Diversified Restaurant Holdings, Inc. (DRH), operator of Bagger Dave's Burger Tavern and one of the largest franchisees of Buffalo Wild Wings, announced results for fiscal 2013 and the fourth quarter ended Dec. 29, 2013. DRH's year-over-year sales were up $31.5 million, or 40.6 percent from 2012, while fourth-quarter revenue grew 9 percent over the prior-year period to $28.5 million.
Overall, sales in 2013 rose to $108.9 million, compared to $77.5 million in 2012. Sales growth was driven by the addition of 10 restaurants in 2013, DRH reported.
"We made excellent progress in 2013, as demonstrated by our growth in restaurants and sales,” says Michael Ansley, president and CEO of DRH. “We added 10 new restaurants and relocated one in the year, expanded into a new market, continued to be creative with Bagger Dave's menu to continue to delight our guests, and further refined our real estate strategy.”
The $31.4 million increase in 2013 revenue included $14.9 million generated from 18 restaurants that DRH does not include in comparable restaurant sales, $13.4 million in incremental sales from acquired Buffalo Wild Wings restaurants in September 2012, and a $3.1 million increase in same-store sales growth.
Due primarily to store openings, DRH reported its compensation expense rose $8.7 million to $28.1 million; general and administrative expenses were up $700,000 to $7.3 million; and operating costs increased $26 million to $88.9 million. DRH reported that the largest component of restaurant operating costs—food, beverage, and packaging costs—increased by $8.6 million to $32.7 million, largely attributable to the increase in the number of restaurants.
At the end of 2013, DRH operated 54 corporate-owned restaurants, comprised of 18 Bagger Dave's and 36 Buffalo Wild Wings, compared with 44 restaurants at the end of 2012.
Ansley says DRH plans to increase its number of restaurants by 11 in 2014, a 20 percent boost over total unit count in 2013. Eight of the new restaurants will be Bagger Dave's stores in Michigan and Indiana. DRH will also open three Buffalo Wild Wings restaurants, relocate two, and remodel two.
“We have zeroed in on our logo, which embodies our train theme at Bagger Dave's ,and will begin a much improved marketing campaign with a heavier traditional media mix,” Ansley says. “We believe these actions will further differentiate Bagger Dave's, attract more attention to our Buffalo Wild Wings, and ultimately drive higher sales."
DRH expects 2014 revenue to hit $125-130 million, about a $20 million increase from 2013.
