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Famous Dave's attracts attention of activist investor

Famous Dave's attracts attention of activist investor

PW Partners Atlas Funds CEO Patrick Walsh has nominated himself for a seat on the company's board

Though the company already made several management transitions near the end of 2012, Minneapolis-based Famous Dave’s of America Inc. might soon get another new voice on its board of directors if activist investor Patrick Walsh has his way at the brand’s 2013 annual meeting.

Walsh, the 36-year-old chief executive of Chicago-based PW Partners Atlas Funds LLC, whose funds control 9.6 percent of Famous Dave’s stock, officially nominated himself for a board seat late in December. In its filing with the Securities and Exchange Commission dated Dec. 21, PW Partners Atlas Funds described Walsh as “a sophisticated investor” with “significant experience in the restaurant industry through past investments.”

Those investments include previous stakes with Denny’s Corp. and Red Robin Gourmet Burgers Inc., when he was a partner with Oak Street Capital Management LLC.

In 2010, Walsh and Oak Street’s David Makula led a proxy fight to replace the chief executive, board chairman and past chairman of Denny’s, but they lost that argument when all three directors were re-elected. Walsh and Makula fought in 2011 for board seats with Red Robin, but a compromise resulted in a board seat only for Makula.

Walsh formed PW Partners Atlas Funds and has led the organization since August 2012.

Famous Dave’s, the operator or franchisor of nearly 187 barbecue restaurants in 34 states and one Canadian province, hired John Gilbert as its chief executive last October, and he has made several changes to the company’s marketing structure in order to restart unit and sales growth. The chain will look to expand internationally, with its sight set on Canada first, and plans to open more locations of its fast-casual variant, Famous Dave’s BBQ Shack.

Last December, Famous Dave’s realigned the marketing department to split strategic planning and execution among four lines of business — dine-in, to-go, catering and retail — to grow all four areas, particularly catering, with more targeted efforts. As a result, vice president of marketing Aric Nissen left the company.

Famous Dave’s stock price closed at $8.80 per share on Dec. 21, 2012, the day Walsh announced his interest in a board seat. Since then, the stock has closed as high as $9.76 per share, and it closed Jan. 30 at $9.29 per share, down from a 52-week high of $12.08 per share.

Famous Dave’s is not the only restaurant brand to attract the interest of activist investors. Most recently, Cracker Barrel Old Country Store Inc. shareholders rejected the nomination of Biglari Holdings’ Sardar Biglari and Phil Cooley to the brand’s board last November. Biglari, whose eponymous company acquired Steak ’n Shake in 2008, also had tried in 2011 to gain a director position with Lebanon, Tenn.-based Cracker Barrel.

Contact Mark Brandau at [email protected].
Follow him on Twitter: @Mark_from_NRN

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