predictable and leveragable expansion
In contrast, more closely reflecting the approach of Scott (our Alternative #2), we believe that BWLD
managements strategy of maintaining +20% EPS growth, has become increasingly short-sighted and reactive
- with respect to store development, menu/concept positioning and capital allocation
Source: http://www.jimcollins.com/article_topics/articles/how-to-manage-through-chaos.html

Simple Concept: Stick to the plan regardless of exogenous/uncontrollable variables
Analogy: In 1911, two teams of adventurers embarked on a 1,400 mile roundtrip journey to reach the South
Pole; the team leaders Roald Amundsen and Robert Falcon Scott - were of similar age and experience
Amundsens Strategy: Strict adherence to a plan of traveling 15 to 20 miles per day, irrespective of conditions
Scotts Strategy: Adjust travel plans based on weather conditions; travel to exhaustion during favorable periods and
hunker down during inclement ones
Result: Amundsens team completed the journey, while Scotts team perished
Lesson: The 20-Mile March imposes order amid disorder, consistency amid swirling inconsistency. But it
works only if you actually achieve your march year after year.
We apply Jim Collins mental model of The 20-MileMarch, from Great by Choice, to evaluate
management teams at the helm of a unit growth story; success through measured progress and a long-
term orientation
What does this lesson mean to us, in the context of building a restaurant chain?
21
DECISION POINT: TRANSITION OR MID-LIFE CRISIS?
In the context of higher wing prices (largest contributor to COGS for BWLD), we believe the reaction of
management is instructive
Alternative #1 (Amundsen Approach):
Youve got bigger wings across [the] industry than you used to, but our customers expect wings by the count, so were
going to stick with that, and hope it evens out in the end
(16)
Patrick Doyle, Dominos CEO
Alternative # 2 (Scott Approach):
We took menu price increases in July and subsequently [took] price increase in mid August to compensate for the bigger
wings and record high wing costs. These adjustments are beginning to ease the pressure on our cost of sales. We are
currently testing, serving our wings in flexible portions rather than fixed quantities, which will lessen the cost of sales
impact from future fluctuation in wing size
(15)
Sally Smith, BWLD CEO
Source:
Company Reports, Company Menu
(14): http://www.jimcollins.com/article_topics/articles/how-to-manage-through-chaos.html
(15): CEO Sally Smith, 10/23/12, 3Q12 Company Conference Call
(16): DPZ CEO Patrick Doyle, 2/3/12/, http://online.wsj.com/news/articles/SB10001424127887324156204578278373193092156



When confronted with business challenges that are largely out of their control, we believe
management that is capable of a balanced and measured response are more likely to retain their
customers and brand equity.
22
DECISION POINT: TRANSITION OR MID-LIFE CRISIS?
Over the past year, wing prices have retreated sharply, leading to starkly different management approaches
Alternative #1 (Amundsen Approach): Take steady pricing over the course of a commodity cycle, like most
industry participants
Alternative #2 (Scott Approach): Make a major change to the concepts menu, at the risk of customer
goodwill
wings by the portion rolled into all restaurants July 15, so its been in effect I guess, for a couple of weeks, so half of
July. To go back to when we tested it, the first round of testing, we did have a few negative comments from guests and
probably saw a decline in same-store sales just briefly in a few of the test markets. We believe that we needed to ramp
up our training around serving wings by the portion and we did exactly that when rolled system widewe really focused on
training our team memberswe had information on tables for our guests [emphasis added](17) - Mary Twinem, BWLD CFO
2Q13
We would expect consumers to react unfavorably; paying $5.99 for five wings instead of six wings equates to
$1.20/wing vs. $1.00/wing, a +20% increase!


Source:
Bloomberg
Company Filings
Company Menu, http://www.yellowbook.com/profile/buffalo-wild-wings-grill-and-bar_1856025763.html
(17): CFO Mary Twinem, 7/30/12, 2Q13 Company Conference Call

$1.30
$1.40
$1.50
$1.60
$1.70
$1.80
$1.90
$2.00
$2.10
USDA Georgia Dock Chicken Ready to Cook Wings Spot Price
In contrast to disciplined execution and sticking to the proverbial 20-Mile March, reactive
management tends to compound their problems by further adjusting their strategy even as conditions
improve.
23
DECISION POINT: TRANSITION OR MID-LIFE CRISIS?
Alternative #1 (Amundsen Approach): Slow unit growth and allow free cash flow to build, ultimately for the
purpose of reinvesting and reinvigorating the existing store base
Alternative #2 (Scott Approach): Continue to pursue unit growth, diverting attention from the core concept
in pursuit of investment in emerging brands
In March of this year, the company made a minority in PizzaRev. At the time of the investment,
PizzaRev had 3 locations
On the companys most recent quarterly conference call, management stated, So we would
anticipate that should PizzaRev prove successful and or we add other emerging brands to our portfolio,
that will help continue to drive unit growth and revenue growthwed like to acquire several small
emerging concepts. PizzaRev certainly has that ability to be the next growth vehicleBut we are also
evaluating other concepts that could add to the portfolio and them out and really provide that growth
momentum we love.
Source: Company Filings

