MINNEAPOLIS Famous Dave’s of America Inc. posted a 6.2-percent increase in second-quarter profit as sales surged nearly 16 percent on restaurant openings and menu price increases.
The operator or franchisor of 171 namesake barbecue restaurants was cautious on its outlook for the rest of the year, however, as operating and food costs are expected to rise and customer traffic gains are expected to remain challenging.
The company said it would evaluate the health of its corporate restaurants, which could result in closures or impairment charges. It cited an older unit in the Chicago area as one that might be closed. Famous Dave’s officials also agreed to adjust the previously expected timing of new franchised openings because of economy-related delays in development.
Famous Dave’s also said it may have to raise menu prices again to offset cost increases. For the second quarter ended June 29, the casual-dining chain’s corporate locations raised menu prices an average of 3.8 percent year-to-year, including a 1.6-percent raise on June 1. A future price hike in October may total an additional 2 percent, the company reported, and would be geared to help offset an expected 5-percent uptick in chicken costs when Famous Dave’s contract expires in September.
Second-quarter earnings totaled $2.3 million, or 23 cents per share, compared with $2.1 million, or 21 cents per share, a year ago. Revenue increased 15.6 percent to $38.8 million.
Same-store sales rose 1.7 percent for corporate restaurants but fell 1.4 percent at franchised units, which make up about three-fourths of the system. The company noted that about 45 percent of the 85 franchised restaurants in Famous Dave’s comparable sales base reported a jump of nearly 4 percent. The others with negative same-store sales trends were located in areas of the country hardest hit by housing and other economic woes.