Famous Dave's of America Inc.
) second-quarter 2013 earnings of 24 cents per share were in line
with the Zacks Consensus Estimate but beat the comparable
prior-year quarter's earnings by 14.3%. Higher top line led to
the year-over-year rise in earnings.
In the second quarter, Famous Dave's, which owns, franchises
and operates full-service and counter-service restaurants in the
U.S., reported total revenue of $43.4 million, up 4.9% year over
year and also surpassed the Zacks Consensus Estimate of $42
million by 3.3%. Revenues in the quarter improved on the back of
menu innovations, better service platform and advertising
Behind the Headline Numbers
Restaurant sales increased 5.5% year over year to $38.3
million, driven by 3.8% rise in comps at company-operated
restaurants. Moreover, higher sales generated at two
company-owned units unveiled in the third and fourth quarter of
2012 also positively impacted the company's restaurant sales.
Franchise fee revenues at Famous Dave's remained flat at $44
million. Franchise royalty revenues, however, dipped 1.9% year
over year to $4.6 million, owing to a 1.9% decline in comps at
In the second quarter, restaurant level margin expanded 360
basis points (bps) to 11.8% due to the decline in the company's
food and beverage costs, labor and benefit costs and operating
expenses by 90 bps, 70 bps and 80 bps, respectively.
However, Famous Dave's' operating margin declined 20 bps to
7.5% as a result of higher general and administrative
During the quarter, Famous Dave's shut down a franchised
restaurant. At the end of second quarter, the company operated
187 restaurants, including 53 company-owned and 134
franchise-operated restaurants across 34 states in the U.S., the
Commonwealth of Puerto Rico and one province in Canada.
Famous Dave's is focused on improving its business model
through initiating a series of initiatives including improving
dine-in, To Go, catering and retail business, aggressive
marketing methods and menu enhancement to further boost its
sales. In 2013, Famous Dave's expects to launch 11
For 2013, the company expects operating expenses, as a
percentage of revenue will be down 135 to 140 bps from 2012.
Advertising expense, as a percentage of revenue is estimated to
be 2.75% for 2013.
Although this Zacks Rank #2 (Buy) company has been posting
disappointing sales for the past few quarters, it has succeeded
to post a year-over-year rise in sales in the second quarter
gaining from its sales-driving initiatives. Moreover, the
company's cost controlling strategy might help to improve its
margin, going ahead. We also remain optimistic about Famous
Dave's' advertising strategies which is expected to benefit its
business in the ensuing quarters.
Some other players in the restaurant industry which look
attractive at the current level include
AFC Enterprises Inc.
Bravo Brio Restaurant Group, Inc.
Burger King Worldwide, Inc.
). All these companies carry a Zacks Rank #2 (Buy).
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FAMOUS DAVES (DAVE): Free Stock Analysis
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