BBQ chain names new CEO

With earnings falling, a recession looming and consumers acting skittish over the weakening economy, Famous Dave's of America Inc. named a new chief executive officer Monday. Wilson L. Craft, 54, became the second official CEO to head the Eden Prairie-based barbecue chain since company founder Dave Anderson stepped aside in 2003.

Craft, currently the executive vice president of operations for Longhorn Steakhouse, a 300-unit chain based in Atlanta, Ga., replaces board member F. Lane Cardwell, Jr., who had served as interim CEO since the Dec. 13 departure of David Goronkin. Goronkin left to take the CEO job at Redstone American Grill.

Craft's experience working with franchises, which account for three-fourths of the chain's 164 restaurants and which have posted weaker results of late than company-owned restaurants, makes him particularly well-suited for the job, said Nicole Miller Regan, an analyst with Piper Jaffray. "That's critical to the Famous Dave's story. It's sort of the bread and butter of the company and it's their growth vehicle," she said.

His arrival was welcomed on Wall Street: the stock rose 5.34 percent Monday to close at $9.67. That's still less than half where it traded as recently as August.

Troubles for the restaurant industry stacked up early this year as rising energy and commodity costs ate into profits. And many consumers, skittish about falling home values and rising food and gas prices, have been eating at home or trading down to cheaper restaurants when they do venture out.

Like other restaurant chains, Famous Dave's has been feeling the pain. In the fourth quarter, earnings fell 25 percent on a 12 percent revenue gain. Profits totaled $797,000, or 8 cents per share, on sales of $31.4 million for the quarter ended Dec. 30. The company blamed the earnings drop on opening four new restaurants that had higher than usual opening costs and advertising expenses. Sales have slowed dramatically at franchised locations in recent quarters, falling 6.8 percent in the fourth quarter and 3.3 percent in the third quarter.

Company-owned stores, meanwhile, posted a 3.3 percent same-store sales gain at locations open at least 18 months.

"We've basically trained customers to expect it all," said Kim Lopez-Walters, senior director, consumer strategist, food and beverage with Iconoculture, a Minneapolis-based cultural trend research company. "Even Burger King now is using free-range chicken and cage-free eggs, and now consumers are understanding what all of these ideas mean. Part of this experience is knowing where your food comes from. Is it safe? Do they treat their employees well? Is it clean? All of those things are part of the experience."

Other trends that could influence the future of Dave's: making the national chain -- now in 35 states -- feel more local. Starbucks, for example, has had success playing local musicians on in-store music, said Lopez-Walters.

Emphasizing family dining could also be key, as a quarter of family dinners are at a restaurant. "It's the most important meal of the day, emotionally," she said. And offering healthy choices is the industry's latest attempt to woo diners. Case in point: KFC, which just added baked chicken to its ubiquitous fried offerings.

Famous Dave's declined to comment beyond its press release announcing Craft joining the company. "Wilson is a proven leader in the industry, and his extensive experience in all aspects of casual dining, as well as franchising, will allow him to guide our company's growth and further increase shareholder value," said board chairman K. Jeffrey Dahlberg in a statement.