In our view, managements fixation on maximizing EPS growth and not necessarily shareholder
value is clear and is laying dry tinder for future problems by not accumulating cash/dry powder to
prepare for an aging store base.
24
VALUATION
Despite decelerating unit growth and several EPS
guidance reductions by management, BWLD is
trading at its highest P/E multiple in 5 years
Why?
Given the scarcity of growth (TTM S&P earnings are
roughly flat) in the market, coupled with
nosebleed valuations for super-unit-growth
consumer names, we suspect BWLD represents the
goldilocks choice for GARP and Growth investors;
exhibiting nice revenue and EPS growth, but trading
at relative discounts to the likes of CMG or WFM.

Source: Bloomberg

0.0X
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Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13
BWLD US Equity - Est P/E Curr Year
Market Enterpise 1-Year Growth Rates Multiples
Company Ticker Cap Value Sales EBITDA 2013E P/E 2013E EBITDA
CHIPOTLE MEXICAN CMG $16,307 $15,775 20% 26% 50.4X 20.6X
CHUY'S HOLDINGS CHUY $613 $614 32% 44% 53.9X 20.8X
FIESTA RESTAURAN FRGI $1,002 $1,199 7% 3% 55.1X 15.8X
FRANCESCAS HOLDI FRAN $793 $753 45% 76% 15.9X 6.8X
FRESH MARKET INC TFM $2,461 $2,490 20% 23% 33.2X 12.7X
NOODLES & CO NDLS $1,252 $1,252 17% 21% 108.7X 26.7X
RESTORATION HARD RH $2,714 $2,786 25% NA 41.1X 14.1X
ULTA SALON COSME ULTA $8,237 $7,950 25% 35% 38.6X 14.1X
WHOLE FOODS MKT WFM $23,517 $22,555 16% 26% 43.2X 15.8X
Mean $1,805 $1,820 23% 32% 48.9X 16.4X
Median $1,857 $1,871 20% 26% 43.2X 15.8X
BUFFALO WILD WIN $2,660 $2,634 33% 23% 38.1X 11.4X
At nearly 40X EPS, the stock is priced to perfection: to deliver historical growth rates - which we view
as unsustainable - far into the future.
25
VALUATION
Restaurant industry P/E multiples are expanding toward prior cyclical peaks (P/E of ~25X)
Short-sellers have capitulated; short interest has collapsed from >4.5mm in 1Q13 (23% of the float) to <1.7
shares (9% of the float)
We think investors and the sell-side have largely missed the inflection point in the growth story and are
awarding increasingly higher multiples when expected growth rates are growing increasingly at risk
Sell-side 2014 EPS (growth) estimates appear aggressive, in our view; given prevailing valuation, stock may
be vulnerable to multiple compression even on modest misses or disappointing guidance

Source: FPA Crescent Fund 3
rd
Quarter Letter, 10/8/13, http://www.fpafunds.com/docs/quarterly-commentaries-crescent-fund/2013-09-crescent-commentary52A0CAAAB07E.pdf?sfvrsn=2
Source: Bloomberg

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S5REST Index - Price Earnings Ratio (P/E)
0.0%
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25.0%
0.0
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1.0
1.5
2.0
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3.0
3.5
4.0
4.5
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BWLD Short Interest (shares; mm) Short Interest, % of Float
Restaurant industry P/E multiples are fast approaching historically peak cyclical levels.
Commensurate with the broader market for high interest stocks, the shorts have capitulated; short
interest in the stock has collapsed.
26
VALUATION: FRANCHISE BUSINESS
FRANCHISE BUSINESS
The franchise business is an enviable business model; it exhibits recurring revenue and high margins, requires
virtually no capital to maintain or grow, the royalty stream grows with inflation and pricing and the business
is not subject to cost inflation. Yet, BWLD is making this an increasingly smaller part of its enterprise
Due to the favorable characteristics of this business model, highly franchised system are awarded large(r) EBITDA multiples
Looking at highly franchised peers, we believe a reasonable valuation range for BWLDs franchise business is
10X-12X EBITDA
For companies that provide franchise segment-level financials, we found the average TTM operating margin
was ~75%, which we applied to BWLDs 2013E franchise revenue to estimate EBITDA

Source: Bloomberg, AFCE Company Reports, DENN Company Reports, DIN Company Reports, DNKN Company Reports, JACK Company Reports, PNRA Company Reports

