Famous Dave's of America Inc.'s first-quarter profits fell 62 percent as it grappled with declining revenue brought on in part by fewer discounts at its barbecue restaurants.
The company said it earned $197,000, or 3 cents a share, in the first three months of the year. Analysts had forecast a profit of 7 cents a share. Famous Dave's earned $516,000, or 7 cents a share, in the same period a year ago.
Revenue was $32.6 million, down 9 percent from $35.7 million a year ago, reflecting the closing of four company-owned locations.
Revenue at comparable company-owned restaurants, or those open at least two years, was down 4.9 percent in the quarter. At franchise-owned restaurants, comparable-store sales were essentially flat.
"It was worse than we expected," Mark Smith, a stock analyst at Feltl and Co., said of the quarter. "Franchise same-store sales were the only highlight," as they didn't come in as weak as expected.
"The quarter's comparable sales continued to be negatively impacted by the elimination of the discounting strategy that was in place last year," Ed Rensi, Famous Dave's chief executive, said in a statement. "And like many of our peers, our sales were also negatively impacted by the severe winter weather and the early start to Lent."
The discounts were eliminated last year after Rensi took over as CEO. Rensi told the Star Tribune earlier this year the decision is right in the long term. But it was a drag on 2014 revenue, as it was in the first quarter of this year.
Rensi was brought in after some turbulent years and after activist investors won seats on the board.
Rensi plans on overhauling the restaurants to better appeal to millennials, including remodeling the interiors. While the chain will still rely on ribs and brisket as the heart of the menu, it plans on introducing flatbreads, tacos and other items based on the barbecue tradition.
Famous Dave's stock closed Wednesday at $25.89, down $1.78, or 6.4 percent.