Famous Dave’s of America, Inc. announced that its board of directors has appointed Jeffery Crivello as the company’s Chief Executive Officer, effective November 14. Crivello has served on Famous Dave’s Board of Directors since August 2017. Since January 2015, he has served as the Chief Financial Officer of PW Partners Capital Management, LLC, where he has primary responsibility for operations and accounting.
Mike Lister, the company’s current Chief Executive Officer, says, “Over the last year, I have been intently focused on improving restaurant operations while closing underperforming restaurants that do not meet our financial standards, in order to allow for the refranchising of our company-owned restaurants to franchisees that are passionate about our brand. Given the significant progress we have made on these efforts, along with the strengthening of existing franchise relationships, the timing of this transition makes strategic sense for the company as it advances into the next phase of its transformation. I am pleased to welcome Jeff to the team and look forward to working together for a seamless transition.”
Jeff Crivello says, “Mike’s tireless effort to execute upon the strategic initiatives set forth by the Company has been commendable. His work is evident in the improving restaurant sales trends as well as the successful refranchising of eight company-owned restaurants and closures of thirteen underperforming company-owned restaurants since the beginning of the year. The board and I sincerely appreciate the thoughtful and decisive decision-making that Mike brought to the organization. I am thrilled to be joining the company during such a pivotal time. With the refranchising effort well underway, my focus will be on improving the existing value proposition, while expeditiously addressing the development and evolution of the Famous Dave’s concept. Additionally, although the team has made substantial progress with their general and administrative optimization plan, I believe that we can strategically reduce G&A expenses to approximately an $8.0 million run-rate within the next 90 days, while continuing to improve upon the franchisor services that we provide. It truly is an exciting time to become a part of the Famous Dave’s team.”
Additionally, the company has appointed its former Chief Development and Franchising Officer, Geovannie Concepcion, as the Company’s Chief Operating Officer, effective November 14, 2017.
The company reported financial results for the third fiscal quarter ended October 1.
Highlights for the third fiscal quarter of 2017:
- Franchise-operated comparable restaurant sales improved to negative 2.1% from negative 3.8% in the third quarter of fiscal 2016
- Company-owned comparable restaurant sales improved to 0.9% from negative 1% in the third quarter of fiscal 2016
- Restaurant-level operating margin increased to 7.0% from 3.8% in the third quarter of fiscal 2016
- General and administrative expenses decreased by $594,000 to approximately $3.8 million, from the third quarter of fiscal 2016
- Cash from continuing operations increased $667,000 to approximately $2.3 million, from the third quarter of fiscal 2016
- Net loss from continuing operations improved $562,000 to approximately $1.8 million, from the third quarter of fiscal 2016
- Adjusted EBITDA (as defined and reconciled below) increased $53,000 to approximately $1.4 million, from the third quarter of fiscal 2016
- Closed six franchise-operated restaurants
- Closed seven company-owned restaurants
Third Quarter 2017 Review
Total revenue for the third quarter of 2017 was $21.9 million, down 13.7% from the third quarter of 2016. The decrease in company-owned net restaurant sales revenue was primarily driven by the closure of twelve restaurants since the end of the third quarter of fiscal 2016, including seven in the third quarter of fiscal 2017, partially offset by a 0.9 percent increase in comparable sales. The declines in franchise royalty and fee revenue were driven by the net closure of ten franchise restaurants since the end of the third quarter of fiscal 2016 and a comparable sales decline of 2.1 percent.
Restaurant-level operating margin for company-owned restaurants was 7%, an increase from 3.8% in the third quarter of fiscal 2016. The increase was primarily driven by lower occupancy costs, the timing of advertising spend, and improved actual versus theoretical food cost, partially offset by increased fixed labor and other operating costs.
General and administrative expenses decreased to $3.8 million from $4.4 million in the third quarter of 2016. The year over year decline was primarily a result of the continued optimization of our general and administrative structure, a decline in professional fees and reduced costs incurred for franchise-related matters. These decreases were partially offset by bad debts expense recognized for a previously struggling franchisee.
Net loss from continuing operations was a loss of $1.8 million, or ($0.26) per share, compared to a net loss of $2.4 million, or ($0.34) per share, in the third quarter of 2016. In the third quarter of 2017, we recorded $2.4 million of asset impairment, estimated lease termination and other closing costs primarily related to our restaurant optimization plan, including seven closed Company-owned restaurants.
Adjusted net loss from continuing operations, a non-GAAP measure, was a loss of approximately $60,000, or ($0.01) per share, compared to income of approximately $150,000, or $0.02 per share, in the third quarter of 2016. A reconciliation between adjusted net income and its most directly comparable GAAP measure is included in the accompanying financial tables.
Refranchising and Restaurant Optimization Plan
During the third quarter of fiscal 2017, the company closed seven restaurants pursuant to its restaurant refranchising and optimization plan. Subsequent to the end of the third quarter, on November 1, 2017, the company completed the refranchising of eight restaurants in Maryland and Virginia and the closure of one additional restaurant.
Lister says, “We continued to show great progress in many areas of our business during the third quarter of 2017. Not only did we continue to execute on our restaurant optimization program and take further steps to optimize our general and administrative expense structure, we generated positive comparable sales for Company-owned restaurants for the first time since the second quarter of 2013. We were pleased with both our franchise-operated and Company-owned comparable sales performances that were able to outpace the casual dining industry, amidst one of its more challenging quarters in recent memory. Additionally, subsequent to the end of the quarter, we announced the refranchising of eight restaurants in Maryland and Virginia.”
