Famous Dave's sales slip, but restaurant chain squeaks out a small profit gain

Famous Dave's of America Inc. said Monday its adjusted second-quarter profit rose marginally despite another sales decline in the barbecue chain.

Executives described the performance as unsatisfactory. The company's investors sent its stock price whipsawing. It rose 13 percent during regular trading and, following the results announcement, fell 3 percent in after-hours trading.

Famous Dave's said its adjusted profit, excluding the effect of one-time costs and gains, was $1.2 million for the April-to-June quarter, up from $1.18 million a year ago.

The profit amounted to 17 cents a share, higher than the 12 cents a share analysts had forecast. Chief executive Adam Wright attributed that result to a favorable tax rate and lower food costs.

Sales fell 14 percent to $28 million. Same-store sales, or those for locations open at least a year, were down 6.4 in company-owned restaurants and 4.3 percent in those owned by franchisees.

During a conference call with analysts, chief financial officer Dexter Newman described the quarter's performance as "unsatisfactory, highlighted by a decline in sales and operating income."

Expenses decreased more than 12 percent, partly due to a 40 percent decrease in marketing expenses. They were partly offset by higher costs as food portions were increased.

Wright reiterated his focus on enhancing value in the menu. Several initiatives have been added, including a "slowdown lowdown" promotion on Wednesdays that he described as "the best deal in town," a new happy hour, lunch specials and a $10 deal on Sundays.

Under former chief executive Ed Rensi, who left in June 2015, portions were cut, cornbread was eliminated and classic menu items such as a brisket burger were dropped. Wright reversed those moves and has tried to go back to basics for the barbecue chain.

That also includes bringing back founder Dave Anderson last October as a consultant inspiring the culinary team and staff.

Guest satisfaction survey results have continued to improve since then, Wright said.

Famous Dave's ended the quarter with 179 restaurants, including 37 company-owned and 142 franchise-operated restaurants in 33 states and several international locations. A year ago, the company had 184 locations.