--------------------------------------------------------------------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                 ---------------

                                    FORM 10-K

                                ---------------

|X| Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 for the fiscal year ended December 30, 2007

                                       or

|_| Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
    of 1934 for the transition period from __________ to __________.

                        Commission File Number: 000-24743

                                 ---------------

                            BUFFALO WILD WINGS, INC.
             (Exact name of registrant as specified in its charter)

                                ---------------


                Minnesota                               No. 31-1455915
     (State or Other Jurisdiction of                    (IRS Employer
      Incorporation or Organization)                  Identification No.)

            5500 Wayzata Boulevard, Suite 1600, Minneapolis, MN 55416
                    (Address of Principal Executive Offices)

                  Registrant's telephone number (952) 593-9943

                                ---------------

Securities registered under Section 12(b) of the Exchange Act: Common Stock, no
                                   par value

       Securities registered under Section 12(g) of the Exchange Act: None

                                ---------------

     Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. YES |_| NO |X|

     Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.     YES  |_|  NO  |X|

     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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|

     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 "large accelerated filer, " "accelerated filer," and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
 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 aggregate market value of the voting stock held by non-affiliates was
$645 million based on the closing sale price of the Company's Common Stock as
reported on the NASDAQ Stock Market on June 29, 2007.

     The number of shares outstanding of the registrant's common stock as of
February 26, 2008: 17,678,016 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Proxy Statement for the 2008 Annual Meeting of Shareholders
are incorporated by reference into Part III of this report.
--------------------------------------------------------------------------------





                                TABLE OF CONTENTS



PART I
                                                                            Page
                                                                           -----

Item 1.  Business                                                              3

Item 1A. Risk Factors                                                          9

Item 1B. Unresolved Staff Comments                                            15

Item 2.  Properties                                                           15

Item 3.  Legal Proceedings                                                    16

Item 4.  Submission of Matters to a Vote of Security Holders                  16


PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder
         Matters and Issuer Purchases of Equity Securities                    17

Item 6.  Selected Financial Data                                              19

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                            20

Item 7A. Quantitative and Qualitative Disclosures About Market Risk           31

Item 8.  Consolidated Financial Statements and Supplementary Data             32

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure                                                 53

Item 9A. Controls and Procedures                                              53

Item 9B. Other Information                                                    54


PART III

Item 10. Directors, Executive Officers and Corporate Governance               56

Item 11. Executive Compensation 56

Item 12. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters                                          56

Item 13. Certain Relationships and Related Transactions, and Director
         Independence                                                         56

Item 14. Principal Accountant Fees and Services                               56


PART IV

Item
  15.    Exhibits and Financial Statement Schedules                           57


Signatures                                                                    58


                                       2



                                     PART I
ITEM 1. BUSINESS

General

     References in this document to "Buffalo Wild Wings," "company," "we," "us"
and "our" refer to the business of Buffalo Wild Wings, Inc. and our
subsidiaries. We maintain an Internet website address at
www.buffalowildwings.com. We make available free of charge through our website
our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and all amendments to those reports as soon as they are reasonably
available after these materials are electronically filed with or furnished to
the Securities and Exchange Commission, ("SEC"). These materials are also
accessible on the SEC's web site at www.sec.gov. The public may read and copy
any materials we file with the SEC at the SEC's Public Reference Room at 100 F
Street, NE, Washington, DC 20549. The public may obtain information for the
Public Reference Room by calling the SEC at 1-800-SEC-0330.

     We are an established and growing owner, operator and franchisor of
restaurants featuring a variety of boldly-flavored, made-to-order menu items
including our Buffalo, New York-style chicken wings spun in any of our signature
sauces. Our restaurants create an inviting neighborhood atmosphere that includes
an extensive multi-media system, a full bar and an open layout, which appeals to
sports fans and families alike. Our concept offers elements of the quick casual
and casual dining restaurant concepts featuring a flexible service model that
allows our guests to choose among convenient dining options such as quick casual
counter service, casual dining table service or take-out. Our award-winning food
and inviting atmosphere, combined with our guests' ability to customize their
dining experience, drives guest visits and loyalty.

     The widespread appeal of our concept establishes our restaurants as a
neighborhood destination with 493 restaurants in 37 states as of December 30,
2007. Our menu, competitively priced between the quick casual and casual dining
segments, features fresh chicken wings and other items including boneless wings,
chicken tenders, popcorn shrimp, specialty hamburgers and sandwiches, wraps,
Buffalito(R) soft tacos, appetizers and salads. Our made-to-order menu items are
enhanced by the bold flavor profile of our signature sauces, ranging from mild
Teriyaki(TM) to Blazin'(R). Our restaurants serve approximately 20 domestic and
imported beers on tap, including several local or regional micro-brews and a
wide selection of bottled beers, wines, and liquor. The inviting and energetic
environment of our restaurants is complemented by furnishings that can be easily
rearranged to accommodate parties of various sizes. Our guests have the option
of watching sporting events or other popular programs on our projection screens
and approximately 40 additional televisions, playing Buzztime(R) Trivia or video
games. The open layout of our restaurants offers dining and bar areas that
provide distinct seating choices for sports fans and families. Our unique
service model, which provides the flexibility of ordering at the counter or
table, allows our guests to customize their Buffalo Wild Wings(R) experience to
meet their time demands, service preferences or the experience they are seeking
of a workday lunch, a dine-in dinner, a take-out meal, an afternoon or evening
enjoying a sporting event or a late-night craving.

     We have established our brand through coordinated marketing and operational
execution that ensures brand recognition and the quality and consistency of our
concept. These efforts include marketing programs and irreverent, award-winning
advertising to support both our company-owned and franchised restaurants. We
also prominently feature our trademark Buffalo insignia and yellow and black
colors in our restaurants and brand our company materials. Our concept is
further strengthened by our emphasis on operational excellence supported by
stringent operating guidelines and comprehensive employee training in both
company-owned and franchised restaurants.

     Buffalo Wild Wings was founded in 1982 by Jim Disbrow and Scott Lowery at a
location near The Ohio State University. Our original name was Buffalo Wild
Wings & Weck(R) and we became more popularly known as bw-3(R). In 1991, we began
our franchising program. In November 2003, we completed an initial public
offering and became a publicly-held company.

Our Concept and Business Strategy

     Our goal is to continue to grow and develop the Buffalo Wild Wings(R) Grill
& Bar concept into a leading national restaurant chain. To do so, we plan to
execute the following strategies:

     o  Open restaurants in new and existing markets;

     o  Offer boldly-flavored menu items with broad appeal;

     o  Create an inviting, neighborhood atmosphere;

     o  Enable our guests to customize their dining experience;

     o  Continue to strengthen the Buffalo Wild Wings brand;

     o  Focus on operational excellence; and

     o Increase same-store sales and average unit volumes.


                                       3



Growth Strategy

     Our growth strategy involves opening company-owned and franchised
restaurants in both new and existing markets. We believe that we have
established the necessary infrastructure and control systems to support our
disciplined growth strategy and that our concept can support over 1,000
restaurants in the United States. We have developed procedures for identifying
new market opportunities, determining our expansion strategy in those markets
and identifying sites for company-owned and franchised restaurants. Our growth
strategy is moving toward a mix of approximately 40% company-owned restaurants
and approximately 60% franchised restaurants. At the end of 2008, we anticipate
a mix of approximately 35% company-owned and 65% franchised restaurants.

     We intend to build additional company-owned restaurants in both new and
existing markets. In most of our existing markets, we plan to continue to
develop new company-owned restaurants until a market is penetrated to a point
that will enable us to gain marketing and cost efficiencies. We intend to enter
new markets by opening several restaurants within a one-year period to quickly
build our brand awareness. We intend to grow our franchise system through the
development of new restaurants by existing and new franchisees, focusing on
multiple-unit area development agreements.

The Buffalo Wild Wings Menu

     Our restaurants feature a variety of menu items including our Buffalo, New
York-style chicken wings spun in one of our signature sauces from sweet to
screamin' hot: Sweet BBQ(TM), Teriyaki(TM), Mild(TM), Parmesan Garlic(TM),
Medium(TM), Honey BBQ(TM), Spicy Garlic(TM), Asian Zing(TM), Caribbean Jerk(TM),
Hot BBQ(TM), Hot(TM), Mango Habanero(TM), Wild(R) and Blazin'(R) . Our fresh
chicken wings can be ordered in sizes ranging from six to 100 wings, with larger
orders available for parties. Our sauces complement and distinguish our chicken
wings to create a bold flavor profile for our guests. In addition to chicken
wings, our menu features a wide variety of food items including boneless wings,
chicken tenders, popcorn shrimp, specialty hamburgers and sandwiches, wraps,
Buffalito soft tacos, finger foods and salads. We also provide a 12 & Under Menu
for kids.

     Our restaurants feature a full bar which offers an extensive selection of
approximately 20 domestic and imported beers on tap as well as bottled beers,
wine and liquor. Additionally, in order to continually improve our menu, we have
a research and development department that tests and implements new menu items.
Our goal is to balance the established menu offerings that appeal to our loyal
guests with new menu items that increase guest frequency and attract new guests.

Restaurant Atmosphere and Layout

     Our restaurants are designed to provide an inviting neighborhood atmosphere
and allow our guests the flexibility to customize their dining experience. The
inviting and energetic environment of our restaurants is created using
furnishings that can be easily rearranged to accommodate parties of various
sizes. Our restaurants also feature distinct dining and bar areas with select
restaurants having patio seating.

     We strategically place approximately 40 televisions and up to seven
projection screen televisions throughout the restaurant to allow for easy
viewing. These televisions, combined with our sound system, Buzztime(R) Trivia
and assorted video games, provide a source of entertainment for our guests and
reinforce the energetic nature of our concept. We tailor the content and volume
of our video and audio programming to reflect our guests' tastes. We believe the
design of our restaurants enhances our guests' experiences, drives repeat visits
and solidifies the broad appeal of our concept.

     All of our menu items are made-to-order and are available for take-out,
which approximated 15% of restaurant sales for company-owned restaurants in
2007. Many of our restaurants have separate parking spots for our take-out
guests.

Current Restaurant Locations

     As of December 30, 2007, we owned or franchised 493 Buffalo Wild Wings
restaurants in 37 states, of which 161 were company-owned and 332 were
franchised. In 2008, our goal is to achieve 15% unit growth and open
approximately 75 new company-owned and franchised restaurants.

     Our company-owned restaurants range in size from 4,500 to 8,200 square
feet, with an average of approximately 5,600 square feet for restaurants that
have opened in the last three years. We anticipate that future restaurants will
range in size from 4,500 square feet to 6,500 square feet with an average cash
investment per restaurant of approximately $1.4 million, excluding preopening
expenses of approximately $180,000. From time to time, we expect that our
restaurants may be smaller or larger or cost more or less than our targeted
range, depending on the particular circumstances of the selected site or market.
Also, from time to time, we expect to purchase the building or the land and
building for certain restaurants, in which case the cash investment would be
significantly higher.


                                       4



     The eight restaurants acquired from Avado Brands will be larger than our
typical restaurant ranging from 6,500 square feet to 9,800 square feet.

     Our restaurants are typically open on a daily basis from 11 a.m. to 2 a.m.
Closing times vary depending on the day of the week and city and state
regulations governing the sale of alcoholic beverages. Our franchise agreements
require franchisees to operate their restaurants for a minimum of 12 hours a
day.

Site Selection and Development

     Our site selection process is integral to the successful execution of our
growth strategy. We have processes for identifying, analyzing and assigning
undeveloped markets for either company-owned or franchise development. Once a
market is assigned, we use a trade area and site selection evaluation system,
which has been customized for the requirements of the Buffalo Wild Wings system,
to assist in identifying suitable trade areas within that market and suitable
sites within identified trade areas. Criteria examined to determine appropriate
trade areas include the presence of a casual dining corridor, projected growth
within the trade area, the locations of key big box retailers and multi-screen
movie theaters in the neighborhood, key demographics and population density,
drive time and trade area analysis and other quantitative and qualitative
measures. Once a suitable trade area is identified, we examine site-specific
details including visibility, signage, access and parking. Final approval by two
or more members of our executive management team is required for each
company-owned site. At least one senior franchise executive reviews each
franchise site.

Marketing and Advertising

     We have created a unique marketing program designed to communicate a
distinctive and consistent brand that differentiates Buffalo Wild Wings from our
competitors and that showcases our food and our brand in a fun and energetic
atmosphere. These efforts include marketing campaigns and irreverent,
award-winning advertising to support both our company-owned and franchised
restaurants. The primary goal of these efforts is to build brand awareness
throughout the United States. In addition, advertising campaigns are also
designed to: i) drive positive same-store sales through additional visits by our
existing guests and visits by new guests, ii) increase margins, iii) increase
average order size, and iv) support strong restaurant openings.

     Marketing Campaigns. Our primary marketing campaigns focus on our
experience or a particular menu item, day or daypart in an attempt to drive
traffic and build brand awareness. For example, in 2007 we developed a campaign
to promote the rollout of our new "Ribs & Combos" menu items as well as
developing a new TV commercial highlighting YOU HAVE TO BE HERE(TM) at Buffalo
Wild Wings. Our secondary marketing campaigns focus on reaching beyond the core
Buffalo Wild Wings guest. Given our strategy to be a neighborhood destination,
community marketing is also a key to developing brand awareness in each market.
Our restaurants actively sponsor local sporting teams and sporting events to
drive guest traffic associated with those activities.

     Advertising. Our media advertising focuses on positioning the Buffalo Wild
Wings brand as an inviting neighborhood dining location. Our commercials, print
advertisements and radio spots are irreverent by design and have been recognized
in the restaurant and advertising industries for their creativity.

     Franchise Involvement. System-wide campaigns and promotions are developed
and implemented with input from the Buffalo Wild Wings National Advertising
Advisory Board. This volunteer franchisee board is elected by franchisees
annually and meets regularly to review marketing strategies, provide input on
advertising messages and vendor co-op programs, and discuss marketing
objectives.

Operations

     Our management team strives for operational excellence by recruiting,
training and supporting the highest quality management teams and employees and
through the implementation of operational standards and best practices within
our restaurants.

     Restaurant Management. Our management structure consists of a general
manager, one assistant general manager and up to three other managers depending
on sales volume of the restaurant. We utilize regional managers to oversee our
general managers, ensuring that they receive the training and support necessary
to effectively operate their restaurants. Currently, we have 26 regional
managers who oversee four to nine restaurants each. As we expand geographically,
we expect to add additional regional managers. We have five directors of
operations who provide leadership to the regional managers.


                                       5



     Kitchen Operations. An important aspect of our concept is the efficient
design, layout and execution of our kitchen operations. Due to the relatively
simple preparation of our menu items, the kitchen consists of fryers, grill and
food prep stations that are arranged assembly-line style for maximum
productivity. Given our menu and kitchen design, we are able to staff our
kitchen with hourly Team Members who require only basic training before reaching
full productivity. Additionally, we do not require the added expense of an
on-site chef. The ease and simplicity of our kitchen operations allows us to
achieve our goal of preparing casual dining quality food with minimal wait
times. We also believe the ease of our kitchen operations creates a competitive
advantage for our concept.

     Training. We provide thorough training for management and hourly Team
Members at company-owned restaurants, with the goal of providing an excellent
guest experience based on our service, food preparation and facilities
maintenance. Further, we require each franchisee to send their general manager,
assistant manager and "control person" to attend our management training
program.

     Managers at our company-owned locations are trained using a hands-on
education process during a seven-week period at one of our Certified Training
Restaurants. During this training period, our manager trainees work in every
aspect of the business, including both hourly and management functions. In
addition, our General Managers and high-potential Assistant General Managers
attend an off-site management skills class.

     Our hourly Team Members in company-owned restaurants complete a
comprehensive position certification process. Station certification requires 16
to 20 hours of hands-on training. Team Members must also successfully pass
position validations, menu certifications and Responsible Alcohol Service
Training.

     Team Members who have demonstrated outstanding performance and a high level
of knowledge in one or more positions within the restaurant are encouraged to
apply to enter the Wing Certified Trainer (WCT) program. The WCT candidates
complete a training plan, which includes developing and evaluating his/her
ability to train and impact the performance of Team Members. Those who
successfully complete the requirements are promoted to the position of Wing
Certified Trainer. Our objective is to have at least four WCTs in each
restaurant.

     Team Members who have performed successfully as Wing Certified Trainers in
three or more station areas can apply to become All-Star Trainers. Our All-Star
Trainers have the opportunity to travel around the country to assist with
training at new restaurant openings.

     Both of these Team Member leadership positions provide growth and can lead
to opportunities to be considered for a position in management. Monetary
incentives and additional benefits are used to recognize and reward the
contributions of these leaders.

     Career Opportunities. We are able to motivate and retain our field
operations team by providing them with opportunities for increased
responsibilities and advancement. In addition, we offer performance-based cash
incentives tied to sales, profitability and qualitative measures such as mystery
shop scores. We strive for a balance of internal promotion and external hiring.
This provides us with the ability to retain and grow our Team Members and to
infuse our organization with new learning and experiences that come from outside
of our concept.

     Recruiting. We actively recruit and select individuals who demonstrate
enthusiasm and dedication and who share our passion for high quality guest
service delivered through teamwork and commitment. To attract high caliber
managers, we have developed a competitive compensation plan that includes a base
salary and an attractive benefits package, including participation in a
management incentive plan that rewards managers for achieving performance
objectives.

Food Preparation, Quality Control and Purchasing

     We strive to maintain high quality standards. Our systems are designed to
protect our food supply from procurement through the preparation process. We
provide detailed specifications to suppliers for our food ingredients, products
and supplies. Our restaurant managers are certified in a comprehensive food
safety and sanitation course, ServSafe, developed by the National Restaurant
Association Educational Foundation.

     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 to
our restaurants. To maximize our purchasing efficiencies and obtain the lowest
possible prices for our ingredients, products and supplies, our purchasing team
negotiates prices based on the system-wide usage of both company-owned and
franchised restaurants. We believe that competitively priced, high quality
alternative manufacturers, suppliers, growers and distributors are available
should the need arise.


                                       6



     We utilize T. Marzetti Company for the production of our signature sauces.
They maintain sufficient inventory levels to ensure consistent supply to our
restaurants. We have a confidentiality agreement with Marzetti which prevents
our sauces from being supplied to, or manufactured for, anyone else.

     Fresh chicken wings are an important component of our cost of sales. 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. In March
2007, we entered into a one-year pricing agreement with one of our chicken
suppliers which limited the price volatility that we had experienced in our
quarterly cost of sales percentage. We have not been able to negotiate a
satisfactory long-term pricing agreement for chicken wings and may float at
market for the remainder of 2008. However, we will continue to pursue options
for a long-term price contract.

Restaurant Franchise Operations

     Our concept continues to attract a strong group of franchisees, many of
whom have substantial prior restaurant operations experience. Our franchisees
execute a separate franchise agreement for each restaurant opened, typically
providing for a 20-year initial term, with an opportunity to enter into a
renewal franchise agreement subject to certain conditions. Our agreement
currently requires franchisees to pay an initial franchise fee of $42,500 for
the first restaurant opened and $32,500 for each additional restaurant they
open. The $32,500 fee is reduced to $12,500 if the additional restaurant is in
the designated area of the franchisee's existing restaurant. If a new franchisee
enters into an area development agreement with us, the initial franchise fee is
$42,500 for the first restaurant, $32,500 for the second restaurant and $27,500
for each subsequent restaurant. If an existing franchisee subsequently signs an
area development agreement, the franchise fee is $32,500 for the first
restaurant and $22,500 for each subsequent restaurant. The franchise fees are
$32,500 for the first restaurant and $12,500 for each subsequent restaurant if
the franchisee is an existing area developer signing an additional area
development agreement.

