A revamp with new menu items has paid off for company-owned restaurants, with sales increasing 2.1 percent in the third quarter.
By John Ewoldt Star Tribune NOVEMBER 13, 2018 — 9:25PM

Famous Dave’s in Coon Rapids was the pilot location for a dramatically expanded menu that debuted in April with some customer favorites.
Famous Dave’s of America beat profit expectations in the latest quarter as sales and traffic at its company-owned restaurants continued a turnaround.

The Minnetonka-based barbecue chain said Tuesday it earned $1.4 million, or 15 cents a share, in the three months ended Sept. 30. That beat analysts’ expectations of a profit of 8 cents a share.

The company had a loss of $1.9 million in the same period last year.

Sales at its 16 company-owned restaurants increased 2.1 percent with traffic up 4.2 percent. Its 130 franchise-operated locations, meanwhile, experienced a decrease in sales of 1.8 percent. Overall revenue fell 12 percent to $14.1 million.

“This is our fifth quarter of growth in same-store sales for our corporate system,” said Geovannie Concepcion, chief operating officer, in an interview. “We are getting our house in order.”

At the end of September, Famous Dave’s operated seven fewer restaurants than a year ago. A franchise location in Greenwood, Ind., was purchased to be a company-owned location.

Concepcion said nearly all of the weaker franchised locations have shut their doors, so more closures should be minimal. “We’re very much at the end of the cycle,” he said. “We hope to pick up six to eight more franchise units [locations] in 2019.”

The number of corporate-owned stores could grow in the future, but Concepcion said there is no target number for 2019.

The pilot location for a dramatically expanded menu in Coon Rapids that debuted in April continues to pay off.

“The uplift has been longer and sustained compared to a refresh two years ago,” Concepcion said. The Maple Grove location adopted the new menu in August but has seen a 2 percent decrease in sales. Concepcion attributed the loss in sales to the arrival of new competitor, Brick & Bourbon, nearby.

The new menu started with 23 new items. Four of the most popular have been added to the menus in all the restaurants — cheese curds, build-your-own burger, chicken tenders and three-meat combo. Six more items were launched Oct. 29 in all corporate stores and half the franchised ones, including a smoked turkey entree, jalapeño Cheddar sausage, and apple crisp.

Sylvia Matzke-Hill, the new head of culinary, said guests have given thumbs up to the apple crisp and smoked turkey as standouts. She most recently spent time on the international and domestic teams at Buffalo Wild Wings. At Famous Dave’s, she will be taking ideas from founder Dave Anderson and pitmaster Travis Clark and implementing them on scale throughout the chain.

For the holidays, she said, the company brought back its popular takeout smoked whole turkey (serves 10-12 people, $55 or $120 with sides) and hickory smoked ham (serves 15-20, $55 or $120 with sides).

Famous Dave’s continues to find ways to expand its delivery and catering service, but Concepcion said that it decided not to move forward on the virtual restaurant concept in Pasadena, Calif. It will instead move ahead with digital delivery out of shared kitchen spaces from franchisees who have other concept locations.

John Ewoldt is a business reporter for the Star Tribune. He writes about small and large retailers including supermarkets, restaurants, consumer issues and trends, and personal finance.

jewoldt@startribune.com 612-673-7633 StribEwoldt