Famous Dave's 1Q earnings tumble

“Disappointing” first-quarter results for Famous Dave’s of America Inc. included a same-store sales difference of more than 4 percent between company-owned restaurants and franchised locations based on the latter’s delayed implementation of turnaround initiatives.

For the March 31-ended quarter, Famous Dave’s net income fell significantly to $62,000, or 1 cent per share, compared with $817,000, or 11 cents per share a year earlier.

Revenue dipped 2.4 percent to $36.6 million, compared to $37.5 million a year earlier, reflecting same-store sales declines of 1.8 percent at company-owned units and 6.1 percent at franchised restaurants.

Chief executive John Gilbert explained in a company statement that Famous Dave’s same-store sales in its 53 corporate restaurants led those of its 134 franchised units by such a wide margin because the company-owned system was first to test and implement “a number of smart, innovative tactics that have proven successful.”

Menu items tested and rolled out during the quarter included Sweetwater Catfish, house-smoked beef brisket and Burnt Ends. The company also continued to implement its realigned marketing procedures to drive business in discrete lines of business like dine-in, takeout, catering and retail.

“As the franchisor, we occasionally get ahead of our franchisees in the testing and launching of new initiatives,” Gilbert said, “and while we launched these new sales drivers in our corporate restaurants during the quarter, the bulk of our franchisees did not add these tactics until the second quarter. This is reflected in the four-point sales gap between company-owned and franchise-operated sales performance.”

The company hopes that the rollout of the initiatives by franchisees will turn around same-store sales for the casual-dining chain this year.

Minneapolis-based Famous Dave’s ended the quarter with 187 restaurants in 34 states and one Canadian province. Subsequent to the end of the first quarter, a franchised location opened in Puerto Rico.

The company said it plans to open two corporate restaurants and 10 franchised units this year.

Contact Mark Brandau at [email protected].
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