Famous Dave's posted yet another bleak quarter Monday as sales continued to sink at the embattled barbecue chain.
Minnetonka-based Dave's, which has been in a free-fall since a botched makeover early last year, recorded a slight loss when adjusted for one-time financial items.
Same-store sales at company-owned restaurants fell 7.7 percent compared with the same time a year ago. Same-store sales, an important financial gauge, account for restaurants opened or closed within the past 24 months.
"Famous Dave's financial performance during the quarter was unsatisfactory," CEO Adam Wright told analysts in a conference call. "We are determined to turn around the performance of the company."
To do so, Wright told analysts that Famous Dave's has several initiatives underway, from cutting costs to improving service and changing customers' perceptions of the chain. He acknowledged, though, that it will take time "to win back guests."
Dave's woes during the quarter led the company to fall out of compliance with two debt covenants; one involving a cash flow ratio, the other a minimum level for adjusted earnings before interest, depreciation, taxes and amortization.
On Monday, Famous Dave's said it entered a forbearance agreement with its lender — Wells Fargo — that is in effect until June 11. Essentially, Wells will forgo taking any action on defaults while Dave's tries to amend or restructure its credit agreement with the bank.
Famous Dave's has been in a whirlwind for more than two years. In 2014, the company hired erstwhile McDonald's executive Ed Rensi as CEO in another attempt to turn around a profitable but stagnating company. Rensi overhauled the menu and the restaurants — then abruptly exited in June 2015. Subsequent financial results were poor, and the company has since blamed Rensi's changes for turning off customers.
Under Wright, Rensi's successor, the company undid the menu changes and has tried to refocus Famous Dave's on classic barbecue. It's working to offer up better values. For instance, on Sundays, Dave's has rolled out half a fried chicken with one side dish and cornbread for $10 at its company stores, Wright said in an interview with the Star Tribune.
"We have not been competing in the segment looking for affordable options" — particularly at lunch, he said.
Wright said that "guest satisfaction scores" are improving. "We believe that is a leading indicator, and things are turning in the right direction."
Famous Dave's reported first-quarter net income from continuing operations of $149,000, or 2 cents per share, unchanged on a per-share basis from a year ago. However, when adjusted for one-time gains and losses, Dave's reported a net loss of 1 cent per share compared with a profit of 3 cents per share for 2015's first quarter.
The company's overall sales were $23.5 million, down 17 percent from a year ago. The decline reflected not only falling same-store sales, but the closure of a company-owned restaurant and the franchising of some company restaurants. (Franchised restaurants bring in less revenue but entail less risk.)
Famous Dave's earnings were released after the market closed Monday. The company's stock closed at $5.05, up 15 cents and a bit higher from its 52-week low of $4.86 hit earlier this month. A year ago, Famous Dave's stock was trading around $24.