Checking In on Famous Dave’s
It’s been a while since we brought you an update on Famous Dave’s, the Minnetonka, Minnesota-based barbecue chain that’s struggled mightily in recent years as the casual dining segment has slowed and its leadership has cycled through a succession of CEOs and other top-level management.
While the company appeared to be free falling at the tail end of 2015, it has since stabilized (relatively speaking) in the wake of acceptable third-quarter results and naming Mike Lister—one of its top franchisees—as its most recent CEO—its fourth in as many years.
From its Q3 release, Famous Dave’s saw comp sales at company-owned restaurants open 24 months or more decrease 1 percent. Not ideal, but far better than the 9.1 percent decrease in the same period last year. Franchise royalty was flat, at $4.3 million, bolstered by four new franchise-operated restaurants since the third quarter of 2015.
“The board and management team continues to operate with a strong sense of urgency and focus on improved performance,” Lister said of its results. “Having our company-owned restaurants post the best comparable sales performance in 12 quarters helps validate and energize our team’s commitment to the four key priorities of revitalizing sales and traffic, reducing costs, elevating organizational effectiveness, and rebuilding culture.”
Significantly lowering the blood pressure of the company’s board and investors, it announced a new $11 million credit line at the beginning of December, as well as the payoff of its former $9.9 million Wells Fargo loan balance. A three-part deal, the first $3.7 million loan matures in 10 years, the second ($6.3 million) matures in seven years, and the third ($1 million) matures in three years—all at favorable rates at or lower than 3.75 percent.
The Street hasn’t been impressed, however, as shares of DAVE have stayed in the $4.5-$5/share doldrums—down from the $7.5-$8 range last seen at the start of this year.
Combining these tidbits with anecdotal information—my local Famous Dave’s is depressingly empty whenever I pass by—it seems like the uncertainty will persist as long as the company struggles to attract new customers as many casual dining brands grind through the same struggle.
New menu changes are good, and perhaps this latest in-house CEO can right the ship. In the meantime, comp sales that are only slightly down is a poor tasting substitution for gains that remain elusive for this national barbecue chain.