     Franchisees also pay us a royalty fee of 5.0% of their restaurant sales.
Franchise agreements typically allow us to assess franchisees an advertising fee
in the amount of 3.5% of their restaurant sales, of which 3.0% was contributed
to our Advertising Fund in 2007 and the remaining 0.5% was spent directly by the
franchisee in the applicable local market. Our current form of franchise
agreement permits us to increase the required contribution to the Advertising
Fund by 0.5% once every three years. The amount contributed to the Advertising
Fund increased from 2.5% to 3.0% on December 26, 2005 and is not expected to
increase in 2008.

     All of our franchise agreements require that each franchised restaurant be
operated in accordance with our defined operating procedures, adhere to the menu
established by us, meet applicable quality, service, health and cleanliness
standards and comply with all applicable laws. We ensure these high standards
are being followed through a variety of means including mystery shoppers and
announced and unannounced quality assurance inspections. We also employ
franchise consultants to assist our franchisees in developing profitable
operations and maintaining our operating standards. We may terminate the
franchise rights of any franchisee who does not comply with our standards and
requirements. We believe that maintaining superior food quality, an inviting and
energetic atmosphere and excellent guest service are critical to the reputation
and success of our concept; therefore, we aggressively enforce the contractual
requirements of our franchise agreements.

     The area development agreement establishes the number of restaurants that
must be developed in a defined geographic area and the deadlines by which these
restaurants must open. For area development agreements covering three to seven
restaurants, restaurants are usually required to open in 12-month intervals. For
larger development agreements, the interval is typically shorter. The area
development agreement can be terminated by us if, among other reasons, the area
developer fails to open restaurants on schedule.

Management Information Systems

     Our core management information systems are in place and we believe they
are scalable to support our future growth plans. We utilize a standard
point-of-sale system in all of our company-owned restaurants which helps
facilitate the operation of the restaurants by recording sales, cost of sales,
labor and other operating metrics and allows managers to create various reports.
Certain information from the point-of-sale system is transferred to our
headquarters on a daily basis and is reported daily to various levels of
management through email and our corporate intranet. Franchisees are required to
report sales on a daily basis through an on-line reporting network and submit
their restaurant-level financial statements on a quarterly and annual basis.


                                       7



Competition

     The restaurant industry is intensely competitive. We compete on the basis
of the taste, quality and price of food offered, guest service, ambience,
location, and overall dining experience. We believe that our attractive
price-value relationship, the atmosphere of our restaurant, our flexible service
model and the quality and distinctive flavor of our food enable us to
differentiate ourselves from our competitors. We believe we compete primarily
with local and regional sports bars and casual dining and quick casual
establishments, as well as with quick service restaurants such as wing-based
take-out concepts. Many of our direct and indirect competitors are
well-established national, regional or local chains and some have substantially
greater financial and marketing resources than we do. We also compete with many
restaurant and retail establishments for site locations and restaurant
employees.

Proprietary Rights

     We own the rights to the "Buffalo Wild Wings(R)" service mark and to
certain other service marks and trademarks used in our system. We attempt to
protect our sauce recipes as trade secrets by, among other things, requiring a
confidentiality agreement with our sauce supplier and executive officers. It is
possible that competitors could develop recipes and procedures that duplicate or
closely resemble our recipes and procedures. We believe that our trademarks,
service marks and other proprietary rights have significant value and are
important to our brand-building efforts and the marketing of our restaurant
concept. We vigorously protect our proprietary rights. We cannot predict,
however, whether steps taken by us to protect our proprietary rights will be
adequate to prevent misappropriation of these rights or the use by others of
restaurant features based upon, or otherwise similar to, our concept. It may be
difficult for us to prevent others from copying elements of our concept and any
litigation to enforce our rights will likely be costly and may not be
successful. Although we believe that we have sufficient rights to all of our
trademarks and service marks, we may face claims of infringement that could
interfere with our ability to market our restaurants and promote our brand. Any
such litigation may be costly and divert resources from our business. Moreover,
if we are unable to successfully defend against such claims, we may be prevented
from using our trademarks or service marks in the future and may be liable for
damages.

Government Regulation

     The restaurant industry is subject to numerous federal, state and local
governmental regulations, including those relating to the preparation and sale
of food and alcoholic beverages, sanitation, public health, fire codes, zoning
and building requirements. Each restaurant requires appropriate licenses from
regulatory authorities allowing it to sell liquor, beer and wine, and each
restaurant requires food service licenses from local health authorities. Our
licenses to sell alcoholic beverages must be renewed annually and may be
suspended or revoked at any time for cause, including violation by us or our
employees of any law or regulation pertaining to alcoholic beverage control,
such as those regulating the minimum age of employees or patrons who may serve
or be served alcoholic beverages, the serving of alcoholic beverages to visibly
intoxicated patrons, advertising, wholesale purchasing and inventory control.
The failure of a restaurant to retain liquor or food service licenses could have
a material adverse effect on our operations. In order to reduce this risk,
restaurant employees are trained in standardized operating procedures designed
to assure compliance with all applicable codes and regulations.

     We and our franchisees are also subject to laws governing our relationships
with employees, including laws and regulations relating to benefits, wages,
hours, workers' compensation insurance rates, unemployment and other taxes,
working and safety conditions and citizenship or immigration status. We may also
be subject in certain states to "dram-shop" statutes, which generally allow a
person injured by an intoxicated person to recover damages from an establishment
that wrongfully served alcoholic beverages to the intoxicated person. In
addition, we are subject to various state and federal laws relating to the offer
and sale of franchises and the franchisor-franchisee relationship. In general,
these laws and regulations impose specific disclosure and registration
requirements prior to the sale and marketing of franchises and regulate certain
aspects of the relationship between franchisor and franchisee.

Employees

     As of December 30, 2007, we employed 9,564 employees. We have 813 full-time
and 8,576 part-time employees working in our company-owned restaurants and 175
employees based out of our home office or in the field. Our employees are not
covered by any collective bargaining agreement, and we have never experienced an
organized work stoppage or strike. We believe that our working conditions and
compensation packages are competitive and consider our relations with our
employees to be good.


                                       8



Executive Officers

     The following sets forth certain information about our executive officers:

     Sally J. Smith, 50, has served as our Chief Executive Officer and President
since July 1996 and as a director since August 1996. She served as our Chief
Financial Officer from 1994 to 1996. Prior to joining Buffalo Wild Wings, she
was the Chief Financial Officer of Dahlberg, Inc., the manufacturer and
franchisor of Miracle-Ear hearing aids, from 1983 to 1994. Ms. Smith began her
career with KPMG LLP, an international accounting and auditing firm. Ms. Smith
is a CPA. She serves on the boards of the National Restaurant Association and
Alerus Financial Corporation.

     Mary J. Twinem, 47, has served as our Executive Vice President, Chief
Financial Officer and Treasurer since July 1996. She served as our Controller
from January 1995 to July 1996. Ms. Twinem also served as a director on our
Board from June 2002 to September 2003. Prior to joining Buffalo Wild Wings, she
served as the Director of Finance/Controller of Dahlberg, Inc. from 1989 to
December 1994. Ms. Twinem began her career in public accounting and holds an
inactive CPA license.

     Kathleen M. Benning, 45, has served as our Senior Vice President, Marketing
and Brand Development since January 2002. She joined us in March 1997 as Vice
President of Marketing. Prior to joining us, Ms. Benning was employed by Nemer,
Fieger & Associates, an advertising agency, from 1992 to 1997, where she was a
partner from 1994 to 1997.

     Mounir N. Sawda, 50, has served as our Senior Vice President, Franchise and
Development since August 2007. Prior to joining us, Mr. Sawda managed his own
consulting company from 2005 to 2007. From 1998 to 2005, Mr. Sawda served in
various executive positions at Denny's Corporation, most recently as Vice
President Development, Property Management, Construction and Facilities. From
1996 to 1998 and from 1984 to 1993, Mr. Sawda held various leadership positions
with Burger King Corporation. From 1982 to 1984 and from 1993 to 1996, Mr. Sawda
worked with Hanna International and ACMECON in Saudi Arabia.

     James M. Schmidt, 48, has served as our Executive Vice President and
General Counsel since December 2006, prior to which he served as Senior Vice
President and General Counsel since joining us in April 2002. Mr. Schmidt has
also served as our Secretary since September 2002, and he served as a director
on our Board from 1994 to September 2003. Mr. Schmidt has been a practicing
attorney since 1985, most recently with the law firm of Robbins, Kelly,
Patterson & Tucker, which provides legal services to us from time to time.

     Judith A. Shoulak, 48, has served as our Senior Vice President, Operations
since March 2004. She served as our Senior Vice President, Human Resources from
January 2003 to February 2004 and as Vice President of Human Resources from
October 2001 to January 2003. From 1993 to 2001, Ms. Shoulak served as Vice
President of Field Human Resources of OfficeMax.

     Linda G. Traylor, 56, has served as our Senior Vice President, Human
Resources since October 2006. Prior to joining us, Ms. Traylor managed her own
consulting company, LG Traylor & Associates from 2005 to 2006. From 2001 to
2005, Ms. Traylor served as Senior Vice President, Human Resources of Denny's
Corporation and as its Vice President, Human Resources Planning and Development
from 1995 to 2001. From 1979 to 1995, Ms. Traylor held various leadership
positions with Burger King Corporation.

ITEM 1A. RISK FACTORS

     The foregoing discussion and the discussion contained in Item 7 of this
Form 10-K 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 growth strategy, financial
results, sales efforts, franchise expectations, store openings and related
expense, and cash requirements. 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 risk factors that follow.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties and speak only as of the date on which they are made.


                                       9



     Fluctuations in chicken wing prices could reduce our operating income.

     The primary food product used by our 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. In March 2007, we entered into a one-year pricing
agreement with one of our chicken suppliers which limited the price volatility
that we had experienced in our quarterly cost of sales percentage. We have not
been able to negotiate a satisfactory long-term pricing agreement for chicken
wings and may float at market for the remainder of 2008. However, we will
continue to pursue options for a long-term price contract. Fresh chicken wing
prices in 2007 averaged 9% higher than 2006 as the average price per pound rose
to $1.28 in 2007 from $1.17 in 2006. 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. For example,
fresh chicken wings accounted for approximately 24%, 24%, and 27% of our cost of
sales in 2007, 2006, and 2005, respectively, with an annual average price per
pound of $1.28, $1.17, and $1.20, respectively. A 10% increase in the fresh
chicken wing costs for 2007 would have increased restaurant cost of sales by
approximately $2.1 million. If the avian flu were to affect our supply of
chicken wings, our operations may be negatively impacted, as prices may rise due
to limited supply. Additional information related to chicken wing prices is
included in Item 7 under "Results of Operations."

     If we are unable to successfully open new restaurants, our revenue growth
rate and profits may be reduced.

     To successfully expand our business, we must open new Buffalo Wild Wings
restaurants on schedule and in a profitable manner. In the past, we and our
franchisees have experienced delays in restaurant openings and we may experience
similar delays in the future. Delays or failures in opening new restaurants
could hurt our ability to meet our growth objectives, which may affect our
results of operations, the expectations of securities analysts and shareholders
and thus our stock price. We cannot guarantee that we or our franchisees will be
able to achieve our expansion goals. Further, any restaurants that we, or our
franchisees, open may not achieve operating results similar or better than our
existing restaurants. If we are unable to generate positive cash flow from a new
restaurant, we may be required to recognize an impairment loss with respect to
the assets for that restaurant. Our ability to expand successfully will depend
on a number of factors, many of which are beyond our control. These factors
include:

     o  Locating suitable restaurant sites in new and existing markets;

     o  Having adequate restaurant sites due to tightening credit markets;

     o  Negotiating acceptable lease or purchase terms for new restaurants;

     o  Recruiting, training and retaining qualified home office, field and
        restaurant personnel and management;

     o  Attracting and retaining qualified franchisees;

     o  Cost effective and timely planning, design and build-out of restaurants;

     o  Obtaining building materials and hiring satisfactory construction
        contractors;

     o  Obtaining and maintaining required local, state and federal governmental
        approvals and permits related to the construction of the sites and the
        sale of food and alcoholic beverages;

     o  Creating guest awareness of our restaurants in new markets;

     o  Competition in our markets; and

     o  General economic conditions.

     We must identify and obtain a sufficient number of suitable new restaurant
sites for us to sustain our revenue growth rate.

     We require that all proposed restaurant sites, whether for company-owned or
franchised restaurants, meet our site-selection criteria. We may make errors in
selecting these criteria or applying these criteria to a particular site, or
there may be an insignificant number of new restaurant sites meeting these
criteria that would enable us to achieve our planned expansion in future
periods. We face significant competition from other restaurant companies and
retailers for sites that meet our criteria and the supply of sites may be
limited in some markets. Further, we may be precluded from acquiring an
otherwise suitable site due to an exclusivity restriction held by another
tenant. As a result of these factors, our costs to obtain and lease sites may
increase, or we may not be able to obtain certain sites due to unacceptable
costs. Our inability to obtain suitable restaurant sites at reasonable costs may
reduce our growth rate.


                                       10



     Our restaurants may not achieve market acceptance in the new geographic
regions we enter.

     Our expansion plans depend on opening restaurants in new markets where we
or our franchisees have little or no operating experience. We may not be
successful in operating our restaurants in new markets on a profitable basis.
The success of these new restaurants will be affected by the different
competitive conditions, consumer tastes and discretionary spending patterns of
the new markets as well as our ability to generate market awareness of the
Buffalo Wild Wings brand. Sales at restaurants opening in new markets may take
longer to reach average annual restaurant sales, if at all, thereby affecting
their profitability.

     New restaurants added to our existing markets may take sales from existing
restaurants.

     We and our franchisees intend to open new restaurants in our existing
markets, which may reduce sales performance and guest visits for existing
restaurants in those markets. In addition, new restaurants added in existing
markets may not achieve sales and operating performance at the same level as
established restaurants in the market.

     Implementing our expansion strategy may strain our resources.

     Our expansion strategy may strain our management, financial and other
resources. We must attract and retain talented operating personnel to maintain
the quality and service levels at our existing and future restaurants. We must
also continue to enhance our operational, financial and management systems. We
may not be able to effectively manage these or other aspects of our expansion.
If we fail to do so, our business, financial condition, operating results and
cash flows could suffer.

     We are dependent on franchisees and their success.

     Currently, approximately 67% of our restaurants are franchised. Franchising
royalties and fees represented approximately 11% of our revenues during fiscal
2007, 2006, and 2005. Our performance depends upon (i) our ability to attract
and retain qualified franchisees, (ii) the franchisees' ability to execute our
concept and capitalize upon our brand recognition and marketing, and (iii)
franchisees' ability to timely develop restaurants. We may not be able to
recruit franchisees who have the business abilities or financial resources
necessary to open restaurants on schedule, or who will conduct operations in a
manner consistent with our concept and standards. Also, our franchisees may not
be able to operate restaurants in a profitable manner.

     Franchisees may take actions that could harm our business.

     Franchisees are independent contractors and are not our employees. We
provide training and support to franchisees, but the quality of franchised
restaurant operations may be diminished if franchisees do not operate
restaurants in a manner consistent with our standards and requirements, or if
they do not hire and train qualified managers and other restaurant personnel. If
franchisees do not adequately manage their restaurants, our image and
reputation, and the image and reputation of other franchisees, may suffer
materially and system-wide sales could significantly decline. In addition, we
may also face potential claims and liabilities due to the acts of our
franchisees based on agency or vicarious liability theories.

     We could face liability from our franchisees.

     A franchisee or government agency may bring legal action against us based
on the franchisee/franchisor relationships. Various state and federal laws
govern our relationship with our franchisees and our potential sale of a
franchise. If we fail to comply with these laws, we could be liable for damages
to franchisees and fines or other penalties. Expensive litigation with our
franchisees or government agencies may adversely affect both our profits and our
important relations with our franchisees.

     We may be unable to compete effectively in the restaurant industry.

     The restaurant industry is intensely competitive. We believe we compete
primarily with regional and local sports bars, casual dining and quick casual
establishments, and quick service wing-based take-out concepts. Many of our
direct and indirect competitors are well-established national, regional or local
chains with a greater market presence than us. Further, some competitors have
substantially greater financial, marketing and other resources than us. In
addition, independent owners of local or regional establishments may enter the
wing-based restaurant business without significant barriers to entry and such
establishments may provide price competition for our restaurants. Competition in
the casual dining, quick casual and quick service segments of the restaurant
industry is expected to remain intense with respect to price, service, location,
concept and the type and quality of food. We also face intense competition for
real estate sites, qualified management personnel and hourly restaurant staff.


                                       11



     A reduction in vendor allowances currently received could affect our costs
of goods sold.

     During fiscal 2007, 2006, and 2005, vendor allowances were recorded as a
reduction in inventoriable costs, and cost of sales was reduced by $4.6 million,
$4.2 million, and $4.0 million, respectively. If the amount of vendor rebates is
reduced, inventoriable costs may increase, as may the cost of sales.

     Our quarterly operating results may fluctuate due to the timing of special
events and other factors, including the recognition of impairment losses.

     Our quarterly operating results depend, in part, on special events, such as
the Super Bowl(R) and other popular sporting events, and thus are subject to
fluctuations based on the dates for such events. Historically, sales in most of
our restaurants have been higher during fall and winter months based on the
relative popularity of national, regional and local sporting and other events.
Further, our quarterly operating results may fluctuate significantly because of
other factors, including:

     o  Increases or decreases in same-store sales;

     o  Fluctuations in food costs, particularly fresh chicken wings;

     o  The timing of new restaurant openings, which may impact margins due to
        the related preopening costs and initially higher restaurant level
        operating expense ratios;

     o  Labor availability and costs for hourly and management personnel;

     o  Changes in competitive factors;

     o  Disruption in supplies;

     o  General economic conditions and consumer confidence;

     o  Claims experience for self-insurance programs;

     o  Increases or decreases in labor or other variable expenses;

     o  The impact from natural disasters;

     o  Fluctuations in interest rates; and

     o  The timing and amount of asset impairment loss and restaurant closing
        charges.

     As a result of the factors discussed above, our quarterly and annual
operating results may fluctuate significantly. Accordingly, results for any one
quarter are not necessarily indicative of results to be expected for any other
quarter or for any year. These fluctuations may cause future operating results
to fall below the expectations of securities analysts and investors. In that
event, the price of our common stock would likely decrease.

     We may not be able to attract and retain qualified personnel to operate and
manage our restaurants.

     Our success and the success of our individual restaurants depends on our
ability to attract, motivate and retain a sufficient number of qualified
restaurant employees, including restaurant managers, kitchen staff and wait
staff. The inability to recruit and retain these individuals may delay the
planned openings of new restaurants or result in high employee turnover in
existing restaurants. This could inhibit our expansion plans and business
performance and, to the extent that a labor shortage may force us to pay higher
wages, harm our profitability. Further, the loss of any of our executive
officers could adversely impact us.

     We may not be able to obtain and maintain licenses and permits necessary to
operate our restaurants.

     The restaurant industry is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. The failure to obtain and maintain these licenses, permits
and approvals, including food and liquor licenses, could adversely affect our
operating results. Difficulties or failure to obtain the required licenses and
approvals could delay or result in our decision to cancel the opening of new
restaurants. Local authorities may revoke, suspend or deny renewal of our food
and liquor licenses if they determine that our conduct violates applicable
regulations.


                                       12



     Changes in employment laws or regulation could harm our performance.