TTM Franchise Margins AFCE DENN DIN Dunkin US JACK* PNRA Average
Franchise and license revenue 123.4 135.8 430.5 510.7 104.4 108.4
Segment Costs 67.2 47.0 110.3 142.2 9.4 5.9
Segment Income 56.2 88.8 320.2 368.5 95.0 102.5
Margin 45.5% 65.4% 74.4% 72.2% 91.0% 94.5% 73.8%
* JACK results reflect F3Q YTD
Market Enterpise Metrics Multiples
Company Ticker Cap Value Franchise % EBITDA % LTM EBITDA Forward EBITDA
AFC ENTERPRISES AFCE $1,064 $1,117 98% 32% 18.0X 14.5X
DENNY'S CORP DENN $567 $736 90% 16% 10.2X 9.0X
DINEEQUITY INC DIN $1,562 $2,803 99% 39% 11.3X 10.4X
DUNKIN' BRANDS G DNKN $5,071 $6,695 100% 46% 20.9X 16.6X
JACK IN THE BOX JACK $1,762 $2,132 72% 15% 9.1X 8.2X
Mean $2,005 $2,696 92% 30% 13.9X 11.7X
Median $1,562 $2,132 98% 32% 11.3X 10.4X
We view BWLD as possessing two separate businesses: the franchise business (i.e., brand royalty) and
the company-owned business (i.e., bricks-and-mortar). As such, we believe BWLD should be
valued on a sum-of-the-parts basis
27
VALUATION: COMPANY-OWNED RESTAURANT BUSINESS
COMPANY-OWNED RESTAURANT BUSINESS
The brick-and-mortar restaurant business is capital-intensive, has high fixed-costs (i.e., operating
leverage) and low margins, is subject to input cost risk (i.e., limited pricing power), has limited barriers
to entry and suffers from barriers to exit (i.e., long-term operating leases)
Generally speaking, the restaurant industry represents a very challenging and fiercely competitive
business
Accordingly, the market affords lower multiples to largely company-owned systems that are in their middle-age to
twilight years
Having followed the industry for a long-time, valuation multiples appear frothy
For existing restaurants, we view an EBITDA multiple range of 6X to 8X (applied to EBITDA, less implied G&A, but excl.
pre-opening expense) as fair-to-generous
We ascribe no value to BWLDs growth prospects, as returns on stores are below the cost of capital; the
present value of future EBITDA capitalized, net of cash investment, is less than free cash flow foregone
today

Source: Bloomberg

Market Enterpise 1-Year Growth Rates Multiples
Company Ticker Cap Value Sales EBITDA LTM EBITDA Forward EBITDA
BJ'S RESTAURANTS BJRI $763 $719 14% 5% 8.7X 7.4X
BOB EVANS FARMS BOBE $1,557 $1,767 -3% -15% 20.8X 8.6X
BRINKER INTL EAT $2,942 $3,690 1% 11% 9.1X 8.2X
CHEESECAKE FACTO CAKE $2,544 $2,413 3% 8% 10.3X 9.3X
CRACKER BARREL CBRL $2,614 $2,893 2% 5% 10.8X 9.4X
DARDEN RESTAURAN DRI $6,728 $9,376 7% -4% 9.3X 8.3X
RED ROBIN GOURME RRGB $1,091 $1,156 7% 15% 11.1X 9.6X
RUBY TUESDAY INC RT $365 $604 -5% -17% 5.0X 8.1X
TEXAS ROADHOUS TXRH $1,927 $1,897 14% 14% 11.4X 9.6X
Mean $1,951 $2,147 5% 2% 10.7X 8.7X
Median $2,051 $2,090 3% 5% 10.3X 8.6X
28
VALUATION: SUM OF THE PARTS
Using a sum-of-the-parts framework, we derive a price target range of ~$80-$100/share representing ~-45%
to -30% from the current price of ~$140/share
Our price target range, applied to consensus estimates, represents P/E and EV/EBITDA multiple bands of
~20X-25X and ~8X-10X respectively; we view these bands as reasonable and achievable, particularly if EPS
growth slows due to reduced growth CapEx spending
This valuation range assumes intrinsic value is not eroded by the pursuit of uneconomic growth

Source: Company Filings, Bloomberg Estimates

BWLD Sum-of-the-Parts Base Case Downside Case
2013E Franchise Revenues (mm) 82.0 82.0
Margin 75.0% 75.0%
Segment EBITDA 61.5 61.5
Multiple 12.0X 10.0X
Franchise EV 738.0 615.0
Restaurant-Level EBITDA 217.0 217.0
Implied G&A 74.5 74.5
Pre-Opening Expense - -
Company-Owned EBITDA 142.5 142.5
Multiple 8.0X 6.0X
Company-Owned EV 1,140.0 855.0
Total EV 1,878.0 1,470.0
(+) Cash 43.8 43.8
Equity Value 1,921.8 1,513.8
Per Share 102.00 $ 80.00 $
Implied 2013E EV/EBITDA 10.1X 7.9X
Implied 2013E P/E 27.7X 21.7X
Applying comp multiples to franchise and company-owned business suggest at least -30% downside.
Restaurant industry is trading at frothy multiples; industry multiple compression offers further
downside of up to -45%.
29
RISKS
Maintenance capital expenditure needs are structurally below stated D&A levels
Chicken wing prices decline
EPS growth exceeds sell-side estimates
Menu shift does not impact traffic; SSS momentum continues
TAM of 1,700 stores proves realistic
Recent price momentum cause remaining short positions to cover



Source: Bloomberg