Famous Dave’s signed a 25-unit development deal in early October with Bluestone Hospitality Group.
Sounds standard, but here’s the COVID-19 spin: Famous Dave’s won’t open a single brick-and-mortar location.
Bluestone Hospitality Group, led by restaurateur Allan Gantes, who franchises brands such as Burger King, On The Border, and Popeyes, directs a fleet of Johnny Carino’s that, like casual-dining peers, felt the weight of dining-room shutdowns in March and continues to navigate capacity restrictions. Generally, casual-dining concepts operate out of massive boxes built for $6 million or so in sales. As those revenue figures slid, and off-premises flipped with dine-in, or sailed past it, Johnny Carino’s found itself facing a familiar pandemic dilemma. If the winning formula is smaller footprints and more delivery- and takeout-focused resources, what do you do with extra space?
Bluestone Hospitality Group decided to bolt on another concept. In this case, Famous Dave’s.
The company tried one such move and it worked out. They added another, to similar results. Quickly they implemented two more. “So they said, ‘OK, we’re going to do this in 25 units,” Famous Dave’s CEO Jeff Crivello says.
Gantes says Famous Dave’s barbecue, and its ability to travel, inspired the investment. “Couple that with the Famous Dave’s leadership team who understands the importance of evolving in light of changing consumer preferences, and we saw a formula for success to enhance our existing restaurant footprint,” he said in a statement. “It’s a period of unprecedented change in the industry, and demand for off-premises sales has dramatically increased.”
This kind of innovative thinking is up Famous Dave’s alley, and it needs a terminology crash course. The brand is currently widening its footprint through two versions of ghost kitchen models, dual concepts, and virtual brands, as well as the standard new-store growth.
The Johnny Carino’s example slots into one of the ghost kitchen definitions. Here, Famous Dave’s shares a kitchen with another brand, but customers only see the offer digitally. They can’t walk into a Johnny Carino’s and order Famous Dave’s. Some of these graduate from ghost kitchens into dual kitchens. Meaning it’s still a shared kitchen, only now Famous Dave’s name is on the sign outside, or the menu in-restaurant. The other ghost kitchen avenue is the more common, shared kitchen space people often label “cloud kitchens.” A dedicated venue that serves multiple concepts out of a single space for off-premises. For instance, Famous Dave’s is linked with one such spot in Chicago alongside Portillo’s, Wendy’s, and others. No branding or sit-down options. Just a center to distribute food.
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There’s no mystery why Famous Dave’s is racing down this road. In Q2, same-store sales decreased 22.9 percent, year-over-year, at corporate locations. To-go, however, skyrocketed 106 percent. And even before COVID-19, Famous Dave’s was a brand that split its to-go and sit-down business evenly. It’s been working on off-premises-friendly restaurants and strategies for several years.
“More to-go, do more third-party delivery, shrink the box from 6,000 down to 1 square foot if we can,” Crivello says. “Everything around our thoughts, conversations, our thinking, has been how to accomplish those goals.”
That’s actually Crivello talking about life for Famous Dave's before coronavirus. Today? “All of sudden the pandemic hit,” he says. “Instead of it just being ideation and thinking, it turned into this is what we’re doing immediately.”
Put another way, welcome to the compressed innovation cycle of COVID-19.
The good news for Famous Dave’s, as Crivello noted, is you wouldn’t necessarily call its current plans a pivot like you would for others. The brand was already halfway there.
“Where most people have to get their head around to fully understand concepts and how it weaves into their business and how it affects their business, we’ve done all that thinking,” he says. “Now, we know what has bubbled to the top and where the froth is, and what we can do immediately.”
Famous Dave’s ghost kitchen, dual kitchen, virtual brand (more on this shortly) strategy presents a multitude of benefits. From an efficiency angle, it’s allowing the growth-focused chain to vet markets. It’s similar in some ways to how a food truck hits the road and morphs into a small trailer before it evolves into a physical location. Famous Dave’s is essentially doing the same thing.
The 25 Johnny Carino’s are in many states where Famous Dave’s doesn’t have a presence yet. So it’s able to test markets quickly via ghost kitchens and figure out if it makes sense to start looking at sites. Through this, Famous Dave’s will be in Texas, Idaho, Arkansas, Louisiana, Kentucky, Indiana, and California. Some of those ghost kitchens that perform well could quickly turn into dual concepts (where Famous Dave’s branding will be out front at the physical store). If they don’t, they could remain ghost kitchens.
“But at least you didn’t build out a million-dollar restaurant just to test out that territory,” Crivello says. “Not only are we able to tap into and broaden our Famous Dave’s footprint into many other geographies, we’re able to get a very good look into regions we should be building physical infrastructure.”
In Johnny Carino’s tests, Crivello says the bolt-on added $500,000 to $1 million for individual locations. And that’s all digital.
Famous Dave’s, in truth, was exploring virtual brands long before they were one of the industry’s buzziest movements. We’re talking December 2018. The chain was trying to figure a way to get some of its non-barbecue staples, like burgers, in front of third-party delivery guests who wouldn’t have considered Famous Dave’s for anything but its core before. So the idea was to concept a burger-themed or salad-themed restaurant, for example, that would live solely on aggregator sites but get served out of Famous Dave’s kitchens. It sounded forward-thinking at the time. Today, everyone from Chili’s to Bloomin’ Brands to Smokey Bones to Applebee’s is getting in the ring.
Famous Dave’s launched Hayward’s Hen House a few weeks ago. It’s live today on DoorDash, Postmates, Grubhub, and soon, Uber Eats.
The brand focuses on chicken, just like the above-mentioned brands, and is named after Hayward, Wisconsin—where Dave Anderson opened the first Famous Dave’s in 1994.
There’s a Hayward Crispy Chicken Breast Sandwich for $9.99. Hand-Breaded Hen Strips (also $9.99). Additionally, the concept features three beef burgers, two desserts, and canned beverages. Check out the full menu here.
By mid-October, it was operating out of nine Famous Dave’s. Crivello says there isn’t enough data yet to decide if Hayward’s Hen House is worth expanding to all 125 locations. But there’s certainty enough to plot next steps. There will likely be a version 2 and 3 before Famous Dave’s makes the ultimate call.
It’s required very minimal changes in-store to bring the virtual brand to life, Crivello says.