     Various federal and state labor laws govern our relationship with our
employees and affect operating costs. These laws include minimum wage
requirements, overtime pay, unemployment tax rates, workers' compensation rates,
citizenship requirements and sales taxes. A number of factors could adversely
affect our operating results, including additional government-imposed increases
in minimum wages, overtime pay, paid leaves of absence and mandated health
benefits, increased tax reporting and tax payment requirements for employees who
receive tips, a reduction in the number of states that allow tips to be credited
toward minimum wage requirements, and increased employee litigation including
claims relating to the Fair Labor Standards Act.

     The Americans with Disabilities Act is a federal law that prohibits
discrimination on the basis of disability in public accommodations and
employment. Although our restaurants are designed to be accessible to the
disabled, we could be required to make modifications to our restaurants to
provide service to, or make reasonable accommodations for disabled persons.

     Changes in consumer preferences or discretionary consumer spending could
harm our performance.

     Our success depends, in part, upon the continued popularity of Buffalo, New
York-style chicken wings, our other menu items, sports bars and casual dining
restaurant styles. We also depend on trends toward consumers eating away from
home more often. Shifts in these consumer preferences could negatively affect
our future profitability. Such shifts could be based on health concerns related
to the cholesterol, carbohydrate or fat content of certain food items, including
items featured on our menu. Negative publicity over the health aspects of such
food items may adversely affect consumer demand for our menu items and could
result in a decrease in guest traffic to our restaurants, which could materially
harm our business. Smoking bans imposed by state or local laws could also
adversely impact our restaurants' performance. In addition, our success depends
to a significant extent on numerous factors affecting discretionary consumer
spending, including economic conditions, disposable consumer income and consumer
confidence. A decline in consumer spending or in economic conditions could
reduce guest traffic or impose practical limits on pricing, either of which
could harm our business, financial condition, operating results or cash flow.

     We are susceptible to adverse trends in Ohio.

     As of December 30, 2007, 86, or approximately 17%, of our company-owned and
franchised restaurants were located in Ohio. In addition, many of our
restaurants in Ohio have been operating for at least ten years. Given our
geographic concentration in the Midwest, negative publicity regarding any of our
restaurants could have a material effect on our business and operations
throughout the region, as could other regional occurrences such as local
economic conditions, strikes, new or revised laws or regulations, or disruptions
in the supply of food products. As a result, we are susceptible to adverse
economic trends in that state.

     Changes in public health concerns may impact our performance.

     Changes in public health concerns may affect consumer preferences for our
products. For example, if incidents of the avian flu occur in the United States,
consumer preferences for poultry products may be negatively impacted, resulting
in a decline in demand for our products. Similarly, public health concerns over
smoking have seen a rise in smoking bans. Such smoking bans may adversely affect
our operations to the extent that such bans are imposed in specific locations,
rather than state-wide, or that exceptions to the ban are given to bars or other
establishments, giving patrons the ability to choose nearby locations that have
no such ban. Further, growing movements to lower blood alcohol levels may result
in a decline in alcohol consumption at our stores or increase the number of dram
shop claims made against us, either of which may negatively impact operations or
result in the loss of liquor licenses.

     A decline in visitors to any of the business districts near the locations
of our restaurants could negatively affect our restaurant sales.

     Some of our restaurants are located near high activity areas such as retail
centers, big box shopping centers and entertainment centers. We depend on high
visitor rates at these businesses to attract guests to our restaurants. If
visitors to these centers decline due to economic conditions, road construction,
changes in consumer preferences or shopping patterns, changes in discretionary
consumer spending or otherwise, our restaurant sales could decline significantly
and adversely affect our results of operations.


                                       13



     The acquisition of existing restaurants from our franchisees or other
acquisitions may have unanticipated consequences that could harm our business
and our financial condition.

     We may seek to selectively acquire existing restaurants from our
franchisees. To do so, we would need to identify suitable acquisition
candidates, negotiate acceptable acquisition terms and obtain appropriate
financing. Any acquisition that we pursue, whether or not successfully
completed, may involve risks, including:

     o  material adverse effects on our operating results, particularly in the
        fiscal quarters immediately following the acquisition as the acquired
        restaurants are integrated into our operations;

     o  risks associated with entering into markets or conducting operations
        where we have no or limited prior experience; and

     o  the diversion of management's attention from other business concerns.

     Future acquisitions of existing restaurants from our franchisees or other
acquisitions, which may be accomplished through a cash purchase transaction, the
issuance of our equity securities or a combination of both, could result in
potentially dilutive issuances of our equity securities, the incurrence of debt
and contingent liabilities and impairment charges related to goodwill and other
intangible assets, any of which could harm our business and financial condition.

     Improper food handling may affect our business adversely.

     There are health risks associated with eating contaminated or improperly
handled or prepared food items. Negative publicity over illness caused by
improper handling or preparation of food items could harm our future revenue and
profitability. While we currently maintain insurance for these types of
incidents, we cannot guarantee our insurance is sufficient to cover all adverse
outcomes.

     Complaints or litigation may hurt us.

     Occasionally, our guests file complaints or lawsuits against us alleging
that we are responsible for an illness or injury they suffered at or after a
visit to our restaurants. We are also subject to a variety of other claims
arising in the ordinary course of business, including personal injury claims,
contract claims, employment-related claims, claims by franchisees, and claims
arising from an incident at a franchised restaurant. The restaurant industry has
also been subject to a growing number of claims that the menus and actions of
restaurant chains have led to the obesity of certain of their guests. In
addition, we are subject to "dram shop" statutes. These statutes generally allow
a person injured by an intoxicated person to recover damages from an
establishment that wrongfully served alcoholic beverages to the intoxicated
person. Recent litigation against restaurant chains has resulted in significant
judgments and settlements under dram shop statutes. Regardless of whether any
claims against us are valid or whether we are liable, claims may be expensive to
defend and may divert time and money away from our operations and hurt our
performance. A judgment significantly in excess of our insurance coverage or for
which we do not have insurance coverage could materially affect our financial
condition or results of operations. Further, adverse publicity resulting from
these allegations may adversely affect us and our restaurants.

     Our current insurance may not provide adequate levels of coverage against
claims.

     We currently maintain insurance customary for businesses of our size and
type. However, there are types of losses we may incur that cannot be insured
against or that we believe are not economically reasonable to insure, such as
losses due to natural disasters. Such damages could have a material adverse
effect on our business and results of operations.

     Natural disasters and other events could harm our performance.

     A natural disaster, such as a hurricane, a serious and widespread disease,
such as an avian flu pandemic, or other events, such as a serious terrorist
attack, could have a material adverse effect on our business and results of
operations.

     We may not be able to protect our trademarks, service marks or trade
secrets.

     We place considerable value on our trademarks, service marks and trade
secrets. We intend to actively enforce and defend our marks and if violations
are identified, to take appropriate action to preserve and protect our goodwill
in our marks. We attempt to protect our sauce recipes as trade secrets by, among
other things, requiring confidentiality agreements with our sauce suppliers and
executive officers. However, we cannot be sure that we will be able to
successfully enforce our rights under our marks or prevent competitors from
misappropriating our sauce recipes. We can also not be sure that: (i) our marks
are valuable, (ii) using our marks does not, or will not, violate others' marks,
(iii) the registrations of our marks would be upheld if challenged, or (iv) we
would not be prevented from using our marks in areas of the country where others
might have already established rights to them. Any of these uncertainties could
have an adverse effect on us and our expansion strategy.


                                       14



ITEM 1B. UNRESOLVED STAFF COMMENTS

     Not applicable.

ITEM 2. PROPERTIES

     We are headquartered in Minneapolis, Minnesota. Our home office has
approximately 44,000 square feet of office space. We occupy this facility under
a lease that terminates on November 30, 2017, with an option to renew for one
five-year term.

     As of December 30, 2007, we owned and operated 161 restaurants. We lease
the land and building for nearly all of these sites. The majority of our
existing leases are for 10 or 15-year terms, generally including options to
extend the terms. We typically lease our restaurant facilities under "triple
net" leases that require us to pay minimum rent, real estate taxes, maintenance
costs and insurance premiums and, in some instances, percentage rent based on
sales in excess of specified amounts. Most of our leases include "exclusive use"
provisions prohibiting our landlords from leasing space to other restaurants
that fall within certain specified criteria. Under our franchise agreements, we
have certain rights to gain control of a restaurant site in the event of default
under the lease or franchise agreement. The following table sets forth the 37
states in which Buffalo Wild Wings restaurants are located and the number of
restaurants in each state as of December 30, 2007:


                                 Number of Restaurants Open
                        --------------------------------------------
                        Company-owned    Franchised       Total
                        -------------- -------------- --------------
Alabama                              1              8              9
Arizona                             --             13             13
Arkansas                            --              4              4
California                          --              2              2
Colorado                            10              1             11
Connecticut                         --              2              2
Delaware                            --              3              3
Florida                             --             18             18
Georgia                              7             --              7
Illinois                             5             26             31
Indiana                              2             33             35
Iowa                                 9             --              9
Kansas                               7             --              7
Kentucky                             9              5             14
Louisiana                           --              8              8
Maryland                            --              3              3
Michigan                            --             29             29
Minnesota                           17              3             20
Mississippi                          2              3              5
Missouri                             5             13             18
Montana                             --              1              1
Nebraska                             5              2              7
Nevada                              --             10             10
New York                             7              5             12
North Carolina                       8              3             11
North Dakota                        --              4              4
Ohio                                25             61             86
Oklahoma                            --              7              7
Oregon                              --              2              2
Pennsylvania                         3              1              4
South Carolina                      --              3              3
South Dakota                        --              1              1
Tennessee                            9             --              9
Texas                               20             32             52
Virginia                             1             15             16
West Virginia                       --              5              5
Wisconsin                            9              6             15
                        -------------- -------------- --------------

    Total                          161            332            493
                        ============== ============== ==============


                                       15



ITEM 3. 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 on any claim not covered by or in excess of our insurance
coverage could adversely affect our financial condition or results of
operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.


                                       16



                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
         ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

     Our Common Stock trades on the NASDAQ Global Market under the symbol
"BWLD". The following table sets forth the high and low closing sale prices of
our Common Stock. On June 15, 2007, we effected a two-for-one stock split. All
stock prices have been adjusted for this change.

                                 2007                2006
                          ------------------ ---------------------
                            High      Low       High       Low
                          --------- -------- ---------- ----------
First Quarter               $ 31.85   $23.84   $  20.73  $   14.96
Second Quarter                46.64    31.35      21.89      17.77
Third Quarter                 43.85    31.99      19.88      15.63
Fourth Quarter                42.03    23.03      29.01      18.62


Holders

     As of February 26, 2008, there were approximately 182 record holders of our
Common Stock, excluding shareholders whose stock is held either in nominee name
and/or street name brokerage accounts. Based on information which we have
obtained from our transfer agent, there are approximately 11,000 holders of our
Common Stock whose stock is held either in nominee name and/or street name
brokerage accounts.

Dividends

     We have never declared or paid cash dividends on our Common Stock. It is
our policy to preserve cash for development and other working capital needs and,
therefore, do not currently have plans to pay any cash dividends. Our future
dividend policy will be determined by our Board of Directors and will depend on
various factors, including our results of operations, financial condition,
anticipated cash needs and plans for expansion.

Securities Authorized for Issuance Under Equity Compensation Plans

     For information on our equity compensation plans, refer to Item 12,
"Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder
Matters."

Stock Performance Chart

      The following graph compares the yearly percentage change in the
cumulative total shareholder return on our Common Stock during the period ended
December 30, 2007 with the cumulative total return on the Nasdaq Composite and
the S&P 600 Restaurants Index. The comparison assumes $100 was invested in
Buffalo Wild Wings Common Stock on November 21, 2003, the date of our initial
public offering, and in each of the foregoing indices on October 31, 2003 and
assumes reinvestment of dividends.


                                       17



                  COMPARISON OF 4 YEAR CUMULATIVE TOTAL RETURN
           Among Buffalo Wild Wings, Inc., The NASDAQ Composite Index
                       And The S&P 600 Restaurants Index

                             [See Supplemental PDF A]




                             11/21/03      12/28/03      12/26/04      12/25/05      12/31/06      12/30/07
                         ------------- ------------- ------------- ------------- ------------- -------------
                                                                               
Buffalo Wild Wings, Inc.   $    100.00   $    139.41   $    203.88   $    198.82   $    312.94   $    272.24
NASDAQ Composite           $    100.00   $    103.53   $    112.21   $    115.52   $    129.07   $    142.45
S&P 600 Restaurants Index  $    100.00   $    103.59   $    134.48   $    145.80   $    155.85   $    115.78


      The preceding stock performance chart is not deemed filed with the
Securities and Exchange Commission. Notwithstanding anything to the contrary set
forth in any of our previous filings made under the Securities Act of 1933 or
the Securities Exchange Act of 1934 that incorporate future filings made by us
under those statutes, the above stock performance chart is not to be
incorporated by reference in any prior filings, nor shall it be incorporated by
reference into any future filings made by us under those statutes.


                                       18



ITEM 6. SELECTED FINANCIAL DATA

     The following summary information should be read in conjunction with the
Consolidated Financial Statements and related notes thereto set forth in Item 8
of this Form 10-K.




                                                                             Fiscal Years Ended (1)
                                                         ---------------------------------------------------------------
                                                           Dec. 30,     Dec. 31,     Dec. 25,     Dec. 26,    Dec. 28,
                                                             2007         2006         2005         2004        2003
                                                         ------------ ------------ ------------ ------------ -----------
                                                                 (in thousands, except share and per share data)
Consolidated Statements of Earnings Data:
Revenue:
                                                                                              
  Restaurant sales                                       $   292,824  $   247,150  $   185,823  $   152,221  $  112,965
  Franchising royalties and fees                              36,828       31,033       23,877       18,827      13,532
                                                         ------------ ------------ ------------ ------------ -----------
       Total revenue                                         329,652      278,183      209,700      171,048     126,497
                                                         ------------ ------------ ------------ ------------ -----------
Costs and expenses:
  Restaurant operating costs:
    Cost of sales                                             90,065       76,087       58,771       51,507      35,423
    Labor                                                     87,784       73,030       55,403       43,853      32,684
    Operating                                                 47,974       41,087       29,717       23,080      17,559
    Occupancy                                                 19,986       17,529       14,172       10,259       7,738
Depreciation                                                  16,987       14,492       11,765        9,717       7,021
General and administrative                                    35,740       30,374       22,303       19,372      16,926
Preopening                                                     4,520        3,077        2,599        2,042       1,155
Loss on asset disposals and impairment                           987        1,008        1,991          573         868
                                                         ------------ ------------ ------------ ------------ -----------
       Total costs and expenses                              304,043      256,684      196,721      160,403     119,374
                                                         ------------ ------------ ------------ ------------ -----------

Income from operations                                        25,609       21,499       12,979       10,645       7,123
Other income (expense), net                                    2,909        2,339        1,340          671      (1,246)
                                                         ------------ ------------ ------------ ------------ -----------
       Earnings before income taxes                           28,518       23,838       14,319       11,316       5,877
Income tax expense                                             8,864        7,565        5,439        4,115       2,294
                                                         ------------ ------------ ------------ ------------ -----------
       Net earnings                                           19,654       16,273        8,880        7,201       3,583
Accretion resulting from cumulative dividend and
 mandatory redemption feature of preferred stock                  --           --           --           --       1,452
                                                         ------------ ------------ ------------ ------------ -----------
Net earnings available to common stockholders            $    19,654  $    16,273  $     8,880  $     7,201  $    2,131
                                                         ============ ============ ============ ============ ===========
Earnings per common share - basic                        $      1.12  $      0.95  $      0.53  $      0.44  $     0.33
Weighted average shares outstanding - basic               17,554,000   17,157,000   16,892,000   16,330,000   6,445,000
Earnings per common share - diluted                      $      1.10  $      0.92  $      0.51  $      0.42  $     0.28
Weighted average shares outstanding - diluted             17,833,000   17,629,000   17,417,000   17,208,000   7,684,000

Consolidated Statements of Cash Flow Data:
Net cash provided by operating activities                $    43,579  $    33,031  $    24,618  $    20,754  $   17,753
Net cash used in investing activities                        (54,687)     (26,829)     (33,919)     (59,307)    (10,739)
Net cash provided by financing activities                        873        1,568          730        1,572      37,872



                                                                                    As Of (1)
                                                         ---------------------------------------------------------------
                                                           Dec. 30,     Dec. 31,     Dec. 25,     Dec. 26,    Dec. 28,
                                                             2007         2006         2005         2004        2003
                                                         ------------ ------------ ------------ ------------ -----------
                                                                                 (in thousands)
Consolidated Balance Sheets Data:
Total current assets                                     $    84,506  $    74,950  $    61,079  $    57,021  $   55,663
Total assets                                                 197,098      161,183      133,123      118,985     103,999
Total current liabilities                                     32,490       25,780       20,203       18,327      15,641
Total liabilities                                             55,433       44,967       36,275       33,278      28,932
Retained earnings                                             60,840       41,186       24,913       16,033       8,832
Total common stockholders' equity                            141,665      116,216       96,848       85,707      75,067

------------------------------------
(1) We utilize a 52- or 53-week accounting period that ends on the last Sunday
    in December. The fiscal years ended December 30, 2007, December 25, 2005,
    December 26, 2004, and December 28, 2003, were comprised of 52 weeks. The
    fiscal year ended December 31, 2006 was a 53-week year.


                                       19



ITEM 7. 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. This discussion and analysis contains
certain statements that are not historical facts, including, among others, those
relating to our anticipated financial performance for fiscal 2008, 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 Item 1
of this 10-K under "Risk Factors/Forward-Looking Statements." Information
included in this discussion and analysis includes commentary on company-owned
and franchised restaurant units, restaurant sales, same-store sales, and average
weekly sales volumes. Management believes such sales information is an important
measure of our performance, and is useful in assessing consumer acceptance of
the Buffalo Wild Wings(R) Grill & Bar concept and the overall health of the
concept. Franchise information also provides an understanding of our revenues
because franchise royalties and fees are based on the opening of franchised
units and their sales. However, franchise sales and same-store sales information
does not represent sales in accordance with U. S. Generally Accepted Accounting
Principles (GAAP), should not be considered in isolation or as a substitute for
other measures of performance prepared in accordance with GAAP and may not be
comparable to financial information as defined or used by other companies.

Overview

     As of December 30, 2007, we owned and operated 161 and franchised an
additional 332 Buffalo Wild Wings Grill & Bar restaurants in 37 states. Of the
493 system-wide restaurants, 86 of those restaurants 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, with 15% annual unit growth over the
next three years, continuing the strategy of developing both company-owned and
franchised restaurants.

     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 costs of
goods sold is difficult to predict, as it ranged from 30.3% to 31.5% of
restaurant sales per quarter in 2007 and 2006, mostly due to the price
fluctuation in chicken wings. 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, and are reviewing menu additions and other
strategies that may decrease the percentage that fresh chicken wings represent
in terms of total restaurant sales. The chart below illustrates the fluctuation
in fresh chicken wing prices from quarter to quarter in the last five years. In
March 2007, we entered into a one-year pricing agreement which fixed 80-90% of
our chicken wing purchases at $1.23 per pound. We have not been able to
negotiate a satisfactory long-term pricing agreement for chicken wings and may
float at market for the remainder of 2008. However, we will continue to pursue
options for a long-term price contract.

                          Average Quarterly Wing Prices
                                   2002-2006
                             [See supplemental PDF B]


                                       20



     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 in a
new market. These factors may result in lower than anticipated sales and cash
flow for new restaurants in new markets. In 2008, we plan to develop
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 to
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:

     o  Sales at our company-owned restaurants, which represented 89% of total
        revenue in 2007. Food and nonalcoholic beverages accounted for 73% of
        restaurant sales. The remaining 27% of restaurant sales was from
        alcoholic beverages. The menu item with the highest sales volume is
        chicken wings at 23% of total restaurant sales.

     o  Royalties and franchise fees received from our franchisees.

