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Actionable news in BWLD: Buffalo Wild Wings, Inc.,

BWLD, DRI, PG, KMB: Jim Cramer's Views By Jim Cramer | Nov 02, 2015 | 01:00 AM EST

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The Prevailing Question: What Went Wrong?

Posted at 3:10 p.m. EDT on Thursday, Oct. 29, 2015

How do you price in disappointment? How does a market decide whether some company's weaker results have pin action, or are indicative of some broader trend and a whole sector has to be avoided and the bear let loose?

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That's what's confounding people today, and the confusion, alas, is justified.

Let's start out with a company that's been known for its consistency through the years, Buffalo Wild Wings (BWLD - Get Report). This chain's been one of the best performers of the era. Five years ago, it was at $50. Now it is at $150. But a month ago it was at $207. And it has fallen an astounding $33 or 18% in one session.

What went wrong? Perhaps the better question to ask is what didn't go wrong? Same-store sales, the key metric to measure retail, showed a dramatic deceleration, with franchise restaurants gaining only 1.2%. It might not be getting any better because, quarter to date, the company's generating 2.8% same-store sales, which sounds like a pickup until you recognize that analysts were estimating the company's sales were running at a 5.5% rate Net earnings guidance went from 13% to single digits. Plus, raw costs are stubbornly high. Wage pressures helped reduced the net. It was an ugly set of facts, mitigated only by the fact that some sports programming didn't go their way.

What does it mean, though, for the rest of the group? We know what happened. As to be expected, almost every restaurant stock got hammered. Darden (DRI - Get Report), parent of Olive Garden, was smashed down by a couple of bucks. DineEquity (DIN), parent of IHOP, fell more than two bucks to a 52-week low. Panera (PNRA), which I like very much for my charitable trust, was obliterated, falling five bucks on the heels of a previous decline of a similar magnitude after it reported an unloved quarter.

The already beaten-down Chipotle (CMG) fell another five points, but that's not as bad, given that it's on a $650 basis.

Now we have to ask, is this right? First, unlike the other chains, except Chipotle, Buffalo Wild Wings was priced for perfection. Second, it's possible the whole thing was just a momentary pause; you get a couple of big football games like a Sunday night game between the unbeaten Broncos and Packers on NBC and maybe October gets a big boost, especially if the Mets come back after faltering in Kansas City.

But then again, you come back to labor costs. Insurance costs. Food costs. These are across the board, with the possible exception that the rest of the chicken's cost has declined more than wings. These are not good trends, so the disappointment makes some sense.