Traffic on the brand's app has increased nearly 200 percent year-over-year.
When the COVID-19 pandemic started in March, Famous Dave’s made an early decision to close dining rooms—before it was even mandated in some cases—and a host of franchisees followed suit.
Al Hank, senior vice president of operations, says this allowed restaurants to swiftly execute an off-premises only model, something the brand had been aggressively working toward during the past two years.
The head start allowed the brand to enhance and perfect initiatives. For example, Famous Dave’s went from testing curbside pickup in a few company and franchised stores to working with vendors to deploy—in just 48 hours—a contactless payment option. Additionally, at higher volume locations, restaurants constructed makeshift drive-thrus with cones and signage.
Along with curbside and drive-thru, Famous Dave’s is utilizing takeout, third-party delivery, and catering.
“So we were—and I use this cautiously—well-prepared, because I don’t think anyone can be prepared for a pandemic like this,” Hank says. “But when you look in comparison to other brands and where we were at as far as the communication of these various initiatives, we were well-equipped to deploy very rapidly and in most cases live with a lot of it already across all locations.”
Same-store sales at Famous Dave’s restaurants decreased 29 percent in the four weeks ending April 26. However, off-premises sales at company-run stores increased 8.4 percent in Q1, and those figures remain steady in Q2, Hank says. Traffic on the app has increased close to 200 percent year over year, and there’s been close to a 90 percent increase in online ordering.
There are 127 units—30 corporate stores and 97 franchises. All company-run locations are open with limited operations and only one franchised location is temporarily closed.
Pre-COVID, the chain’s off-premises strategy involved actively looking for real estate with drive-thru potential. It started with the brand’s small prototype design, which was introduced in 2019. The company opened three spots in Q3 and Q4 2019 that transitioned from 6,000-7,000 square feet to 3,000 square-foot small box prototypes. The units are focused on off-premises and changing the in-house brick and mortar dining experience to counter-style or bar-centric. The next iteration of that transition was going to be drive-thru.
Now the to-go strategy includes the use of ghost kitchens. Hank says Famous Dave’s worked with Elliot Baum, franchise owner of 15 Famous Dave's restaurants, to open a ghost kitchen in downtown Chicago in April.
The unit has experienced so much success that Baum signed on for a second location that will open in the next 30 days on the north side of Chicago.
“We think there’s a lot of interest not only from our corporate market, but in the franchise market to continue this,” Hank says. “… I think what’s really interesting for our brand, in a time during a COVID pandemic, where there’s a ton of uncertainty, we’re out here opening restaurants, which I think speaks volumes about our brand.”
Similar to its off-premises business, Hank says Famous Dave’s was also well-secured heading into 2020 in regard to its key protein suppliers.
The chain hasn’t run into any issues yet, but Hank did note that product costs are completely volatile and uncertainty still remains.
“A lot of the decisions that are being made now by the farmers in America are going to impact 2021 and beyond, and that’s really where our focus is,” Hank says. “Some of the challenges that we face have been in distribution. Obviously with the ramp up of the off-premise, [it’s] keeping those volumes and keeping stock of to-go boxes and all the packaging—your to-go sauce packets and things like that. We’ve been working very closely with our suppliers in order to keep up with that demand, and by and large our partners have done a great job keeping us supplied with their product.
With the pandemic hurting revenue, Famous Dave’s parent company, BBQ Holdings, furloughed 85 percent of staff systemwide.
Hank says Famous Dave’s felt it was better for employees to use unemployment assistance in a time when the company is unable to provide the proper income. The brand has promised to pay healthcare premiums for furloughed workers.
Restaurant operators have voiced concern about enhanced unemployment benefits under the CARES Act because they believe workers will opt to stay on the insurance as opposed to returning to work.
Hank says Famous Dave’s hasn’t run into any major problems, but acknowledges that it is a challenge that many restaurants are facing.
“There definitely is some pushback from team members and their willingness to come back. Any of our team members that have expressed concerns, we’re trying to work with them on a case-by-case basis to address those concerns. But as of right now, we’ve been able to staff adequately our restaurants to handle the volume,” Hank says.
The employment issue becomes more important as states continue to lift mandates. More than 60 percent of states have allowed restaurants to reopen dining rooms in some fashion.
Hank says the buzzword is trust, which begins by educating customers on how Famous Dave’s plans to keep them safe. All employees are required to wear masks and gloves. At tables, restaurants are using disposable menus or QR code-based digital menus. Additionally, sauce bottles are being removed and will only be available only upon request. Each unit will also have a designated employee solely responsible for sanitation and cleaning high-touch points.
“The main vocal point we identified as a group early on is that the biggest name of this game right now is trust. That’s our mantra as we begin reopening dining rooms,” Hank says. “Trust is really going to be the most important piece that we see for our guests and our team members.”