Consistent with its aggressive growth strategy,
Famous Dave's of America Inc.
) recently announced that it has penned its largest deal of the
year. Under the deal, the barbecue and restaurant concept chain
plans to add 21 restaurants in the U.S., with most of the
openings targeted in California and the rest in Michigan,
Missouri and Washington. The deal represents the first step
towards achieving the company's goal of opening around 50 new
units by 2014.
BJ'S RESTAURANT (BJRI): Free Stock Analysis
FAMOUS DAVES (DAVE): Free Stock Analysis
DARDEN RESTRNT (DRI): Free Stock Analysis
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Famous Dave's intends to open 16 units in San Diego, Los Angeles,
Ventura County and Sacramento and one each in Riverside,
Montebello, Lansing , Independence and Yakima. As a matter
of fact, the company currently has 18 restaurants in California,
six in Washington, eight in Michigan and three in Missouri.
The emerging restaurant industry of California caught the
attention of Famous Dave's, which conform its decision of opening
majority of the restaurants in that state. As per the National
Restaurant Association, the Californian restaurant industry
accounted for around $62 billion of revenues in 2011. The
industry has been projected to register around $63.8 billion of
revenues in 2012, which tops the projected top 12 highest revenue
generating U.S. states.
Famous Dave's is on an expansion spree at domestic and
international levels. In the recently completed quarter, the
company opened its first restaurant outside the U.S. in Winnipeg,
Canada, and expects to open a unit in Puerto Rico by year end. In
the last quarter, the 200-seat restaurant, which featured the
legendary Famous Dave's barbeque, generated the highest revenues
from any single location ever. Considering the growing popularity
of this barbeque concept, the company aims to develop the concept
in the chosen markets for expansion.
We remain impressed with the company's decision to increase the
number of units, despite the challenging environment for
restaurant growth in the U.S. However, the company should be wary
of its competitors. Renowned U.S.-based restaurant chain
companies such as -
BJ's Restaurants, Inc.
Darden Restaurants, Inc.
) already have a significant presence.
The company recently reported its third-quarter 2012 earnings per
share of 13 cents, missing the Zacks Consensus Estimate by 7
cents. As of October 29, 2012, Minnetonka, Minnesota-based Famous
Dave's owned 53 locations and franchised 132 additional units in
33 states and one Canadian province.
We currently have a long-term Neutral recommendation on Famous
Dave's. However, it carries a short term Zacks #4 Rank