Famous Dave's Of America's CEO Discusses Q2 2011 Results - Earnings Call Transcript

Famous Dave's of America, Inc. ( DAVE)

Q2 2011 Conference Call

July 28, 2011, 10:00 AM CT

Executives

Diana Purcel - CFO

Christopher O’Donnell - President and CEO

Presentation

Operator

[Operator Comments]

Diana Purcel

Good morning everyone and thank you for joining us for the Famous Dave’s fiscal 2011 second quarter conference call. I’m Diana Purcel, Chief Financial Officer. With me 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 attained. 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 close 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 for today’s call.

Yesterday after the close, Famous Dave’s reported revenue of $41.3 million and second quarter earnings of $0.29 per share.

During the second quarter, we experienced a 1.2 percent decline in comparable restaurant sales for our company-owned locations and a 1.4% decline for franchise comparable sales. We have positive comparable sales on a year-to-date basis for our company locations of 0.9% and negative comparable sales of 0.7% for our franchise locations.

Our comparable sales results primarily reflect a year over year shift in holidays that Diana will touch on and declines in our dine-in business.

To help offset this trend, and to drive incremental sales through new product introductions, we have created offerings aimed to attract new guests as well as maximize the value of our current guests. While we are carefully watching our dine-in traffic, we are pleased that our to-go and catering segments increased during the quarter, and we remain pleased with the overall improvement in off-premise sales on a year-to-date basis. These two segments at various times have served as somewhat of a positive leading indicator for our overall trends, so we remain encouraged.

To help continue to build our off-premise sales, and offer convenience for our guests, we recently completed the successful rollout of on-line ordering to all of our 52 company-owned restaurants. Additionally, several of our franchise partners have elected to implement the new system as well.

Since the rollout began, we have seen a higher check average for on-line orders and have received great feedback from our guests. Now our focus will be in maximizing the opportunities with greater guest trial.

On the marketing and brand-building front, Dave Anderson appeared as one of the nation’s six most prominent barbeque experts in a four-episode cook-off featured on the Food Network, called “Best in Smoke.” In our humble opinion, Dave was an audience favorite throughout the competition—and although he didn’t “officially win” he captured many people’s hearts and added great credibility to our brand.

We’re tremendously proud of our founder, and congratulate all the competitors in what turned out to be a fun—and grueling—competition. We also want to thank our director of culinary, Charlie Torgerson, for all his hard work on this project. We are lucky to have his innovative culinary skills in our test kitchen.

Famous Dave’s continues to garner national exposure this summer for our brand. Since Memorial Day, and through Labor Day, Famous Dave’s will be catering the backyard barbeque every Friday morning on Fox and Friends in New York City. Additionally, Dave will be a special guest on the show twice this summer, including an appearance this coming August 11th, featuring barbeque tips and recipes.

As for our limited time offerings and menu update, we just completed another successful “U.S. of Barbeque tour – but this time Hawaiian-style”! This promotion features our signature barbeque items from around the U.S., and to celebrate the opening of our first location in the Hawaiian islands on Maui, this year the promotion includes Hawaiian Huli-Buli chicken.

We’re again gearing up for Dave’s Day, which takes place on August 14th. This event celebrates the fact that we have an authentic bbq brand with a true, passionate, founder. This year marks the highest system-wide participation in this promotion, with more than 90 percent of our franchise partners taking part in the festivities. You’ll recall that anyone with the first name of Dave, David, or Davey, is eligible for a free entree up to $15.00 in value, and eligible for half that amount if their middle name is Dave or a close variation.

We are advertising the promotion via email blasts and social media, along with some targeted direct mail marketing.

This event remains popular with our loyal guests and has certainly attracted some new “Dave’s” to the restaurants - however, as with any promotion, we will continue to evaluate this promotional opportunity each year.

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