     We generate cash from the operation of our company-owned restaurants and
also from franchise royalties and fees. We highlight the specific costs
associated with the on-going operation of our company-owned restaurants in the
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 annually based on the number of new locations opened.
Loss on asset disposal and impairment expense is related to company-owned
restaurants, and includes the write-down of underperforming locations, the costs
associated with closures of locations and normal asset retirements. Certain
other expenses, such as general and administrative, relate to both company-owned
restaurant and franchising operations.

     We operate on a 52 or 53-week fiscal year ending on the last Sunday in
December. Each of the fiscal years in the five years ended December 30, 2007
were 52-week years except for the fiscal year ended December 31, 2006, which was
a 53-week year.

Critical Accounting Policies and Use of Estimates

     Our significant accounting policies are described in Note 1 to the
Consolidated Financial Statements, which were prepared in accordance with GAAP.
Critical accounting policies are those that we believe are both important to the
portrayal of our financial condition and results and require our most difficult,
subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain.

     We believe that the following discussion represents our more critical
accounting policies and estimates used in the preparation of our consolidated
financial statements, although it is not inclusive.

   Valuation of Long-Lived Assets and Store Closing Reserves

     We review long-lived assets quarterly to determine if the carrying amount
of these assets may not be recoverable based on estimated future cash flows.
Assets are reviewed at the lowest level for which cash flows can be identified,
which is at the individual restaurant level. In the absence of extraordinary
circumstances, restaurants are included in the impairment analysis after they
have been open for 15 months. We evaluate the recoverability of a restaurant's
long-lived assets, including leasehold improvements, equipment and fixtures over
its remaining lease term, after considering the potential impact of planned
operational improvements, marketing programs, and anticipated changes in the
trade area. In determining future cash flows, significant estimates are made by
us with respect to future operating results of each restaurant over its
remaining lease term. If assets are determined to be impaired, the impairment
charge is measured by calculating the amount by which the asset carrying amount
exceeds its fair value based on our estimate of discounted future cash flows.
The determination of asset fair value is also subject to significant judgment.
During fiscal 2006 and 2005, we recognized $481,000 and $1.7 million,
respectively, of asset impairment charges.

     In addition to the valuation of long-lived assets, we also record a store
closing reserve when a restaurant is abandoned. The store closing reserve is
subject to significant judgment as accruals are made for lease payments on
abandoned leased facilities. Many factors, including the local business
environment, other available lease sites, and the willingness of lessors to
negotiate lease buyouts are considered in making the accruals. We estimate
future lease obligations based on these factors and evaluate quarterly the
adequacy of the estimated reserve based on current market conditions. During the
fourth quarter of 2007 and 2006, we recorded reserves of $85,000 and $54,000,
respectively, for restaurants that closed.


                                       21



     The reconciliation of the store closing reserve for the years ended
December 30, 2007, December 31, 2006, and December 25, 2005 is as follows (in
thousands):



                                               As of                           As of
                                             Dec. 31,     2007      Costs    Dec. 30,
                                               2006     reserve    incurred    2007
                                             --------- ---------- ---------- ---------
                                                                    
Remaining lease obligation and utilities       $    54    $    85   $  (139)    $    0
                                             --------- ---------- ---------- ---------

                                               $    54    $    85   $  (139)    $    0
                                             ========= ========== ========== =========


                                             --------- ---------- ---------- ---------
                                               As of                           As of
                                             Dec. 25,     2006      Costs    Dec. 31,
                                               2005     reserve    incurred    2006
                                             --------- ---------- ---------- ---------
Remaining lease obligation and utilities       $    --    $    54   $    --     $   54
                                             --------- ---------- ---------- ---------

                                               $    --    $    54   $    --     $   54
                                             ========= ========== ========== =========


                                             --------- ---------- ---------- ---------
                                               As of                           As of
                                             Dec. 26,     2005      Costs    Dec. 25,
                                               2004     reserve    incurred    2005
                                             --------- ---------- ---------- ---------
Remaining lease obligation and utilities       $   136    $    --   $  (136)    $   --
                                             --------- ---------- ---------- ---------

                                               $   136    $    --   $  (136)    $   --
                                             ========= ========== ========== =========


     Vendor Allowances

     Vendor allowances include allowances and other funds received from vendors.
Certain of these funds are determined based on various quantitative contract
terms. We also receive vendor allowances from certain manufacturers and
distributors calculated based upon purchases made by franchisees. Amounts that
represent a reimbursement of costs incurred, such as advertising, are recorded
as a reduction of the related expense. Amounts that represent a reduction of
inventory purchase costs are recorded as a reduction of inventoriable costs. We
record an estimate of earned vendor allowances that are calculated based upon
monthly purchases. We generally receive payment from vendors approximately 30
days from the end of a month for that month's purchases. During fiscal 2007,
2006, and 2005, vendor allowances were recorded as a reduction in inventoriable
costs, and cost of sales was reduced by $4.6 million, $4.2 million, and $4.0
million, respectively.

     Revenue Recognition -- Franchise Operations

     Our franchise agreements have terms ranging from 10 to 20 years. These
agreements also convey extension terms of 5 or 10 years depending on contract
terms and if certain conditions are met. We provide training, preopening
assistance and restaurant operating assistance in exchange for area development
fees, franchise fees and royalties of 5% of the franchised restaurant's sales.
Franchise fee revenue from individual franchise sales is recognized upon the
opening of the restaurant when we have performed all of our material obligations
and initial services. Area development fees are dependent upon the number of
restaurants granted in the agreement as are our obligations under the area
development agreement. Consequently, as our obligations are met, area
development fees are recognized in relation to the expenses incurred with the
opening of each new restaurant and any royalty-free periods. Royalties are
accrued as earned and are calculated each period based on reported franchisees'
sales.

     Self-Insurance Liability

     We are self-insured for a significant portion of our risks and associated
liabilities with respect to workers' compensation, general liability, and
employee health benefits. The accrued liabilities associated with these programs
are based on our estimate of the ultimate costs to settle known claims as well
as claims that may have arisen but have not yet been reported to us as of the
balance sheet date. Our estimated liabilities are not discounted and are based
on information provided by our insurance brokers and insurers, combined with our
judgments regarding a number of assumptions and factors, including the frequency
and severity of claims, and claims development history. We maintain stop-loss
coverage with third-party insurers to limit our total exposure for each of these
programs. Significant judgment is required to estimate claims incurred but not
reported as parties have yet to assert such claims. If actual claims trends,
including the frequency or severity of claims, differ from our estimates, our
financial results could be impacted.


                                       22



Results of Operations

     Our operating results for 2007, 2006, and 2005 are expressed as a
percentage of total revenue below, except for the components of restaurant
operating costs, which are expressed as a percentage of restaurant sales.

                                                Fiscal Years Ended
                                          ------------------------------
                                           Dec. 30,  Dec. 31,  Dec. 25,
                                             2007      2006      2005
                                          ---------- --------- ---------
Revenue:
    Restaurant sales                           88.8%     88.8%     88.6%
    Franchising royalties and fees             11.2      11.2      11.4
                                          ---------- --------- ---------

              Total revenue                   100.0     100.0     100.0
                                          ---------- --------- ---------

Costs and expenses:
    Restaurant operating costs:
         Cost of sales                         30.8      30.8      31.6
         Labor                                 30.0      29.5      29.8
         Operating                             16.4      16.6      16.0
         Occupancy                              6.8       7.1       7.6
Depreciation                                    5.2       5.2       5.6
General and administrative                     10.8      10.9      10.6
Preopening                                      1.4       1.1       1.2
Loss on asset disposals and impairment          0.3       0.4       0.9
                                          ---------- --------- ---------

              Total costs and expenses         92.2      92.3      93.8
                                          ---------- --------- ---------

Income from operations                          7.8       7.7       6.2
         Interest income                        0.9       0.8       0.6
                                          ---------- --------- ---------

Earnings before income taxes                    8.7       8.6       6.8
Income tax expense                              2.7       2.7       2.6
                                          ---------- --------- ---------

Net earnings                                    6.0%      5.8%      4.2%
                                          ========== ========= =========

The number of company-owned and franchised restaurants open are as follows:

                                                    As of
                                      ---------------------------------
                                       Dec. 30,    Dec. 31,   Dec. 25,
                                         2007        2006       2005
                                      ----------- ---------- ----------
Company-owned restaurants                     161        139        122
Franchised restaurants                        332        290        248

The restaurant sales for company-owned and franchised restaurants are
as follows (in thousands of dollars):

                                             Fiscal Years Ended
                                       -------------------------------
                                        Dec. 30,  Dec. 31,   Dec. 25,
                                          2007      2006       2005
                                       ---------- --------- ----------
Company-owned restaurant sales          $ 292,824 $ 247,150 $  185,823
Franchised restaurant sales               724,486   621,897    470,667

Increases in comparable same-store sales are as follows (based on
restaurants operating at least fifteen months):

                                             Fiscal Years Ended
                                       ------------------------------
                                        Dec. 30,  Dec. 31,  Dec. 25,
                                          2007      2006      2005
                                       ---------- --------- ---------
Company-owned same-store sales               6.9%     10.4%      3.2%
Franchised same-store sales                  3.9       6.1       2.2

The annual average price paid per pound for fresh chicken wings for
company-owned restaurants is as follows:

                                             Fiscal Years Ended
                                       -------------------------------
                                        Dec. 30,  Dec. 31,   Dec. 25,
                                          2007      2006       2005
                                       ---------- --------- ----------
Annual average price per pound            $  1.28    $ 1.17    $  1.20


                                       23



Fiscal Year 2007 Compared to Fiscal Year 2006

     Restaurant sales increased by $45.7 million, or 18.5%, to $292.8 million in
2007 from $247.2 million in 2006. The increase in restaurant sales was due to a
$35.5 million increase associated with the opening of 23 new company-owned
restaurants in 2007 and the 27 company-owned restaurants opened before 2007 that
did not meet the criteria for same-store sales and $15.7 million related to a
6.9% increase in same-store sales. The 53rd week of 2006 resulted in sales of
$5.7 million and contributed approximately $0.08 of earnings per diluted share.

     Franchise royalties and fees increased by $5.8 million, or 18.7%, to $36.8
million in 2007 from $31.0 million in 2006. The increase was due primarily to
additional royalties collected from the 48 new franchised restaurants that
opened in 2007 and a full year of operations for the 45 franchised restaurants
that opened in 2006. Same-store sales for franchised restaurants increased 3.9%.

     Cost of sales increased by $14.0 million, or 18.4%, to $90.1 million in
2007 from $76.1 million in 2006 due primarily to more restaurants being operated
in 2007. Cost of sales as a percentage of restaurant sales remained steady at
30.8% in both 2007 and 2006. Cost of sales as a percentage of restaurant sales
was steady with higher fresh chicken wing costs offsetting favorable product mix
changes. Fresh chicken wing costs rose to $1.28 per pound in 2007 from $1.17 per
pound in 2006. Also, boneless wings sales have increased as a part of our menu
mix, providing better margins and a corresponding lower cost of goods
percentage.

     Labor expenses increased by $14.8 million, or 20.2%, to $87.8 million in
2007 from $73.0 million in 2006 due primarily to more restaurants being operated
in 2007. Labor expenses as a percentage of restaurant sales also increased to
30.0% in 2007 compared to 29.5% in 2006. Labor costs in our restaurants was
higher than prior year due to restaurants having higher hourly wages and
management salaries along with slightly higher medical costs but were partially
offset by lower workers' compensation costs.

     Operating expenses increased by $6.9 million, or 16.8%, to $48.0 million in
2007 from $41.1 million in 2006 due primarily to more restaurants being operated
in 2007. Operating expenses as a percentage of restaurant sales decreased to
16.4% in 2007 from 16.6% in 2006. The decrease in operating expenses as a
percentage of restaurant sales was primarily due to lower credit card fees and
utility costs partially offset by higher cable costs.

     Occupancy expenses increased by $2.5 million, or 14.0%, to $20.0 million in
2007 from $17.5 million in 2006 due primarily to more restaurants being operated
in 2007. Occupancy expenses as a percentage of restaurant sales decreased to
6.8% in 2007 from 7.1 % in 2006, primarily due to better leverage of rent
expense with the higher sales levels.

     Depreciation increased by $2.5 million, or 17.2%, to $17.0 million in 2007
from $14.5 million in 2006. The increase was primarily due to the additional
depreciation on 23 new restaurants in 2007 and 18 new restaurants opened in 2006
and operated for a full year in 2007.

     General and administrative expenses increased by $5.4 million, or 17.7%, to
$35.7 million in 2007 from $30.4 million in 2006. General and administrative
expenses as a percentage of total revenue decreased to 10.8 % in 2007 from 10.9%
in 2006. Exclusive of stock based compensation, our general and administrative
expenses decreased to 9.7% of total revenue in 2007 from 9.8% in 2006. This
decrease was primarily due to lower cash incentive compensation partially offset
by higher medical costs.

     Preopening costs increased by $1.4 million, or 46.9%, to $4.5 million in
2007 from $3.1 million in 2006. In 2007, we opened 23 new company-owned
restaurants and incurred cost of approximately $47,000 for restaurants opening
in 2008. In 2006, we opened 18 new company-owned restaurants, incurred costs of
approximately $29,000 for restaurants opening in 2007. Average preopening cost
per restaurant increased to $195,000 in 2007 from $170,000 in 2006.

     Loss on asset disposals and impairment decreased by $21,000, or 2.1%, to
$987,000 in 2007 from $1.0 million in 2006. During the fourth quarter of 2007 we
closed one underperforming restaurant in North Carolina resulting in store
closing costs and a write down of equipment costs for $183,000. The remaining
2007 expense was for write-offs of miscellaneous equipment. The expense in 2006
represented the asset impairment of one underperforming restaurant in Atlanta of
$481,000, the disposal of miscellaneous equipment and the closure costs for one
restaurant.


                                       24



     Interest income increased by $570,000 to $2.9 million in 2007 from $2.3
million in 2006. The majority of our investments were in short-term municipal
securities. The increase in interest income was primarily due to higher interest
rates and higher overall balances. Cash and marketable securities balances at
the end of the year were $68.0 million in 2007 compared to $64.6 million in
2006.

     Provision for income taxes increased $1.3 million to $8.9 million in 2007
from $7.6 million in 2006. The effective tax rate as a percentage of income
before taxes decreased to 31.1% in 2007 from 31.7% in 2006. The rate decrease
was primarily due to higher employee-related federal tax credits and a decrease
in the reserve for tax contingencies. These reductions in the effective tax rate
were partially offset by an increase in the state income tax rate. For 2008, we
believe our effective tax rate will be between 34% and 35%.

Fiscal Year 2006 Compared to Fiscal Year 2005

     Restaurant sales increased by $61.3 million, or 33.0%, to $247.2 million in
2006 from $185.8 million in 2005. The increase in restaurant sales was due to a
$37.6 million increase associated with the opening of 18 new company-owned
restaurants in 2006 and the 29 company-owned restaurants opened before 2006 that
did not meet the criteria for same-store sales and $18.1 million increase caused
by a 10.4% increase in same-store sales, and $5.7 million related to sales in
the 53rd week of fiscal 2006.

     Franchise royalties and fees increased by $7.2 million, or 30.0%, to $31.0
million in 2006 from $23.9 million in 2005. The increase was due primarily to
additional royalties collected from the 45 new franchised restaurants that
opened in 2006 and a full year of operations for the 47 franchised restaurants
that opened in 2005. Same-store sales for franchised restaurants increased 6.1%.
In the 53rd week of fiscal 2006, we recognized $768,000 of franchise royalties
and fees.

     Cost of sales increased by $17.3 million, or 29.5%, to $76.1 million in
2006 from $58.8 million in 2005 due primarily to more restaurants being operated
in 2006. Cost of sales as a percentage of restaurant sales decreased to 30.8% in
2006 from 31.6% in 2005. The decrease in cost of sales as a percentage of
restaurant sales was primarily due to the reduction of chicken wing prices and
the leverage of food costs related to menu price increases. Fresh chicken wings
were 24% of cost of goods sold in 2006 compared to 27% in 2005. This decrease
was primarily due to the decrease in average wing costs to $1.17 per pound in
2006 from $1.20 per pound in 2005 and menu price increases taken in the fall of
2006.

     Labor expenses increased by $17.6 million, or 31.8%, to $73.0 million in
2006 from $55.4 million in 2005 due primarily to more restaurants being operated
in 2006. Labor expenses as a percentage of restaurant sales decreased to 29.5%
in 2006 from 29.8% in 2005. Labor costs for our restaurants were lower than the
prior year primarily due to lower health insurance costs partially offset by
higher incentive compensation costs.

     Operating expenses increased by $11.4 million, or 38.3%, to $41.1 million
in 2006 from $29.7 million in 2005 due primarily to more restaurants being
operated in 2006. Operating expenses as a percentage of restaurant sales
increased to 16.6% in 2006 from 16.0% in 2005. The increase in operating
expenses as a percentage of restaurant sales was primarily due to the 0.5%
increase in contributions to the advertising fund. Increases in other operating
costs, such as credit card fees, repair and maintenance costs, and supplies were
offset by lower insurance and utility costs.

     Occupancy expenses increased by $3.4 million, or 23.7%, to $17.5 million in
2006 from $14.2 million in 2005 due primarily to more restaurants being operated
in 2006. Occupancy expenses as a percentage of restaurant sales decreased to
7.1% in 2006 from 7.6% in 2005. The decrease in occupancy expense as a
percentage of restaurant sales was primarily due to better leverage of costs
with the higher sales levels.

     Depreciation increased by $2.7 million, or 23.2%, to $14.5 million in 2006
from $11.8 million in 2005. The increase was primarily due to the additional
depreciation on 18 new restaurants opened in 2006 and 19 restaurants opened in
2005 and operated for a full year in 2006.

     General and administrative expenses increased by $8.1 million, or 36.2%, to
$30.4 million in 2006 from $22.3 million in 2005. General and administrative
expenses as a percentage of total revenue increased to 10.9% in 2006 from 10.6%
in 2005. We adopted the fair value recognition provisions of SFAS 123R, using
the modified-prospective transition method. Under this transition method, we
recognized $3.2 million of stock-based compensation in 2006. In 2005, we
recognized $1.7 million of stock-based compensation under APB 25 and other
related pronouncements. Exclusive of stock-based compensation, our general and
administrative expenses remained flat as a percentage of total revenue at 9.8%
in 2006 and 2005.


                                       25



     Preopening costs increased by $478,000, or 18.4%, to $3.1 million in 2006
from $2.6 million in 2005. In 2006, we opened 18 new company-owned restaurants
and incurred costs of approximately $29,000 for restaurants opening in 2007. In
2005, we opened 19 new company-owned restaurants and incurred costs of
approximately $38,000 for restaurants that opened in 2006 and incurred $44,000
for restaurants that opened in 2004. Average preopening cost per restaurant was
$170,000 and $132,000 in 2006 and 2005, respectively. The increase in average
preopening cost per restaurant is primarily due to the expensing of preopening
rent under a new accounting pronouncement for 2006.

     Loss on asset disposals and impairment decreased by $983,000, or 49.4%, to
$1.0 million in 2006 from $2.0 million in 2005. The expense in 2006 included the
asset impairment of one underperforming restaurant in Atlanta of $481,000, and
the disposal of miscellaneous equipment, and the closure costs for one store.
The expense in 2005 included a $1 million impairment loss with respect to
certain assets of three underperforming restaurants in Atlanta and the disposal
of miscellaneous equipment. In addition, the assets and goodwill impairment of
$621,000 for one underperforming restaurant in North Carolina occurred in 2005.

