Famous Dave's of America on Wednesday reported a steep drop in quarterly profits, as overall sales and franchisee-related revenue fell while administrative costs climbed — largely due to a recent change in the CEO suite.
The Minnetonka-based restaurant chain posted first-quarter profits of $62,000, or 1 cent per share, compared with $817,000, or 11 cents per share, a year ago. Revenue declined to $36.6 million from $37.5 million a year earlier.
"Our first-quarter sales, royalties and franchise fee results were disappointing, which lead to poor [earnings] results," Famous Dave's CEO John Gilbert III said in a statement.
Comparable sales at company-owned restaurants — a key performance gauge — fell 1.8 percent during the first quarter.
The company's franchise royalty revenue fell 7 percent from a year ago, settling at $4.1 million. Meanwhile, Famous Dave's quarterly general and administrative costs tallied $5 million, up 12 percent from a year ago.
The spike in those expenses stemmed mostly from a $325,000 jump in compensation-related costs "due to the reorganized CEO and COO positions," combined with $135,000 "of legal and other costs incurred related to board activity," the company said in a news release.
In October, Famous Dave's announced that Gilbert, a board member, would become CEO, while then-CEO Christopher O'Donnell would become COO. Famous Dave's results were released after the stock market closed Wednesday.