Famous Dave's financial results, after years of struggling, are starting to heat up again.
Famous Dave's latest profit exceeds expectations, but franchise sales still sluggish
It hopes to persuade more franchisees to spend on needed upgrades.
March 5, 2019 at 1:39AM
The Minnetonka-based barbecue chain said Monday that it earned $1.1 million during the last three months of 2018, turning around from a loss of $1.5 million in the same quarter of 2017.
That profit amounted to 12 cents a share, well above the consensus forecast by analysts of 6 cents a share. The company's stock jumped about 6.6 percent in the last minutes of trading Monday.
Revenue was $83.4 million, down from $89.3 million as its restaurant count fell to 144 from 150.
The pattern of comparable sales, those in restaurants open at least a year, was consistent with the last several quarters. Those sales at corporate-owned stores saw an increase of 2.2 percent, while franchise-owned locations declined 1.5 percent.
The company introduced 10 menu items in 90 percent of the 127 franchised locations, aiming to reverse the pattern of declining sales.
"We need to find creative ways for franchisees to operate the initiatives," said Famous Dave's Chief Operating Officer Geo Concepcion. "The full package moves the needle. We need much broader adoption of the exterior and interior design and marketing efforts."
Concepcion said franchisees would have to invest $100,000 to $300,000 to update the decor and make other changes that have worked in company-owned locations. He said he expects franchisees could recover the investment within two years.
The number of locations continues to shrink as weaker locations close. The company finished the year at 127 franchise units and 17 corporate-owned units in 33 states.
Several more restaurants have closed since the beginning of the year. In the Denver market, the company purchased five locations and transferred them to company-owned stores after the quarter closed.
Online ordering and delivery proved to be brightest spot in the last year. Digital sales doubled in the latest quarter from their year-earlier level.
John Ewoldt • 612-673-7633
The Birds Eye plant recruited workers without providing all the job details Minnesota law requires.