     Interest income increased by $1.0 million to $2.3 million in 2006 from $1.3
million in 2005. The increase was primarily due to the rise in short-term
interest rates during the first half of 2006. Cash and marketable securities
balances at the end of the year were $64.6 million in 2006 compared to $52.4
million in 2005.

     Provision for income taxes increased $2.1 million to $7.6 million in 2006
from $5.4 million in 2005. The effective tax rate as a percentage of income
before taxes decreased to 31.7% in 2006 from 38.0% in 2005. The effective tax
rate decrease was primarily due to higher federal tax credits, increased
tax-exempt income and reduced state income tax due to changes in state
apportionment factors. The reduction in state taxes is a result of new
restaurants opening in states with favorable income tax rates and the phase-out
of the Ohio income tax and phase-in of the Ohio franchise tax (Commercial
Activity Tax).

     We estimate the 53rd week in fiscal 2006 contributed approximately $0.08 of
earnings per diluted share.

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 December 30, 2007 was $68.0 million. We invest our cash balances in debt
securities with the focus on protection of principal, adequate liquidity and
maximization of after-tax returns. As of December 30, 2007, nearly all excess
cash was invested in high quality municipal securities.

     During fiscal 2007, 2006, and 2005, net cash provided by operating
activities was $43.6 million, $33.0 million, and $24.6 million, respectively.
Net cash provided by operating activities in 2007 consisted primarily of net
earnings adjusted for non-cash expenses and an increase in accounts payable and
accrued expenses partially offset by an increase in accounts receivable, prepaid
expenses, and income tax receivables. The increase in accounts payable is
relative to the growth in the number of company-owned restaurants. The increase
in accrued expenses was due primarily to the growth in the number of
company-owned restaurants, and a higher gift card liability due to strong fourth
quarter gift card sales. The increase in accounts receivable was primarily due
to higher credit card receivables and landlord receivables for tenant
improvements. The increase in prepaid expense is primarily due to the timing of
payments related to our self insurance programs. The increase in income tax
receivables was due to the timing of payments.

     Net cash provided by operating activities in 2006 consisted primarily of
net earnings adjusted for non-cash expenses, an increase in accrued expenses and
income taxes payable, partially offset by an increase in accounts receivable and
a decrease in accounts payable. The increase in accrued expenses was due to a
greater number of restaurants and related payroll and operating costs, and
higher incentive and deferred compensation costs partially offset by lower
health insurance costs. The increase in income taxes payable and decrease in
accounts payable was due to timing of payments. The increase in accounts
receivable was due to higher credit card sales and tenant allowances compared to
prior year. The purchase of marketable securities in 2006 relates to trading
securities for a deferred compensation plan.

     Net cash provided by operating activities in 2005 consisted primarily of
net earnings adjusted for non-cash expenses and an increase in accounts payable
and income taxes payable, partially offset by an increase in accounts
receivable. The increase in accounts payable was due primarily to additional
restaurants and the timing of payments. The increase in income taxes payable was
also due to the timing of payments. The increase in accounts receivable was due
to higher credit card usage and construction allowance receivables.

     Net cash used in investing activities for 2007, 2006, and 2005 was $54.7
million, $26.8 million, and $33.9 million, respectively. Investing activities
included purchases of property and equipment related to the opening of new
restaurants in all periods. In 2007, 2006, and 2005, we opened 23, 18, and 19
new restaurants, respectively. In 2008, we expect capital expenditures for
approximately 25 new company-owned restaurants to cost approximately $1.4
million per location, expenditures of approximately $18 million for the
maintenance and remodels of existing restaurants, and $26 million for the
purchase of our nine Las Vegas franchised locations. In 2007, we purchased
$158.2 million of marketable securities and received proceeds of $144.8 million
as investments in marketable securities matured. In 2006, we purchased $108.3
million of marketable securities and received proceeds of $105.3 million as
investments in marketable securities matured or were sold. In 2005, we purchased
$91.5 million of marketable securities and received proceeds of $79.5 million as
investments in marketable securities matured or were sold.


                                       26



     Net cash provided by financing activities for 2007, 2006 and 2005 was
$873,000, $1.6 million, and $730,000, respectively. Net cash provided by
financing activities for 2007 resulted primarily from the issuance of common
stock for options exercised and employee stock purchases of $1.4 million and
excess tax benefits for restricted stock issuances of $1.0 million partially
offset by tax payments for restricted stock of $1.6 million. Net cash provided
by financing activities for 2006 resulted primarily from the issuance of common
stock for options exercised and employee stock purchases of $1.1 million and
excess tax benefits for restricted stock issuances of $1.2 million partially
offset by tax payments for restricted stock of $686,000. Net cash provided by
financing activities for 2005 resulted from the issuance of common stock for
options exercised and employee stock purchases of $1.0 million partially offset
by tax payments for restricted stock of $284,000.
No additional funding from the issuance of common stock (other than from the
exercise of options and employee stock purchases) is anticipated in 2008.

     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. Except for one restaurant
building, we do not currently own any of the land or buildings in which our
restaurants operate and therefore do not have the 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 December 30, 2007:



                                                                         Payments Due By Period
                                                                             (in thousands)
                                                              --------------------------------------------
                                                               Less than                          After 5
                                                    Total      one year    1-3 years   3-5 years   years
                                                 ------------ ----------- ----------- ----------- --------
                                                                                     
Operating lease obligations                        $  152,577      18,588      34,590      30,972   68,427
Commitments for restaurants under development          17,456       1,034       3,458       3,311    9,653
                                                 ------------ ----------- ----------- ----------- --------

    Total                                          $  170,033      19,622      38,048      34,283   78,080
                                                 ============ =========== =========== =========== ========



     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 amounts to $241,000.
These amounts are excluded from the contractual obligations table due to the
high degree of uncertainty regarding the timing of these liabilities.

Recent Accounting Pronouncements

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS 157"), which defines fair value, establishes a framework for measuring
fair value in GAAP, and expands disclosures about fair value measurements. SFAS
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. Early
adoption is permitted. We believe the adoption of SFAS 157 will not have a
significant impact on our financial statements.

     In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115" ("SFAS 159"). SFAS 159 permits entities to choose to measure
many financial instruments and certain warranty and insurance contracts at fair
value on a contract-by-contract basis. A business entity is required to report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date. The objective of this
Statement is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. SFAS 159 is effective for financial statements issued for
fiscal years beginning after November 15, 2007. We believe the adoption of SFAS
159 will not have a significant impact on our financial statements.


                                       27



     In December 2007, the 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. Early adoption of SFAS No. 141R is not permitted. We are currently
evaluating the impact SFAS No. 141R will have on any future business
combinations.

Impact of Inflation

     In the last three years we have not operated in a period of high general
inflation; however, the cost of chicken wings, labor and certain utilities have
generally increased. Our restaurant operations are subject to federal and state
minimum wage laws governing such matters as working conditions, overtime and tip
credits. Significant numbers of our food service and preparation personnel are
paid at rates related to the federal and/or state minimum wage and, accordingly,
increases in the minimum wage have increased our labor costs in the last three
years. In addition, costs associated with our operating leases, such as taxes,
maintenance, repairs and insurance, are often subject to upward pressure. To the
extent permitted by competition, we have mitigated increased costs by increasing
menu prices and may continue to do so if deemed necessary in future years.

Quarterly Results of Operations

     The following table sets forth, by quarter, the unaudited quarterly results
of operations for the two most recent years, as well as the same data expressed
as a percentage of our total revenue for the periods presented. Restaurant
operating costs are expressed as a percentage of restaurant sales. The
information for each quarter is unaudited and we have prepared it on the same
basis as the audited financial statements appearing elsewhere in this document.
In the opinion of management, all necessary adjustments, consisting only of
normal recurring adjustments, have been included to present fairly the unaudited
quarterly results. All amounts, except per share amounts, are expressed in
thousands.

     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 fresh chicken wing prices, the timing and number of new
restaurant openings and their related expenses, asset impairment charges, store
closing charges, general economic conditions and seasonal fluctuations.


                                       28



Results of Quarterly Operations (unaudited)



                                                Mar. 26,    Jun. 25,  Sep. 24,  Dec. 31,   Apr. 1,   Jul. 1,  Sep. 30,  Dec. 30,
                                                  2006        2006      2006     2006(1)    2007      2007      2007      2007
                                               ----------- ---------- --------- --------- --------- --------- --------- --------
Revenue:
                                                                                                
    Restaurant sales                            $   57,092  $  55,036 $  60,800  $ 74,222  $ 71,059  $ 67,535  $ 73,280 $ 80,950
    Franchise royalties and fees                     7,169      7,224     7,548     9,092     8,843     8,464     9,086   10,435
                                               ----------- ---------- --------- --------- --------- --------- --------- --------

Total revenue                                       64,261     62,260    68,348    83,314    79,902    75,999    82,366   91,385
                                               ----------- ---------- --------- --------- --------- --------- --------- --------

Costs and expenses:
    Restaurant operating costs:
         Cost of sales                              18,005     17,028    18,557    22,497    22,058    20,591    22,517   24,899
         Labor                                      16,595     16,562    18,265    21,608    21,107    21,050    21,156   23,471
         Operating                                   9,443      9,236    10,291    12,117    11,472    10,729    12,272   13,501
         Occupancy                                   4,089      4,269     4,450     4,721     4,718     4,892     5,076    5,300
    Depreciation                                     3,330      3,433     3,649     4,080     3,892     4,028     4,284    4,783
    General and administrative                       7,078      7,441     7,600     8,255     8,617     8,538     9,147    9,438
    Preopening                                         487      1,034       755       801       318       987       988    2,227
    Loss on asset disposals and impairment             210         44       102       652        79       153       306      449
                                               ----------- ---------- --------- --------- --------- --------- --------- --------

Total costs and expenses                            59,237     59,047    63,669    74,731    72,261    70,968    76,746   84,068
                                               ----------- ---------- --------- --------- --------- --------- --------- --------

Income from operations                               5,024      3,213     4,679     8,583     7,641     5,031     5,620    7,317
    Interest income                                    470        500       556       813       700       755       768      686
                                               ----------- ---------- --------- --------- --------- --------- --------- --------

Earnings before income taxes                         5,494      3,713     5,235     9,396     8,341     5,786     6,388    8,003
Income tax expense                                   1,978      1,281     1,709     2,597     2,800     1,945     2,121    1,998
                                               ----------- ---------- --------- --------- --------- --------- --------- --------

Net earnings                                    $    3,516  $   2,432 $   3,526  $  6,799  $  5,541  $  3,841  $  4,267 $  6,005
                                               =========== ========== ========= ========= ========= ========= ========= ========


Earnings per common share - basic                     0.21       0.14      0.21      0.39      0.32      0.22      0.24     0.34
Earnings per common share - diluted                   0.20       0.14      0.20      0.38      0.31      0.22      0.24     0.34
Weighted average shares outstanding - basic         17,064     17,111    17,196    17,249    17,448    17,560    17,596   17,612
Weighted average shares outstanding - diluted       17,473     17,510    17,524    17,678    17,684    17,744    17,767   17,860


(1) We utilize a thirteen-week quarterly accounting period.  However, fiscal
    2006 was a 53-week year, with the quarter ended December 31, 2006 comprising
    fourteen weeks.


                                       29



Results of Quarterly Operations (unaudited)



                                             Mar. 26,  Jun. 25,  Sep. 24, Dec. 31, Apr. 1,  Jul. 1,  Sep. 30,  Dec. 30,
                                               2006      2006      2006   2006(1)    2007     2007     2007      2007
                                             --------- --------- -------- -------- -------- -------- --------- --------
Revenue:
                                                                                          
    Restaurant sales                             88.8%     88.4%    89.0%    89.1%    88.9%    88.9%     89.0%    88.6%
    Franchise royalties and fees                 11.2      11.6     11.0     10.9     11.1     11.1      11.0     11.4
                                             --------- --------- -------- -------- -------- -------- --------- --------

Total revenue                                   100.0     100.0    100.0    100.0    100.0    100.0     100.0    100.0
                                             --------- --------- -------- -------- -------- -------- --------- --------

Costs and expenses:
    Restaurant operating costs:
         Cost of sales                           31.5      30.9     30.5     30.3     31.0     30.5      30.7     30.8
         Labor                                   29.1      30.1     30.0     29.1     29.7     31.2      30.2     29.0
         Operating                               16.5      16.8     16.9     16.3     16.1     15.9      16.7     16.7
         Occupancy                                7.2       7.8      7.3      6.4      6.6      7.2       6.9      6.5
    Depreciation                                  5.2       5.5      5.3      4.9      4.9      5.3       5.2      5.2
    General and administrative                   11.0      12.0     11.1      9.9     10.8     11.2      11.1     10.3
    Preopening                                    0.8       1.7      1.1      1.0      0.4      1.3       1.2      2.4
    Loss on asset disposals and impairment        0.3       0.1      0.1      0.8      0.1      0.2       0.4      0.5
                                             --------- --------- -------- -------- -------- -------- --------- --------

Total costs and expenses                         92.2      94.8     93.2     89.7     90.4     93.4      93.2     92.0
                                             --------- --------- -------- -------- -------- -------- --------- --------

Income from operations                            7.8       5.2      6.8     10.3      9.6      6.6       6.8      8.0
    Interest income                               0.7       0.8      0.8      1.0      0.9      1.0       0.9      0.8
                                             --------- --------- -------- -------- -------- -------- --------- --------

Earnings before income taxes                      8.5       6.0      7.7     11.3     10.4      7.6       7.8      8.8
Income tax expense                                3.1       2.1      2.5      3.1      3.5      2.6       2.6      2.2
                                             --------- --------- -------- -------- -------- -------- --------- --------

Net earnings                                      5.5%      3.9%     5.2%     8.2%     6.9%     5.1%      5.2%     6.6%
                                             ========= ========= ======== ======== ======== ======== ========= ========


(1) We utilize a thirteen-week quarterly accounting period. However, fiscal 2006
    was a 53-week year, with the quarter ended December 31, 2006 comprising
    fourteen weeks.


                                       30



ITEM 7A. 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.

     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. In March 2007, we entered into a one-year pricing
agreement with one of our chicken suppliers which limited the price volatility
that we had experienced in our quarterly cost of sales percentage. We have not
been able to negotiate a satisfactory long-term pricing agreement for chicken
wings and may float at market for the remainder of 2008. However, we will
continue to pursue options for a long-term price contract. Fresh chicken wing
prices in 2007 averaged 9% higher than 2006 as the average price per pound rose
to $1.28 in 2007 from $1.17 in 2006. 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 24%, 24%, and 27% of our cost of sales in
2007, 2006, and 2005, respectively, with an annual average price per pound of
$1.28, $1.17, and $1.20, respectively. A 10% increase in fresh chicken wing
costs during 2007, would have increased restaurant cost of sales by
approximately $2.1 million for fiscal 2007. Additional information related to
chicken wing prices and our approaches to managing the volatility thereof is
included in Item 7 under "Results of Operations."


                                       31



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     For supplemental information regarding quarterly results of operations,
refer to Item 7, "Quarterly Results of Operations."

                            BUFFALO WILD WINGS, INC.

                     Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm                       33

Consolidated Balance Sheets as of December 30, 2007 and December 31, 2006     34

Consolidated Statements of Earnings for the Years Ended December 30, 2007,
  December 31, 2006, and December 25, 2005                                    35

Consolidated Statements of Stockholders' Equity for the Years Ended December
  30, 2007, December 31, 2006, and December 25, 2005                          36

Consolidated Statements of Cash Flows for the Years Ended December 30, 2007,
  December 31, 2006, and December 25, 2005                                    37

Notes to Consolidated Financial Statements                                    38


                                       32



             Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Buffalo Wild Wings, Inc.:

     We have audited the accompanying consolidated balance sheets of Buffalo
Wild Wings, Inc. and subsidiaries (the "Company") as of December 30, 2007 and
December 31, 2006, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 30, 2007. In connection with our audits of the
consolidated financial statements, we have also audited the financial statement
schedule for each of the years in the three-year period ended December 30, 2007,
listed in schedule II of this Form 10-K. These consolidated financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our audits.

     We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Buffalo Wild
Wings, Inc. and subsidiaries as of December 30, 2007 and December 31, 2006, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 30, 2007, in conformity with U.S. generally
accepted accounting principles. Also in our opinion, the related financial
statement schedule referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

     As discussed in Note 1 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 123R,
"Share-Based Payment," on December 26, 2005.

     We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), Buffalo Wild Wings, Inc.'s
internal control over financial reporting as of December 30, 2007, based on
criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our
report dated March 5, 2008 expressed an unqualified opinion on the effectiveness
of the Company's internal control over financial reporting.


                                                   /S/    KPMG LLP

Minneapolis, Minnesota
March 5, 2008


                                       33



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     December 30, 2007 and December 31, 2006
                          (Dollar amounts in thousands)



                                                                                      December 30,  December 31,
                                                                                          2007          2006
                                                                                     -------------- -------------
                                       Assets
Current assets:
                                                                                                     
    Cash and cash equivalents                                                        $        1,521        11,756
    Marketable securities                                                                    66,513        52,829
    Accounts receivable - franchisees, net of allowance of $25 and $47, respectively            885           929
    Accounts receivable - other                                                               6,976         5,212
    Inventory                                                                                 2,362         1,767
    Prepaid expenses                                                                          3,060         1,052
    Refundable income tax                                                                     1,886            --
    Deferred income taxes                                                                     1,303         1,405
                                                                                     -------------- -------------

         Total current assets                                                                84,506        74,950

Property and equipment, net                                                                 102,742        78,137
Restricted cash                                                                               7,161         6,007
Other assets                                                                                  2,320         1,720
Goodwill                                                                                        369           369
                                                                                     -------------- -------------

         Total assets                                                                $      197,098       161,183
                                                                                     ============== =============

                        Liabilities and Stockholders' Equity
Current liabilities:
    Unearned franchise fees                                                          $        2,316         2,347
    Accounts payable                                                                         10,692         5,874
    Income taxes payable                                                                         --           264
    Accrued compensation and benefits                                                        12,615        10,963
    Accrued expenses                                                                          6,207         5,538
    Current portion of deferred lease credits                                                   660           794
                                                                                     -------------- -------------

         Total current liabilities                                                           32,490        25,780

Long-term liabilities:
    Other liabilities                                                                         1,031           478
    Marketing fund payables                                                                   7,161         6,007
    Deferred income taxes                                                                     2,166         3,162
    Deferred lease credits, net of current portion                                           12,585         9,540
                                                                                     -------------- -------------

         Total liabilities                                                                   55,433        44,967
                                                                                     -------------- -------------

Commitments and contingencies (notes 4, 13, and 14)
Stockholders' equity:
    Undesignated stock, 1,000,000 and 5,600,000 shares authorized, respectively                  --            --
    Common stock, no par value. Authorized 20,200,000 and 15,600,000 shares,
     respectively; issued and outstanding 17,933,497 and 17,591,180, respectively            80,825        75,030
    Retained earnings                                                                        60,840        41,186
                                                                                     -------------- -------------

         Total stockholders' equity                                                         141,665       116,216
                                                                                     -------------- -------------

         Total liabilities and stockholders' equity                                  $      197,098       161,183
                                                                                     ============== =============


          See accompanying notes to consolidated financial statements.


