Stung by higher food and energy costs, Famous Dave's of America Inc. may be forced to write down the value of some of its restaurants and raise prices this year.
The Eden Prairie-based barbecue chain said Wednesday that it is "evaluating the long-term prospects" of company-owned restaurants that have not met sales, profitability and cash-flow goals.
"This process may lead to a decision to impair the assets of some underperforming restaurants, resulting in non-cash charges," Famous Dave's said in a prepared statement. The company said that any charges will occur in the third or fourth quarter of its current fiscal year.
A Famous Dave's official said company executives would not answer questions about the announcement until today, when the company has a scheduled conference call with analysts.
Famous Dave's, which owns 48 restaurants and has 123 franchise locations, also said it is considering a price increase "in the 2 percent range" in October to help offset higher costs. This would be on top of a 1.6 percent price increase that went into effect June 1.
Like other restaurant chains, Famous Dave's has been feeling the impact of tightfisted consumers and surging commodity prices. In the second quarter ended June 29, sales for the company's restaurants open 24 months or more rose a tepid 1.7 percent, down from a 3.6 percent gain in the first quarter. Profit totaled $2.27 million, or 23 cents a share, up 6 percent from $2.14 million, or 21 cents a share, a year earlier. The earnings results beat the consensus analyst estimate by 5 cents a share, according to Thomson First Call.
"Our operations team delivered a solid quarter, but the business climate remains challenging, and we expect that we'll face increasing sales and cost pressures through the remainder of the year," said Famous Dave's CEO Wilson Craft, who took the helm at the restaurant chain in March.
Famous Dave's released its results after the stock market closed Wednesday. Shares fell 17 cents, to $6.51, in after-hours trading.
