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Famous Dave's Of America CEO Discusses F2Q10 Results - Earnings Call Transcript

Famous Dave's of America CEO Discusses F2Q10 Results - Earnings Call Transcript

Famous Dave's of America (DAVE)

F2Q10 Earnings Call

July 29, 2010 3:00 PM

Executives

Diana Garvis Purcel - CFO

Christopher O'Donnell - President and CEO

PRESENTATION

Operator

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Good morning. My name is Gordon and I'll be your conference operator today. At this time, I would like to welcome everyone to the Famous Dave's second quarter 2010 conference call. (Operator Instructions). Thank you. Diana Purcel, you may now begin your conference.

Diana Garvis Purcel

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Thank you. Good morning, everyone, and thank you for joining us for Famous Dave's fiscal 2010 second quarter conference call. I'm Diana Purcel, Chief Financial Officer. Also on the call today is Christopher O'Donnell, our Chief Executive Officer.

Before we begin, we'd like to remind those listening that certain matters discussed within are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Famous Dave's believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be obtained.

Factors that could cause actual results to differ materially from Famous Dave's expectations include financial performance, restaurant industry conditions, execution of our restaurant development and construction programs, franchisee performance, ability of our franchisees to meet their development commitments, changes in local or national economic conditions, availability of financing and other risks detailed from time to time in the Company's SEC reports.

Our earnings release, which contains the financial and other statistical information being discussed this morning, was issued yesterday afternoon after market closed and can be accessed by clicking on the Investor Relations link on our website at www.famousdaves.com. As a reminder, this call is being recorded and will be available for replay for seven days.

Now, I will turn the call over to Christopher O'Donnell, Famous Dave's President and CEO. Christopher?

Christopher O'Donnell

Thank you, Diana. Good morning, everyone, and thank you for joining us. Famous Dave's of America reported the second quarter results yesterday. Based on our most recent completed quarter, it is safe to say that we are seeing some stabilization in our business. We benefited during the quarter from year-over-year improvement as well as sequential improvement in comparable sales on both the Company and franchise fronts.

We were also pleased with the results from our recently acquired New York/New Jersey restaurants. They have met and in some cases exceeded our expectations. Our results, during a time when consumers continue to be cautious in their spending, reflect the focused discipline of our organization and our passion to take care of the guests. Our Company-owned comparable sales for the quarter were up 0.6% over last year.

On a weighted basis, dine-in comprised0.2% of the increase and to-go was 0.6%. These were partially offset by a 0.2% decline in catering. We were particularly encouraged to see the pickup in to-go and dine-in during this quarter. On a year-to-date basis, our comparable sales were down 1.4%, with dine-in representing 1.1% of the decline, to-go was 0.1% and catering 0.2%.

In addition to sales growth, we saw continued improvement in certain restaurant cost categories and also maintained control of G&A spend. Diana will speak to the specifics in greater detail, but we continue to benefit from our lower contracted food prices during 2010, as well as a sourcing of secondary suppliers for core items. We continue to maintain tight controls on our G&A expenses.

While the current business conditions continue to put pressure on our top line, we have been diligent in watching our cost and expenses. As a result, we have been able to continue to deliver the services required of us in the most prudent and cost-effective manner. It’s important to note that we have achieved these results without negatively affecting the guest experience.

We continue to see improvement in our guest satisfaction scores year-over-year, with a diligent focus on turning satisfied guests into highly satisfied guests and turning highly satisfied guests into raving loyal fans. Speaking of fans, we were just named the People's Choice by a two-to-one margin at the Washington D.C. Safeway National Capital Barbecue Battle. This is the fourth year in a row that we've won this prestigious award. System-wide, we continued to win awards in various cities across the United States, including most recently Best Barbecue at the Taste of Tacoma, Washington. Our Rib Team as well as many of our franchise partners' teams will continue to participate in various competitions around the country and we continue to update you on our achievements.

We're excited about the momentum we're seeing in the franchise side of our business. Like the Company restaurants, franchise restaurants have improved their comparable sales results. On a regional basis, we've seen recovery in certain parts of the country that were some of the first to suffer declines in late 2008; Michigan and Nevada, for example. And on a year-to-date basis, 40% of our franchise partners are comp positive.

On the development front, several of our franchise partners are looking to take advantage of the options we provided to build our brand in different ways, such as through smaller footprints and counter-service formats, and to capitalize on great locations with a lower investment cost. As you saw from our release, we slightly adjusted our forecast to eight to ten new franchise openings and one new Company opening in Bel Air, Maryland, which is scheduled to open on August 16. We anticipate the majority of our 2010 franchise openings will be in the fourth quarter.

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