                                       34



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS
 Fiscal years ended December 30, 2007, December 31, 2006, and December 25, 2005
          (Dollar amounts in thousands except share and per share data)



                                                             Fiscal years ended
                                                 --------------------------------------------
                                                  December 30,  December 31,   December 25,
                                                      2007          2006           2005
                                                 -------------- ------------- ---------------
Revenue:

                                                                             
    Restaurant sales                               $    292,824       247,150         185,823
    Franchise royalties and fees                         36,828        31,033          23,877
                                                 -------------- ------------- ---------------

              Total revenue                             329,652       278,183         209,700
                                                 -------------- ------------- ---------------

Costs and expenses:
    Restaurant operating costs:
         Cost of sales                                   90,065        76,087          58,771
         Labor                                           87,784        73,030          55,403
         Operating                                       47,974        41,087          29,717
         Occupancy                                       19,986        17,529          14,172
    Depreciation                                         16,987        14,492          11,765
    General and administrative (1)                       35,740        30,374          22,303
    Preopening                                            4,520         3,077           2,599
    Loss on asset disposals and impairment                  987         1,008           1,991
                                                 -------------- ------------- ---------------

              Total costs and expenses                  304,043       256,684         196,721
                                                 -------------- ------------- ---------------

Income from operations                                   25,609        21,499          12,979
    Interest income                                       2,909         2,339           1,340
                                                 -------------- ------------- ---------------

Earnings before income taxes                             28,518        23,838          14,319
Income tax expense                                        8,864         7,565           5,439
                                                 -------------- ------------- ---------------

Net earnings                                             19,654        16,273           8,880
                                                 ============== ============= ===============


Earnings per common share - basic                  $       1.12          0.95            0.53
Earnings per common share - diluted                        1.10          0.92            0.51
Weighted average shares outstanding - basic          17,553,998    17,156,656      16,892,400
Weighted average shares outstanding - diluted        17,832,825    17,628,674      17,416,988


(1) Includes stock-based compensation of $3,755, $3,216, and $1,700,
respectively

            See accompanying notes to consolidated financial statements.


                                       35



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 Fiscal years ended December 30, 2007, December 31, 2006, and December 25, 2005
                          (Dollar amounts in thousands)



                                                      Common Stock
                                                ------------------------
                                                                           Deferred     Retained
                                                  Shares       Amount    Compensation   Earnings     Total
                                                ----------- ------------ ------------- ---------- -----------
                                                                                       
Balance at December 26, 2004                     16,851,542     $71,491        (1,817)     16,033     85,707

Net earnings                                             --          --            --       8,880      8,880
Shares issued under employee stock purchase plan     42,476         506            --          --        506
Net issuances of restricted stock                   129,702       1,589        (2,451)         --       (862)
Exercise of stock options                           208,724         508            --          --        508
Tax benefit from stock issued                            --         409            --          --        409
Stock-based compensation                                 --          --         1,700          --      1,700
                                                ----------- ------------ ------------- ---------- -----------

Balance at December 25, 2005                     17,232,444     $74,503        (2,568)     24,913     96,848

Net earnings                                             --          --            --      16,273     16,273
Shares issued under employee stock purchase plan     36,804         528            --          --        528
Net issuances of restricted stock                   149,954      (4,943)        2,568          --     (2,375)
Exercise of stock options                           171,978         573            --          --        573
Tax benefit from stock issued                            --       1,153            --          --      1,153
Stock-based compensation                                 --       3,216            --          --      3,216
                                                ----------- ------------ ------------- ---------- -----------


Balance at December 31, 2006                     17,591,180     $75,030            --      41,186    116,216

Net earnings                                             --          --            --      19,654     19,654
Shares issued under employee stock purchase plan     30,836         685            --          --        685
Net issuances of restricted stock                    70,044        (413)           --          --       (413)
Exercise of stock options                           241,437         761            --          --        761
Tax benefit from stock issued                            --       1,007            --          --      1,007
Stock-based compensation                                 --       3,755            --          --      3,755
                                                ----------- ------------ ------------- ---------- -----------

Balance at December 30, 2007                     17,933,497     $80,825            --      60,840    141,665
                                                =========== ============ ============= ========== ===========


            See accompanying notes to consolidated financial statements.


                                       36



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
 Fiscal years ended December 30, 2007, December 31, 2006, and December 25, 2005
                          (Dollar amounts in thousands)



                                                                       Fiscal years ended
                                                           ---------------------------------------------
                                                            December 30,    December 31,   December 25,
                                                                2007            2006           2005
                                                           --------------- -------------- --------------
Cash flows from operating activities:
                                                                                         
    Net earnings                                              $    19,654         16,273          8,880
    Adjustments to reconcile net earnings to cash provided
     by operations:
         Depreciation                                              16,987         14,492         11,765
         Amortization                                                 (54)           (54)            90
         Loss on asset disposals and impairment                       987          1,008          1,991
         Deferred lease credits                                     2,374            393            362
         Deferred income taxes                                       (894)        (2,228)        (1,473)
         Stock-based compensation                                   3,755          3,216          1,700
         Tax benefit from stock issuance                               --             --            409
         Excess tax benefit from stock issuance                    (1,007)        (1,153)            --
         Change in operating assets and liabilities:
              Purchase of marketable securities                      (302)        (1,288)            --
              Accounts receivable                                  (1,183)        (1,575)        (1,064)
              Inventory                                              (595)          (265)          (295)
              Prepaid expenses                                     (2,008)           920           (502)
              Other assets                                           (600)          (853)           (93)
              Unearned franchise fees                                 (31)           153           (239)
              Accounts payable                                      3,683         (1,884)         1,163
              Income taxes                                         (1,143)         1,315          1,829
              Accrued expenses                                      3,956          4,561             95
                                                           --------------- -------------- --------------

                  Net cash provided by operating activities        43,579         33,031         24,618
                                                           --------------- -------------- --------------

Cash flows from investing activities:
    Acquisition of property and equipment                         (41,359)       (23,760)       (21,865)
    Purchase of marketable securities                            (158,170)      (108,328)       (91,539)
    Proceeds of marketable securities                             144,842        105,259         79,485
                                                           --------------- -------------- --------------

                  Net cash used in investing activities           (54,687)       (26,829)       (33,919)
                                                           --------------- -------------- --------------

Cash flows from financing activities:
    Issuance of common stock                                        1,446          1,101          1,014
    Tax payments for restricted stock                              (1,580)          (686)          (284)
    Excess tax benefit from stock issuance                          1,007          1,153             --
                                                           --------------- -------------- --------------

                  Net cash provided by financing activities           873          1,568            730
                                                           --------------- -------------- --------------

                  Net increase (decrease) in cash and cash
                   equivalents                                    (10,235)         7,770         (8,571)

Cash and cash equivalents at beginning of year                     11,756          3,986         12,557
                                                           --------------- -------------- --------------

Cash and cash equivalents at end of year                      $     1,521         11,756          3,986
                                                           =============== ============== ==============


          See accompanying notes to consolidated financial statements.


                                       37


                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

(1) Nature of Business and Summary of Significant Accounting Policies

   (a) Nature of Business

     References in these financial statement footnotes to "we", "us", and "our"
refer to the business of Buffalo Wild Wings, Inc. and our subsidiaries. We were
organized for the purpose of operating Buffalo Wild Wings(R) restaurants, as
well as selling Buffalo Wild Wings restaurant franchises. In exchange for the
initial and continuing franchise fees received, we give franchisees the right to
use the name Buffalo Wild Wings.

     At December 30, 2007, December 31, 2006, and December 25, 2005, we operated
161, 139, and 122 Company-owned restaurants, respectively, and had 332, 290, and
248 franchised restaurants, respectively.

   (b) Principles of Consolidation

     The consolidated financial statements include the accounts of Buffalo Wild
Wings, Inc. and its wholly owned subsidiaries (collectively, the Company). All
significant intercompany accounts and transactions have been eliminated in
consolidation.

   (c) Fiscal Year

     We utilize a 52- or 53-week accounting period that ends on the last Sunday
in December. The fiscal years ended December 30, 2007, and December 25, 2005,
comprised 52 weeks. The fiscal year ended December 31, 2006 was a 53-week year
with the quarter ended December 31, 2006 comprising fourteen weeks. The 53rd
week of fiscal 2006 contributed $5,663 in restaurant sales and $768 in royalties
and fees.

   (d) Restaurant Sales Concentration

     As of December 30, 2007, we operated 25 Company-owned restaurants and had
61 franchised restaurants in the state of Ohio. The Company-owned restaurants in
Ohio aggregated 16.3%, 18.6%, and 22.3%, respectively, of our restaurant sales
in fiscal 2007, 2006, and 2005. We are subject to adverse trends in that state.

   (e) Cash and Cash Equivalents

     Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.

   (f) Marketable Securities

     Marketable securities consist of available-for-sale securities and trading
securities that are carried at fair value and held-to-maturity securities that
are stated at amortized cost, which approximates market.

     Available-for-sale securities are classified as current assets based upon
our intent and ability to use any and all of the securities as necessary to
satisfy the operational requirements of its business. Realized gains and losses
from the sale of available-for-sale securities were not material for fiscal
2007, 2006, and 2005. Unrealized losses are charged against net earnings when a
decline in fair value is determined to be other than temporary. The
available-for-sale investments carry short-term repricing features which
generally result in these investments having a value at or near par value
(cost).

     Trading securities are stated at fair value, with gains or losses resulting
from changes in fair value recognized currently in earnings as interest income.
In 2006, we funded a deferred compensation plan using trading assets in a
marketable equity portfolio. This portfolio is held to generate returns that
seek to offset changes in liabilities related to the equity market risk of
certain deferred compensation arrangements. These deferred compensation
liabilities were $1,579 and $1,237 as of December 30, 2007 and December 31,
2006, respectively, and are included in accrued compensation and benefits in the
accompanying consolidated balance sheets.

   (g) Accounts Receivable

     Accounts receivable - franchisees represents royalty receivables from our
franchisees. Accounts receivable - other consists primarily of
contractually-determined receivables for leasehold improvements, credit cards,
vendor rebates, and purchased interest on investments.


                                       38



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

   (h) Inventories

     Inventories are stated at the lower of cost or market. Cost is determined
by the first-in, first-out (FIFO) method.

     We purchase 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
purchase requirements do not create a market risk. The primary food product used
by Company-owned and franchised restaurants is fresh chicken wings. Fresh
chicken wings are purchased by us based on a chicken wing contact which fixes
80-90% of our chicken wing purchases at $1.23 per pound. This agreement is set
to expire in March 2008. We have not been able to negotiate a satisfactory
long-term pricing agreement for chicken wings and may float at market for the
remainder of 2008. However, we will continue to pursue options for a long-term
price contract. For fiscal 2007, 2006, and 2005, fresh chicken wings were 24%,
24%, and 27% of restaurant cost of sales, respectively.

   (i) Property and Equipment

     Property and equipment are recorded at cost. Leasehold improvements include
the cost of improvements funded by landlord incentives or allowances and during
the build-out period leasehold improvements are amortized using the
straight-line method over the lesser of the term of the lease, without
consideration of renewal options, or the estimated useful lives of the assets,
which typically range from five to ten years. Furniture and equipment are
depreciated using the straight-line method over the estimated useful lives of
the assets, which range from two to eight years. Maintenance and repairs are
expensed as incurred. Upon retirement or disposal of assets, the cost and
accumulated depreciation are eliminated from the respective accounts and the
related gains or losses are credited or charged to earnings.

     We review property and equipment, along with other long-lived assets,
quarterly to determine if the carrying value of these assets may not be
recoverable based on estimated future undiscounted cash flows. Assets are
reviewed at the lowest level for which cash flows can be identified, which is
the individual restaurant level. In determining future cash flows, significant
estimates are made by us with respect to future operating results of each
restaurant over its remaining lease term. If such assets are considered
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Fair value
is generally determined by estimated discounted future cash flows.

   (j) Goodwill and Other Assets

     Goodwill represents the excess of cost over the fair value of identified
net assets of the business acquired. Goodwill and indefinite-life purchased
liquor licenses are subject to an annual impairment analysis. We identify
potential impairments for goodwill by comparing the fair value of a reporting
unit with its carrying amount, including goodwill. If the fair value of the
reporting unit exceeds the carrying amount, the asset is not impaired. If the
carrying amount exceeds the fair value, we calculate the possible impairment by
comparing the implied fair value of the asset with the carrying amount. If the
implied value of the asset is less than the carrying amount, a write-down is
recorded. In 2005, we recorded an impairment charge of $390 for goodwill not
considered recoverable based on estimated discounted future cash flows. The
remaining goodwill was considered recoverable as of December 30, 2007.

     Other assets consist primarily of liquor licenses. These licenses are
either amortized over their annual renewal period or, if purchased, are carried
at the lower of fair value or cost. We identify potential impairments for liquor
licenses by comparing the fair value with its carrying amount. If the fair value
exceeds the carrying amount, the liquor licenses are not impaired. If the
carrying amount exceeds the fair value, we calculate the possible impairment by
comparing the implied fair value of the liquor licenses with the carrying
amount. If the implied value of the asset is less than the carrying amount, a
write-down is recorded. The carrying amount of the liquor licenses not subject
to amortization as of December 30, 2007 and December 31, 2006 was $414 and $375,
respectively, and is included in other assets.

   (k) Fair Values of Financial Instruments

     The carrying amount of our financial assets and liabilities approximates
fair value, because of their short-term nature.


                                       39



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

   (l) Asset Retirement Obligations

     An asset retirement obligation associated with the retirement of a tangible
long-lived asset is recognized as a liability in the period incurred or when it
becomes determinable, with an associated increase in the carrying amount of the
related long-lived asset. We must recognize a liability for the fair value of a
conditional asset retirement obligation when incurred, if the liability's fair
value can be reasonably estimated. Conditional asset retirement obligations are
legal obligations to perform asset retirement activities when the timing and/or
method of settlement are conditional on a future event or may not be within our
control. Asset retirement costs are depreciated over the useful life of the
related asset. As of December 30, 2007 and December 31, 2006, we had asset
retirement obligations of $175 and $142, respectively.

   (m) Revenue Recognition

     Franchise agreements have terms ranging from ten to twenty years. These
agreements also convey multiple extension terms of five or ten years, depending
on contract terms and if certain conditions are met. We provide the use of the
Buffalo Wild Wings trademarks, system, training, preopening assistance, and
restaurant operating assistance in exchange for area development fees, franchise
fees, and royalties of 5% of a restaurant's sales.

     Franchise fee revenue from individual franchise sales is recognized upon
the opening of the franchised restaurant when all material obligations and
initial services to be provided by us have been performed. Area development fees
are dependent based on the number of restaurants in the territory, as are our
obligations under the area development agreement. Consequently, as obligations
are met, area development fees are recognized proportionally with expenses
incurred with the opening of each new restaurant and any royalty-free periods.
Royalties are accrued as earned and are calculated each period based on
restaurant sales.

     Sales from Company-owned restaurant revenues are recognized as revenue at
the point of the delivery of meals and services. All sales taxes are presented
on a net basis and are excluded from revenue.

   (n) Franchise Operations

     We enter into franchise agreements with unrelated third parties to build
and operate restaurants using the Buffalo Wild Wings brand within a defined
geographical area. We believe that franchising is an effective and efficient
means to expand the Buffalo Wild Wings brand. The franchisee is required to
operate their restaurants in compliance with their franchise agreement that
includes adherence to operating and quality control procedures established by
us. We do not provide loans, leases, or guarantees to the franchisee or the
franchisee's employees and vendors. If a franchisee becomes financially
distressed, we do not provide any financial assistance. If financial distress
leads to a franchisee's noncompliance with the franchise agreement and we elect
to terminate the franchise agreement, we have the right but not the obligation
to acquire the assets of the franchisee at fair value as determined by an
independent appraiser. We receive a 5% royalty of gross sales as defined in the
franchise agreement and in most cases, allowances directly from the franchisees'
vendors that generally are less than 0.6% of the franchisees' gross sales. We
have financial exposure for the collection of the royalty payments. Franchisees
generally remit franchise payments weekly for the prior week's sales, which
substantially minimizes our financial exposure. Historically, we have
experienced insignificant write-offs of franchisee royalties. Franchise and area
development fees are paid upon the signing of the related agreements.

   (o) Advertising Costs

     Advertising costs for Company-owned restaurants are expensed as incurred
and aggregated $10,548, $9,055, and $5,809, in fiscal years 2007, 2006, and
2005, respectively. Our advertising costs exclude amounts collected from
franchisees as part of the system-wide marketing and advertising fund.

   (p) Preopening Costs

     Costs associated with the opening of new Company-owned restaurants are
expensed as incurred.


                                       40



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

   (q) Payments Received from Vendors

     Vendor allowances include allowances and other funds received from vendors.
Certain of these funds are determined based on various quantitative contract
terms. We also receive vendor allowances from certain manufacturers and
distributors calculated based upon purchases made by franchisees. Amounts that
represent a reimbursement of costs incurred, such as advertising, are recorded
as a reduction of the related expense. Amounts that represent a reduction of
inventory purchase costs are recorded as a reduction of inventoriable costs. We
recorded an estimate of earned vendor allowances that are calculated based upon
monthly purchases. We generally receive payment from vendors approximately 30
days from the end of a month for that month's purchases. During fiscal 2007,
2006, and 2005, vendor allowances were recorded as a reduction in inventoriable
costs, and cost of sales was reduced by $4,636, $4,246, and $4,020,
respectively.

   (r) National Advertising Fund

     We have a system-wide marketing and advertising fund. Company-owned and
franchised restaurants are required to remit a designated portion of sales, to a
separate advertising fund that is used for marketing and advertising efforts
throughout the system. In 2007, 2006, and 2005 that amount was 3%, 3%, and 2.5%,
respectively. Certain payments received from various vendors are deposited into
the National Advertising Fund. These funds are used for development and
implementation of system-wide initiatives and programs. We account for cash and
receivables of these funds as "restricted cash" with an offsetting "marketing
fund payables" on our accompanying consolidated balance sheet.

   (s) Earnings Per Common Share

     Basic earnings per common share excludes dilution and is computed by
dividing the net earnings available to common stockholders by the weighted
average number of common shares outstanding during the period. Diluted earnings
per common share include dilutive common stock equivalents consisting of stock
options and warrants determined by the treasury stock method. Restricted stock
units are included for calculating both basic and diluted earnings per share at
the time that the performance criteria is met.

   (t) Income Taxes

     Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the balance sheet carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
recorded to reduce the carrying amounts of deferred tax assets unless it is more
likely than not that such assets will be realized.

   (u) Deferred Lease Credits

     Deferred lease credits consist of reimbursement of costs of leasehold
improvements from the Company's lessors. These reimbursements are amortized on a
straight-line basis over the term of the applicable lease, without consideration
of renewal options. In addition, this account includes adjustments to recognize
rent expense on a straight-line basis over the term of the lease commencing at
the start of our construction period for the restaurant, without consideration
of renewal options.

     Leases typically have an initial lease term of between 10 to 15 years and
contain renewal options under which we may extend the terms for periods of three
to five years. Certain leases contain rent escalation clauses that require
higher rental payments in later years. Leases may also contain rent holidays, or
free rent periods, during the lease term. Rent expense is recognized on a
straight-line basis over the initial lease term. In 2005, rent expense
recognized over the construction period was capitalized and depreciated over the
economic life of the asset, generally ten years.

   (v) Accounting Estimates

     The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.


                                       41



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

   (w) Stock-Based Compensation

     We maintain a stock equity incentive plan under which we may grant
non-qualified stock options, incentive stock options, and restricted stock units
to employees, non-employee directors and consultants. We also have an employee
stock purchase plan ("ESPP").

     Prior to the December 26, 2005 adoption of the Financial Accounting
Standards Board ("FASB") Statement No. 123R, "Shared-Based Payment" ("SFAS
123R"), we accounted for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations.
Accordingly, because the stock option grant price equaled the market price on
the date of grant, and any purchase discounts under our stock purchase plan were
within statutory limits, no compensation expense was recognized for stock-based
compensation related to stock options or ESPP shares. Restricted stock units
vesting upon the achievement of certain performance targets were expensed under
the requirements of APB 25. Stock-based compensation recognized for restricted
stock during 2005 was $1,700. Prior to the adoption of SFAS 123R, stock-based
compensation was included as a pro forma disclosure in the notes to the
consolidated financial statements.

