Famous Dave's Sees Improvement as Transformation Continues
Famous Dave’s is on its way to becoming a leaner, higher-performing restaurant company. The 151-unit barbecue chain closed 13 restaurants in fiscal 2017, which drove down its total revenue nearly 28 percent in the fourth quarter to $12.5 million. But shedding those underperforming locations was a necessary step as the company continues shifting into a more-dedicated franchisor role.
Famous Dave’s franchise same-store sales grew 1.1 percent in Q4 versus the prior-year period, while company-owned stores saw comps rise 8 percent and traffic lift 9.2 percent. In the quarter, Famous Dave’s refranchised eight company-owned stores and closed one underperforming unit. This brought the split to 16 corporate locations and 135 franchises in 32 states, Puerto Rico, Canada, and United Arab Emirates. Since 2015, Famous Dave’s has decreased its company-owned stores from 50 to 16 as it looks to get rid of net debt, and divert resources to franchise operations, like training, and boost marketing efforts. And many of the aforementioned closures have occurred recently as well. The chain shuttered 12 stores in October and sold eight restaurants to Virginia and Maryland franchisees.
The total revenue missed Wall Street expectations by about $2.5 million, although its adjusted loss of 1 cent in Q4 beat the predicted 3-cent loss. Shares of Famous Dave’s were up more than 12 percent Wednesday to close at $7.90.
Famous Dave’s elected to refrain from hosting a conference call after the results, and said investors or analysts can call the company directly if they have questions.
Jeff Crivello, Famous Dave’s CEO, said the company was proud of its fiscal 2017 achievements, especially its refranchising of the Mid-Atlantic market to the chain’s largest franchisee. The company also implemented third-party delivery at company-operated units, and finalized the restructure of its general and administrative expenses, he said.
“We continue to work on the revitalization of the totality of the guest experience in our core restaurants and remain engaged on the development of the new concept for the future,” Crivello said. “We look forward to building on these achievements into fiscal 2018. Finally, the board and I express sincere thanks and appreciation to Dexter Newman, our chief Financial officer who is departing [March 5], for his leadership and stewardship of the restructuring of our organization over the past two years.”
The Minnetonka, Minnesota-based company said Paul Malazita assumed the role of interim chief financial officer. The agreement, the company said, is for an indefinite term and Malazita will receive an annual base salary of $165,000. He will be eligible for annual bonus compensation, at the direction of the board, to the tune of 30 percent of his base salary as well. Malazita, 30, was Famous Dave’s director of accounting and has been the company’s corporate controller since October 2017. Malazita will be granted a four-year, 20,000 share non-qualified stock option pursuant to the company’s 2015 stock incentive plan. He also agreed to a 12-month non-compete clause.
For fiscal 2017, Famous Dave’s recorded franchised same-store sales declines of 2.3 percent. Company stores appreciate comps growth of 2.4 percent with a 3.3 percent traffic increase. General and administrative expenses decreased by $1.9 million to $14.6 million
Revenue declined 15.7 percent to $64.4 million from fiscal 2016.
The company reported an $8.1 million loss in 2017, or $1.16 per share. This was an improvement over 2016, when Famous Dave’s posted a loss of $2.4 million, or 35 cents per share.
In addition to these initiatives, Famous Dave’s announced in January that it was bringing Travis Clark in a newly created role of “National Pitmaster.” According to a company release, Clark is the winningest Pitmaster in the Kansas City BBQ Society since 2013.
He will be responsible for overseeing culinary development and menu innovation, as well as ensuring recipe quality and excellence, the company said. Clark and his team, Clark Crew BBQ, hold the title of 2017 American Royal Invitational World Champion, as well as the distinction of consecutively winning the most KCBS awards for the past four years. Other 2017 honors include: winning KCBS Team of the Year for the second time (2017 and 2015), Rib Team of the Year, and Brisket Team of the Year.