     Effective December 26, 2005, we adopted the fair value recognition
provisions of SFAS 123R, using the modified-prospective transition method. Under
this transition method, stock-based compensation expense is recognized in the
consolidated financial statements for granted, modified, or settled stock
options and for expense related to the ESPP, since the related purchase
discounts exceeded the amount allowed under SFAS 123R for non-compensatory
treatment. Compensation expense recognized includes the estimated expense for
the portion of stock options vesting in the period for options granted prior to,
but not vested as of December 26, 2005, based on the grant date fair value
estimated prior to the adoption of SFAS 123R. There were no new stock option
grants in 2007 or 2006. Restricted stock units vesting upon the achievement of
certain performance targets are expensed based on the fair value on the date of
grant. Results for prior periods have not been restated, as provided for under
the modified-prospective transition method.

     Total stock-based compensation expense recognized in the consolidated
statement of earnings for fiscal year 2007 was $3,755 before income taxes and
consisted of restricted stock, stock options, and employee stock purchase plan
(ESPP) expense of $3,538, $37 and $180, respectively. The related total tax
benefit was $1,007 during 2007. All stock-based compensation is recognized as
general and administrative expense.

     Total stock-based compensation expense recognized in the consolidated
statement of earnings for fiscal year 2006 was $3,216 before income taxes and
consisted of restricted stock, stock options, and employee stock purchase plan
(ESPP) expense of $3,000, $82 and $134, respectively. The related total tax
benefit was $1,153 during 2006.

     Prior to the adoption of SFAS 123R, we presented all tax benefits resulting
from the exercise of stock options as operating cash inflows in the consolidated
statements of cash flows, in accordance with the provisions of the Emerging
Issues Task Force ("EITF") Issue No 00-15, "Classification in the Statement of
Cash Flows of the Income Tax Benefit Received by a Company upon Exercise of a
Nonqualified Employee Stock Option." SFAS 123R requires the benefits of tax
deductions in excess of the compensation cost recognized for those options to be
classified as financing cash inflows, rather than operating cash inflows, on a
prospective basis. This amount is shown as "Excess tax benefit from stock
issuance" in the accompanying consolidated statement of cash flows for the
fiscal year ended December 30, 2007 and December 31, 2006.


                                       42



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

     The following table shows the effect on net earnings and earnings per share
for the 2005 fiscal period had compensation cost been recognized based upon the
estimated fair value on the grant date of stock options and ESPP.

                                                               Fiscal Year Ended
                                                               -----------------

                                                                    December 25,
                                                                        2005
                                                                   -------------
Net earnings, as reported                                          $      8,880
    Add:
         Total stock-based compensation expense included in
          reported earnings, net of related tax effects                   1,054
    Deduct:
         Total stock-based compensation expense determined
          under the fair value-based method for stock
          options, restricted stock, and ESPP, net of
          related tax effects                                            (1,210)
                                                                   -------------

              Pro forma net earnings                               $      8,724
                                                                   =============

Net earnings per common share:
    As reported (basic)                                            $       0.53
    Pro forma (basic)                                                      0.52

    As reported (dilutive)                                                 0.51
    Pro forma (dilutive)                                                   0.50

     Pro forma disclosures for the fiscal years ended December 30, 2007 and
December 31, 2006 are not presented because stock-based compensation is
recognized in the consolidated financial statements.

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes-Merton ("BSM") option valuation model with the following
assumptions:

                                                  Stock Options
                                    ------------------------------------------
                                    December 30,  December 31,   December 25,
                                        2007*         2006*          2005
Expected dividend yield                       N/A           N/A           0.0%
Expected stock price volatility               N/A           N/A          40.1%
Risk-free interest rate                       N/A           N/A           3.5%
Expected life of options                      N/A           N/A        5 years

                                           Employee Stock Purchase Plan
                                    ------------------------------------------
                                    December 30,  December 31,   December 25,
                                        2007          2006           2005
                                    ------------- ------------- --------------
Expected dividend yield                      0.0%          0.0%           0.0%
Expected stock price volatility      41.4 - 44.4%  39.2 - 41.4%  38.0% - 41.8%
Risk-free interest rate                3.6 - 4.9%    4.3 - 5.2%    3.1% - 4.3%
Expected life of options                0.5 years     0.5 years      0.5 years

* No stock options were granted in 2007 or 2006.


                                       43



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

     The expected term of the options represents the estimated period of time
until exercise and is based on historical experience of similar awards, giving
consideration to the contractual terms, vesting schedules and expectations of
future employee behavior. Expected stock price volatility is based on historical
volatility of our stock. The risk-free interest rate is based on the implied
yield available on U.S. Treasury zero-coupon issues with an equivalent remaining
term. We have not paid dividends in the past.

   (x) New Accounting Pronouncements

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS 157"), which defines fair value, establishes a framework for measuring
fair value in GAAP, and expands disclosures about fair value measurements. SFAS
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. Early
adoption is permitted. We believe the adoption of SFAS 157 will not have a
significant impact on our financial statements.

     In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115" ("SFAS 159"). SFAS 159 permits entities to choose to measure
many financial instruments and certain warranty and insurance contracts at fair
value on a contract-by-contract basis. A business entity is required to report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date. The objective of this
Statement is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. SFAS 159 is effective for financial statements issued for
fiscal years beginning after November 15, 2007. We believe the adoption of SFAS
159 will not have a significant impact on our financial statements.

     In December 2007, the 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. Early adoption of SFAS No. 141R is not permitted. We are currently
evaluating the impact SFAS No. 141R will have on any future business
combinations.

(2) Marketable Securities

     Marketable securities were comprised as follows:

                             December 30,   December 31,
                                 2007           2006
                            --------------- -------------
Held-to-maturity
    Municipal securities             23,718        33,522
Available-for-sale
    Municipal securities             41,206        18,019
Trading
    Mutual funds                      1,589         1,288
                            --------------- -------------

Total                          $     66,513        52,829
                            =============== =============

     Purchases of available for-sale securities totaled $132,346 in 2007 with
sales totaling $109,181. Purchases of held-to-maturity securities totaled
$25,824 in 2007 with proceeds from maturities totaling $35,661. All
held-to-maturity debt securities mature within one year and had an aggregate
fair value of $23,753 at December 30, 2007.


                                       44





                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

     Purchases of available for-sale securities totaled $71,585 in 2006 with
sales totaling $87,205. Purchases of held-to-maturity securities totaled $36,743
in 2006 with proceeds from maturities totaling $18,054. All held-to-maturity
debt securities mature within one year and had an aggregate fair value of
$33,512 at December 31, 2006.

     Purchases of available for-sale securities totaled $63,738 in 2005 with
sales totaling $46,743. Purchases of held-to-maturity securities totaled $27,800
in 2005 with proceeds from maturities totaling $32,742. All held-to-maturity
debt securities mature within one year and had an aggregate fair value of
$14,862 at December 25, 2005.

     Trading securities represent investments held for future needs of a
non-qualified deferred compensation plan.

     The fair value of available-for-sale investments in debt securities by
contractual maturities at December 30, 2007, is as follows:

Maturity date                              Fair Value
------------------------------------------ -----------
1-5 years                                       $1,210
5-10 years                                       6,664
After 10 years                                  33,332
                                           -----------

      Total                                    $41,206
                                           ===========


(3) Property and Equipment

     Property and equipment consisted of the following:

                                            December 30,    December 31,
                                                2007            2006
                                          ---------------- ---------------
Construction in process                      $      1,851           1,037
Furniture, fixtures, and equipment                 69,962          53,994
Leasehold improvements                             97,916          77,794
                                          ---------------- ---------------

                                                  169,729         132,825
Less accumulated depreciation                     (66,987)        (54,688)
                                          ---------------- ---------------

                                             $    102,742          78,137
                                          ================ ===============


(4) Lease Commitments

     We lease all of our restaurants and corporate offices under operating
leases that have various expiration dates. In addition to base rents, leases
typically require us to pay our share of maintenance and real estate taxes and
certain leases include provisions for contingent rentals based upon sales.

     Future minimum rental payments due under noncancelable operating leases for
existing restaurants and commitments for restaurants under development as of
December 30, 2007 were as follows:

                                                                  Restaurants
                                                      Operating      under
                                                       leases     development
                                                     ----------- -------------
Fiscal year ending:
2008                                                  $   18,588         1,034
2009                                                      17,677         1,729
2010                                                      16,913         1,729
2011                                                      15,898         1,682
2012                                                      15,074         1,629
    Thereafter                                            68,427         9,653
                                                     ----------- -------------

         Total future minimum lease payments          $  152,577        17,456
                                                     =========== =============


                                       45



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

     In 2007, 2006, and 2005, we rented office space under operating leases
which, in addition to the minimum lease payments, require payment of a
proportionate share of the real estate taxes and building operating expenses. We
also rent restaurant space under operating leases, some of which, in addition to
the minimum lease payments and proportionate share of real estate and operating
expenses, require payment of percentage rents based upon sales levels. Rent
expense, excluding our proportionate share of real estate taxes and building
operating expenses, was as follows:

                                               Fiscal Years Ended
                                  --------------------------------------------
                                   December 30,   December 31,   December 25,
                                       2007           2006           2005
                                  -------------- -------------- --------------
     Minimum rents                  $     16,729         14,600         11,702
     Percentage rents                        250            238            170
                                  -------------- -------------- --------------

         Total                      $     16,979         14,838         11,872
                                  ============== ============== ==============

     Equipment and auto leases      $        359            273            218
                                  ============== ============== ==============


 (5) Income Taxes

     We adopted the provisions of FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" (FIN 48), on January 1, 2007 and upon adoption did
not need to recognize an adjustment in the previously recorded liability for
unrecognized income tax benefits. A reconciliation of the beginning and ending
amount of unrecognized tax benefits is as follows:

                                                              (in millions)
                                                            -----------------
Balance at January 1, 2007                                      $       419
Additions based on tax positions related to the current year             88
Reductions for tax positions of prior years                            (204)
Settlements                                                             (62)
                                                            -----------------

Balance at December 30, 2007                                    $       241
                                                            =================


     We recognize potential accrued interest and penalties related to
unrecognized tax benefits within its operations in income tax expense. Interest
and penalties related to unrecognized tax benefits totaled $146 at January 1,
2007. Included in the balance at January 1, 2007 and December 30, 2007, are
unrecognized tax benefits of $337 and $157, respectively, which if recognized,
would affect the annual effective tax rate. The difference between these amounts
and the amount reflected in the tabular reconciliation above relates to the
deferred U.S. federal income tax benefit on unrecognized tax benefits related to
U.S. state income taxes.

     We file a consolidated return in the United States Federal jurisdiction and
in many state jurisdictions. The Internal Revenue Service has completed their
examination of our 2005 U.S. Federal Income Tax Return. No proposed changes were
made. With few exceptions, we are no longer subject to state income tax
examinations for years before 2004. We do not anticipate that total unrecognized
tax benefits will significantly change due to the settlement of audits and the
expiration of statute of limitations prior to December 28, 2008. Income tax
expense (benefit) is comprised of the following:


                                               Fiscal Years Ended
                                 -----------------------------------------------
                                  December 30,    December 31,    December 25,
                                      2007            2006            2005
                                 --------------- --------------- ---------------
Current:
    Federal                        $      8,320           8,801           5,400
    State                                 1,438             992           1,512
Deferred:
    Federal                                (869)         (1,705)         (1,287)
    State                                   (25)           (523)           (186)
                                 --------------- --------------- ---------------

      Total income tax expense     $      8,864           7,565           5,439
                                 =============== =============== ===============


                                       46



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

     A reconciliation of the expected federal income taxes (benefits) at the
statutory rate of 35% to the actual provision for income taxes is as follows:



                                                               Fiscal Years Ended
                                                  --------------------------------------------
                                                   December 30,    December 31,  December 25,
                                                       2007            2006          2005
                                                  --------------- -------------- -------------
                                                                               
Expected federal income tax expense                 $      9,981          8,343         5,012
State income tax expense, net of federal effect              919            305           862
Nondeductible expenses                                       144            115            80
Tax exempt income                                           (824)          (602)         (350)
General business credits                                  (1,121)          (772)         (528)
Statutory rate changes, deferred tax impact                   --             --           148
Other, net                                                  (235)           176           215
                                                  --------------- -------------- -------------

    Total income tax expense                        $      8,864          7,565         5,439
                                                  =============== ============== =============



     Deferred tax assets and liabilities are classified as current and
noncurrent on the basis of the classification of the related asset or liability
for financial reporting. Deferred income taxes are provided for temporary
differences between the basis of assets and liabilities for financial reporting
purposes and income tax purposes. Temporary differences comprising the net
deferred tax assets and liabilities on the balance sheets are as follows:

                                      Fiscal Years Ended
                                 -----------------------------
                                  December 30,   December 31,
                                      2007           2006
                                 -------------- --------------
Deferred tax assets:
    Unearned franchise fees        $        880            892
    Accrued vacation                        264            197
    Accrued compensation                    600            470
    Deferred lease credits                1,262          1,029
    Other                                   484            611
                                 -------------- --------------

                                   $      3,490          3,199
                                 ============== ==============

Deferred tax liability:
    Depreciation                   $      4,353          4,956
                                 -------------- --------------

         Total                     $      4,353          4,956
                                 ============== ==============


(6) Stockholders' Equity

   (a) Stock Options

We have 2.9 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 stock options, or
85% of fair market value for nonqualified stock options. Incentive stock options
become exercisable in four equal installments from the date of the grant and
have a contractual life of 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 ten years. We issue new shares of common stock upon exercise
of stock options. In 2003, our shareholders approved amendments to the plan to
allow the granting of restricted stock and extended the plan to 2013. Option
activity is summarized as follows:


                                       47



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)




                                                                      Average
                                                      Weighted       remaining      Aggregate
                                       Number         average       contractual     Intrinsic
                                      of shares    exercise price   life (years)      Value
                                   --------------- -------------- --------------- -------------
                                                
Outstanding, December 31, 2006            420,986     $      4.23

Granted                                        --              --
Exercised                                (241,434)           3.15
Cancelled                                  (2,949)           9.63
                                   --------------- -------------- --------------- -------------

Outstanding, December 30, 2007            176,603     $      5.61             3.9    $    3,096
Exercisable, December 30, 2007            172,086            5.37             3.9         3,058


     The aggregate intrinsic value in the table above is before applicable
income taxes, based on our closing stock price of $23.14 as of December 30,
2007, which would have been received by the optionees had all options been
exercised on that date. As of December 30, 2007, total unrecognized stock-based
compensation expense related to nonvested stock options was approximately $16,
which is expected to be recognized over a weighted average period of
approximately seven months. During 2007, 2006, and 2005, the total intrinsic
value of stock options exercised was $5,978, $2,707, and $3,226, respectively.
During 2007 and 2006, the total fair value of options vested was $201 and $587,
respectively.

     The following table summarizes our stock options outstanding at December
30, 2007:



                               Options outstanding                     Options exercisable
                 ----------------------------------------------- -------------------------------
                                    Average         Weighted                        Weighted
                                   remaining        average                         average
                                  contractual       exercise                        exercise
     Range           Shares      life (years)        price           Shares          price
---------------- -------------- --------------- ---------------- -------------- ----------------
                                                                   
 $   1.68 - 3.75         82,534            2.66   $         2.88         82,534   $         2.88
     5.63 - 6.38         51,171            4.49             5.76         51,171             5.76
    9.08 - 14.13         40,698            5.69            10.31         37,331             9.99
           17.41          2,200            7.01            17.41          1,050            17.41
                 --------------                                  --------------

                        176,603            3.94             5.61        172,086             5.37
                 ==============                                  ==============

     The plan has 693,811 shares available for grant as of December 30, 2007.



   (b) Restricted Stock

     Restricted stock units are granted annually at the discretion of the Board
under the plan. These units are subject to annual vesting upon achieving
performance targets established by the Board of Directors. We record
compensation expense for the restricted stock units if vesting, based on the
achievement of performance targets, is probable. The restricted stock units may
vest one-third annually over a ten-year period as determined by meeting
performance targets. However, the second 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 has
vested. We issue new shares of common stock upon the disbursement of restricted
stock units. Restricted stock activity is summarized for fiscal year 2007:

                                                     Weighted
                                                     average
                                        Number      grant date
                                      of shares     fair value
                                    -------------- ------------
Outstanding, December 31, 2006            168,212    $    17.10

Granted                                   166,950         24.88
Vested                                   (149,740)        20.96
Cancelled                                 (44,730)        21.20
                                    -------------- ------------

Outstanding, December 30, 2007            140,692         20.92


                                       48



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

     As of December 30, 2007, the total stock-based compensation expense related
to nonvested awards not yet recognized was $3,044, which is expected to be
recognized over a weighted average period of 1.3 years. During fiscal year 2007,
the total fair value of shares vested was $3,139. The weighted average grant
date fair value of restricted stock units granted during 2006 and 2005 was
$16.99 and $17.42, respectively. During 2007, we recognized $399 of expense and
paid $1,066 for liability classified share-based compensation.

   (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
2007, 2006, and 2005, we issued 30,836, 36,804, and 42,476 shares, respectively,
of common stock under the ESPP and have 432,978 available for future sale.

(7) Earnings Per Common Share

     The following is a reconciliation of basic and fully diluted earnings per
common share for fiscal 2007, 2006, and 2005:



                                                                Fiscal year ended December 30, 2007
                                                               --------------------------------------
                                                                 Earnings      Shares      Per-share
                                                               (numerator)  (denominator)   amount
                                                               ------------ ------------- -----------
                                                                                   
Net earnings                                                     $   19,654
                                                               ------------
         Earnings per common share                                   19,654    17,553,998   $    1.12
Effect of dilutive securities--stock options, restricted stock
 and warrants                                                            --       278,827
                                                               ------------ -------------
         Earnings per common share--assuming dilution               $19,654    17,832,825        1.10
                                                               ============ =============


                                                                Fiscal year ended December 31, 2006
                                                               --------------------------------------
                                                                 Earnings      Shares      Per-share
                                                               (numerator)  (denominator)   amount
                                                               ------------ ------------- -----------
Net earnings                                                     $   16,273
                                                               ------------
         Earnings per common share                                   16,273    17,156,656   $    0.95
Effect of dilutive securities--stock options and restricted
 stock                                                                   --       472,018
                                                               ------------ -------------
         Earnings per common share--assuming dilution            $   16,273    17,628,674        0.92
                                                               ============ =============


                                                                Fiscal year ended December 25, 2005
                                                               --------------------------------------
                                                                 Earnings      Shares      Per-share
                                                               (numerator)  (denominator)   amount
                                                               ------------ ------------- -----------
Net earnings                                                     $    8,880
                                                               ------------
         Earnings per common share                                    8,880    16,892,400   $    0.53
Effect of dilutive securities--stock options and restricted
 stock                                                                   --       524,588
                                                               ------------ -------------
         Earnings per common share--assuming dilution            $    8,880    17,416,988        0.51
                                                               ============ =============


     The following is a summary of those securities outstanding at the end of
the respective periods, which have been excluded from the fully diluted
calculations because the effect on net earnings per common share would have been
anti-dilutive:


                                                               December 30, December 31, December 25,
                                                                  2007         2006         2005
                                                              ------------ ------------ ------------
                                                                                    
Stock options                                                           --        2,972        4,052
Restricted stock                                                   140,692      168,212      151,928




                                       49



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
           (Dollar amounts in thousands, except per-share amounts)

(8) Supplemental Disclosures of Cash Flow Information



                                                                       Fiscal Years Ended
                                                            ----------------------------------------
                                                            December 30,  December 31,  December 25,
                                                                2007          2006          2005
                                                            ------------  ------------  ------------
                                                                                     
Cash paid during the period for:
    Income taxes                                            $    10,783         8,803         4,801

Noncash financing and investing transactions:
         Property and equipment not yet paid for                  1,135         1,130            82
         Tax withholding for restricted stock units               1,100         2,267           578
         Adjustment of restricted stock units to fair value
          on grant date                                              --         2,568            --
         Adjustment of restricted stock units to fair value          --            --         2,451
         Capitalization of preopening rent expense                   --            --           463



(9) Loss on Asset Disposals and Impairment

     In 2007, 2006 and 2003, we closed restaurants. As a result, a charge was
taken for remaining lease obligations, broker fees, and utilities. These charges
were recognized as a part of the loss on asset disposals and impairment and were
based on remaining lease obligations.

     The rollforward of the store closing reserve for the years ended December
30, 2007, December 31, 2006, and December 25, 2005 is as follows:



                                          As of                                   As of
                                      December 31,     2007         Costs     December 30,
                                          2006        reserve     incurred        2007
                                      ------------- ----------- ------------- -------------
Remaining lease obligation and
                                                                            
 utilities                               $       54          85        (139)             --
                                      ------------- ----------- ------------- -------------

                                         $       54          85        (139)             --
                                      ============= =========== ============= =============


                                          As of                                   As of
                                      December 25,     2006         Costs     December 31,
                                          2005        reserve     incurred        2006
                                      ------------- ----------- ------------- -------------
Remaining lease obligation and
 utilities                               $       --          54          --              54
                                      ------------- ----------- ------------- -------------

                                         $       --          54          --              54
                                      ============= =========== ============= =============


                                          As of                                   As of
                                      December 26,     2005         Costs     December 25,
                                          2004        reserve     incurred        2005
                                      ------------- ----------- ------------- -------------
Remaining lease obligation and
 utilities                               $      136          --        (136)             --
                                      ------------- ----------- ------------- -------------

                                         $      136          --        (136)             --
                                      ============= =========== ============= =============


     During 2006, we recorded an impairment charge for the assets of one
underperforming restaurant. An impairment charge of $481 was recorded to the
extent that the carrying amount of the assets was not considered recoverable
based on estimated discounted future cash flows and the underlying fair value of
the assets.

     During 2005, we recorded an impairment charge for the assets of four
underperforming restaurants. An impairment charge of $1,268 was recorded to the
extent that the carrying amount of the assets was not considered recoverable
based on estimated discounted future cash flows and the underlying fair value of
the assets.


                                       50



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)

     A summary of the loss on asset disposals and impairment charges recognized
by us is as follows:

                                            Fiscal Years Ended
                               ---------------------------------------------
                                December 30,   December 31,    December 25,
                                    2007           2006            2005
                               -------------- --------------- --------------
Store closing charges            $         85              54             --
Long-lived asset impairment                --             481          1,268
Goodwill impairment                        --              --            390
Other asset write-offs                    902             473            333
                               -------------- --------------- --------------

                                 $        987           1,008          1,991
                               ============== =============== ==============


(10) Defined Contribution Plans

     We have a defined contribution 401(k) plan whereby eligible employees may
contribute pretax wages in accordance with the provisions of the plan. We match
100% of the first 3% and 50% of the next 2% of contributions made by eligible
employees. Matching contributions of approximately $840, $394, and $312 were
made by us during 2007, 2006, and 2005, respectively.

     Under our Management Deferred Compensation Plan, our executive officers and
other named officers are entitled to receive an amount equal to a percentage of
an officer's base salary which is credited on a monthly basis to that officer's
deferred compensation account. The maximum deferral is 7.5% of the base salary
of each Vice President, 10% of the base salary of each Senior Vice President,
and 12.5% of the base salary of Chief Executive Officer, Chief Financial
Officer, and Executive Vice Presidents. Such amounts are subject to certain
vesting provisions, depending on length of employment and circumstances of
employment termination. Cash contributions relating to salary deferrals of $261,
$245, and $228 were made by us during 2007, 2006, and 2005, respectively.

(11) Related Party Transactions

     It is our policy that all related party transactions must be disclosed and
approved by the disinterested directors, and the terms and considerations for
such related party transactions are compared and evaluated to terms available or
the amounts that would have to be paid or received, as applicable, in
arms-length transactions with independent third-parties.

     We sublease a portion of our main offices to Carefree Capital Partners,
Limited Partnership (Carefree) on a month-to-month lease on the same rental
basis as we are. A member of our board of directors is chairman and sole
stockholder of Carefree.

     A member of our board of directors, Warren Mack, is an officer and director
at our primary law firm.

(12) Designation of Shares and Stock Split

     On May 17, 2007, the Board of Directors authorized 4,600,000 shares of the
5,600,000 undesignated shares be designated as additional common stock.

     On June 15, 2007, we effected a two-for-one stock split of our common stock
for holders of record on June 1, 2007. All applicable share and per-share data
in the accompanying consolidated financial statements and related disclosures
have been retroactively adjusted to give effect to this stock split.

(13) Contingencies

     We are involved in various legal matters 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 and results of operations.


                                       51



                    BUFFALO WILD WINGS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                     December 30, 2007 and December 31, 2006
             (Dollar amounts in thousands, except per-share amounts)


(14) Commitment - Acquisition of Las Vegas Franchised Restaurants

     On May 18, 2007, we exercised a right of first refusal to acquire the
assets of nine Buffalo Wild Wings franchised restaurants in the Las Vegas,
Nevada area. We expect the acquisition, if completed, to close in 2008. The
purchase price is approximately $26,000 and will be funded with available cash
and proceeds from marketable securities. The acquisition is subject to purchase
price adjustments. The transaction also remains dependent on execution of a
definitive asset purchase agreement, receipt of necessary approvals for gaming
and liquor licenses, lease assignments, and other customary closing conditions.

(15) Subsequent Event

     During February 2008, we acquired certain leases and assets of eight
locations from Avado Brands, Inc. for approximately $1,200 in cash. Due to this
acquisition, we anticipate an asset impairment charge of approximately $400
relating to the relocation of one of our restaurants in the first quarter of
2008.


                                       52



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     We have established and maintain disclosure controls and procedures that
are designed to ensure that material information relating to us and our
subsidiaries required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized, and reported within the time periods specified in the SEC's rules
and forms, and that such information is accumulated and communicated to our
management, including our chief executive officer and chief financial officer,
as appropriate to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can only provide reasonable assurance of achieving the desired control
objectives, and in reaching a reasonable level of assurance, management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

     We carried out an evaluation, under the supervision and with the
participation of our management, including our chief executive officer and chief
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this
report. Based on that evaluation, the chief executive officer and chief
financial officer concluded that our disclosure controls and procedures were
effective as of the date of such evaluation to provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified by the Securities and Exchange
Commission's rules and forms.

Management's Report on Internal Control over Financial Reporting

     Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial
reporting is a process designed by, or under the supervision of, our chief
executive and chief financial officers and effected by our board of directors,
management and other personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. generally accepted accounting
principles and includes those policies and procedures that:

     o  pertain to the maintenance of records that in reasonable detail
        accurately and fairly reflect the transactions and dispositions of our
        assets;

     o  provide reasonable assurance that transactions are recorded as necessary
        to permit preparation of financial statements in accordance with
        generally accepted accounting principles, and that our receipts and
        expenditures are being made only in accordance with the authorizations
        of our management and directors; and

     o  provide reasonable assurance regarding prevention or timely detection of
        unauthorized acquisition, use or disposition of our assets that could
        have a material effect on our financial statements.

     Because of inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risks that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with policies or procedures may deteriorate. However, these inherent
limitations are known features of the financial reporting process. It is
possible to design into the process safeguards to reduce, thought not eliminate,
the risk that misstatements are not prevented or detected on a timely basis.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company.

     Management assessed the effectiveness of our internal control over
financial reporting as of December 30, 2007. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
Framework. Based on this assessment, our management concluded that, as of
December 30, 2007, our internal control over financial reporting was effective
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation and presentation of financial statements for external
purposes in accordance with generally accepted accounting principles. Our
independent registered public accounting firm, KPMG LLP, has issued an audit
report on the effectiveness of our internal control over financial reporting.
That report appears below.


                                       53



Change in Internal Control Over Financial Reporting

     There were no changes in the our internal control over financial reporting
that occurred during our last fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 9B. OTHER INFORMATION

     Not applicable.


                                       54



              Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Buffalo Wild Wings, Inc.:

     We have audited Buffalo Wild Wings, Inc. and subsidiaries' (the Company)
internal control over financial reporting as of December 30, 2007, based on the
criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Company's management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management's
Annual Report on Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Company's internal control over financial
reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing
such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.

     A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the consolidated financial
statements.

     Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

     In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 30, 2007, based on the
criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).

     We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheets of Buffalo Wild Wings, Inc. and subsidiaries as of December 30, 2007 and
December 31, 2006, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 30, 2007, and our report dated March 5, 2008 expressed an
unqualified opinion on those consolidated financial statements. Our report
stated the Company adopted Statement of Financial Accounting Standards No. 123R,
"Share-Based Payment," on December 26, 2005.


                                                /s/    KPMG LLP

Minneapolis, Minnesota
March 5, 2008


                                       55



                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     Additional information required by this item is contained in Item 1 of this
document and the sections entitled "Election of Directors," "Compliance with
Section 16(a) of the Exchange Act," and "Corporate Governance" appearing in our
Proxy Statement to be delivered to shareholders in connection with the 2008
Annual Meeting of Shareholders. Such information is incorporated herein by
reference.

     Our Board of Directors has adopted a Code of Ethics & Business Conduct for
all employees and directors. A copy of this document is available on our website
at www.buffalowildwings.com, free of charge, under the Corporate Governance
Investors section. We will satisfy any disclosure requirements under Item 10 or
Form 8-K regarding an amendment to, or waiver from, any provision of the Code
with respect to our principal executive officer, principal financial officer,
principal accounting officer and persons performing similar functions by
disclosing the nature of such amendment or waiver on our website or in a report
on Form 8-K.

     Our Board of Directors has determined that Mr. J. Oliver Maggard, a member
of the Audit Committee and an independent director, is an audit committee
financial expert, as defined under 407(d) (5) of Regulation S-K. Mr. Maggard is
an "independent director" as that term is defined in Nasdaq Rule 4200(a)(15).
The designation of Mr. Maggard as the audit committee financial expert does not
impose on Mr. Maggard any duties, obligations or liability that are greater than
the duties, obligations and liability imposed on Mr. Maggard as a member of the
Audit Committee and the Board of Directors in the absence of such designation or
identification.

ITEM 11. EXECUTIVE COMPENSATION

     The information required by this item is contained in the section entitled
"Executive Compensation" appearing in our Proxy Statement to be delivered to
shareholders in connection with the 2008 Annual Meeting of Shareholders. Such
information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

     The information required by this item relating to the security ownership of
certain holders is contained in the sections entitled "Principal Shareholders
and Management Shareholdings" and "Equity Compensation Plan Information"
appearing in our Proxy Statement to be delivered to shareholders in connection
with the 2008 Annual Meeting of Shareholders. Such information is incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
          INDEPENDENCE

     The information required by this item is contained in the sections entitled
"Corporate Governance" and "Certain Transactions" appearing in our Proxy
Statement to be delivered to shareholders in connection with the 2008 Annual
Meeting of Shareholders. Such information is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information required by this item is contained in the section entitled
"Independent Registered Public Accounting Firm" appearing in our Proxy Statement
to be delivered to shareholders in connection with the 2008 Annual Meeting of
Shareholders. Such information is incorporated herein by reference.


                                       56



                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a) Financial Statements. The following consolidated financial statements
of ours are filed with this report and can be found at Item 8 of this Form 10-K.

         Report of Independent Registered Public Accounting Firm dated
     March 5, 2008

         Consolidated Balance Sheets as of December 30, 2007 and
     December 31, 2006

         Consolidated Statements of Earnings for the Years Ended December 30,
     2007, December 31, 2006, and December 25, 2005

         Consolidated Statements of Stockholders' Equity for the Years Ended
     December 30, 2007, December 31, 2006, and December 25, 2005

         Consolidated Statements of Cash Flows for the Years Ended December 30,
     2007, December 31, 2006, and December 25, 2005

         Notes to Consolidated Financial Statements

     (b)  Financial Statement Schedules. The following schedule is included
following the exhibits to this Form 10-K.

         Schedule II - Valuation and Qualifying Accounts

     All other schedules for which provision is made in the applicable
accounting regulations of the SEC have been omitted as not required or not
applicable, or the information required has been included elsewhere by reference
in the financial statements and related notes.

     (c) Exhibits. See "Exhibit Index" following the signature page of this Form
10-K for a description of the documents that are filed as Exhibits to this
report on Form 10-K or incorporated by reference herein.


                                       57



                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



Date: March 5, 2008                 BUFFALO WILD WINGS, INC.


                                    By      /s/    SALLY J. SMITH
                                       ----------------------------------------
                                                    Sally J. Smith
                                        Chief Executive Officer and President

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated below.

     Each person whose signature appears below constitutes and appoints Sally J.
Smith and Mary J. Twinem as the undersigned's true and lawful attorneys-in fact
and agents, each acting alone, with full power of substitution and
resubstitution, for the undersigned and in the undersigned's name, place and
stead, in any and all amendments to this Annual Report on Form 10-K and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granted unto said
attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.


           Name                            Title                         Date
---------------------------------------------------------------- ---------------

                            Chief Executive Officer, President
                             and Director (principal executive
    /s/ SALLY J. SMITH       officer)                              3/5/08
----------------------------
      Sally J. Smith

                            Executive Vice President, Chief
                             Financial Officer and Treasurer
                             (principal financial and accounting
    /s/ MARY J. TWINEM       officer)                              3/5/08
----------------------------
      Mary J. Twinem

  /s/ DALE M. APPLEQUIST    Director                               3/5/08
----------------------------
    Dale M. Applequist

  /s/ KENNETH H. DAHLBERG   Director                               3/5/08
----------------------------
    Kenneth H. Dahlberg

                            Director, Chairman of the Board
----------------------------
      James M. Damian

  /s/ MICHAEL P. JOHNSON    Director                               3/5/08
----------------------------
    Michael P. Johnson

  /s/ ROBERT W. MACDONALD   Director                               3/5/08
----------------------------
    Robert W. MacDonald

                            Director
----------------------------
      Warren E. Mack

   /s/ J. OLIVER MAGGARD    Director                               3/5/08
----------------------------
     J. Oliver Maggard


                                       58



                            Buffalo Wild Wings, Inc.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS



                                                        Additions
                                            Balance      Charged
                                               at       to Costs   Deductions   Balance
                                           Beginning       and        From     at End of
Description                                of Period    Expenses    Reserves     Period
----------------------------------        ------------ ----------- ----------- ----------
                                                                        
Allowance for doubtful accounts     2007    $       47          --          22         25
                                    2006            25          51          29         47
                                    2005            25          --          --         25

Store closing reserves              2007            54          85         139         --
                                    2006            --          54          --         54
                                    2005           136          --         136         --



                                       59






                            BUFFALO WILD WINGS, INC.
                           EXHIBIT INDEX TO FORM 10-K



For the Fiscal Year Ended:                                  Commission File No.

December 30, 2007                                                     000-24743




  Exhibit
   Number                                          Description
------------  -------------------------------------------------------------------------------------

        
         3.1  Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our
               Form 10-Q for the fiscal quarter ended September 30, 2007)

         3.2  Restated Bylaws, as Amended (incorporated by reference to Exhibit 3.1 to our current
               report on Form 8-K filed February 28, 2007)

         4.1  Form of specimen certificate representing Buffalo Wild Wings, Inc.'s common stock (1)

        10.1  2003 Equity Incentive Plan forms of stock option agreements (1)(2)

        10.2  Employment Agreement, dated as of December 1, 1999 with Sally J. Smith (1)(2)

        10.3  Employment Agreement, dated as of December 1, 1999 with Mary J. Twinem (1)(2)

        10.4  Employment Agreement, dated as of December 1, 1999 with Kathleen M. Benning (1)(2)

        10.5  Employment Agreement, dated as of April 22, 2002 with James M. Schmidt (1)(2)

        10.6  Employment Agreement, dated as of February 25, 2002 with Judith A. Shoulak (1)(2)

        10.7  Employee Stock Purchase Plan and Amendment No. 1 (1) (2)

        10.8  Form of 2005 Restricted Stock Unit Award Notice to Directors used under the 2003
               Equity Incentive Plan (incorporated by reference to Exhibit 10.16 to our Form 10-K
               for the fiscal year ended December 25, 2005) (2)

        10.9  The Executive Nonqualified Excess Plan (incorporated by reference to Exhibit 10.1 to
               our Form 10-Q for the fiscal quarter ended September 24, 2006) (2)

       10.10  The Executive Nonqualified Excess Plan Adoption Agreement (incorporated by reference
               to Exhibit 10.2 to our Form 10-Q for the fiscal quarter ended September 24, 2006)
               (2)

       10.11  2003 Equity Incentive Plan, as Amended Through March 17, 2007 (incorporated by
               reference to Appendix A to our Proxy Statement filed on April 20, 2007) (2)

       10.12  Form of Restricted Stock Unit Award Notice to Employees under the 2003 Equity
               Incentive Plan as of January 1, 2007 (2)

       10.13  2007 Executive Bonus Plan (incorporated by reference to Exhibit 10.1 to our Form 8-K
               filed December 13, 2006) (2)

       10.14  Director Compensation Arrangements as of January 1, 2007 (incorporated by reference
               to Exhibit 10.22 to our Form 10-K for the fiscal year ended December 31, 2006) (2)

       10.15  Executive Officer Compensation Arrangements for Fiscal Year 2007 (incorporated by
               reference to Exhibit 10.23 to our Form 10-K for the fiscal year ended December 31,
               2006) (2)

       10.16  Employment Agreement, dated as of October 30, 2006, with Linda G. Traylor
               (incorporated by reference to Exhibit 10.24 to our Form 10-K for the fiscal year
               ended December 31, 2006) (2)

       10.17  2008 Executive Cash Incentive Program (incorporated by reference to Exhibit 10.1 to
               our Current Report on Form 8-K filed December 12, 2007) (2)

       10.18  Cash Incentive Plan (incorporated by reference to Appendix B to our Proxy Statement
               filed on April 20, 2007) (2)

       10.19* Director Compensation Arrangements as of December 31, 2007 (2)

       10.20* Executive Officer Compensation Arrangements for Fiscal Year 2008 (2)



                                       60





        
       10.21* Employment Agreement, dated as of September 27, 2007 with Mounir N. Sawda (2)

       10.22  Form of Notice of Performance-Based Restricted Stock Unit Award under the 2003 Equity
               Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on
               February 22, 2008) (2)

       10.23  Form of Notice of Incentive Stock Option Award under the 2003 Equity Incentive Plan
               (incorporated by reference to Exhibit 10.2 to our Form 8-K filed on February 22,
               2008) (2)

        21.1  List of Subsidiaries (incorporated by reference to Exhibit 21.1 to our Form 10-K for
               the fiscal year ended December 26, 2004)

      23.1 *  Consent of KPMG LLP, Independent Registered Public Accounting Firm

      24.1 *  Power of Attorney (included on the signature page)

      31.1 *  Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-
               Oxley Act of 2002

      31.2 *  Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-
               Oxley Act of 2002

      32.1 *  Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-
               Oxley Act of 2002

      32.2 *  Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-
               Oxley Act of 2002


------------------------

  *  Filed herewith.
(1)  Incorporated by reference to the corresponding exhibit numbers to our
     Registration Statement on Form S-1, Reg. No. 333-108695
(2)  Management agreement or compensatory plan or arrangement.


                                       61