What’s at play?
Famous Dave’s led with innovation in 2018, especially at the corporate level, which is one reason the chain could spark significant systemwide improvement moving forward. Many of the updates aren’t spread throughout Famous Dave’s franchised footprint just yet. The traffic and sales outperformance at company units prove sweeping changes are paying dividends.
Famous Dave's chief operating officer, Geo Concepcion, told The Star Tribune that its current goal is to “find creative ways for franchisees to operate the initiatives,” including exterior and interior design and marketing efforts.
He said operators would have to invest between $100,000–$300,000 to update locations and take advantage of the changes that have spiked traffic at corporate units. He added it would likely take franchisees about two years to recover the investment.
What’s changing? Pretty much every touchpoint possible, from visual to operations to culinary.
On the menu front, Famous Dave’s introduced 11 fresh items in 90 percent of its 127 franchised locations last year. The first “founder inspired” refresh project from the chain took form at a Coon Rapids, Minnesota, location. The store reunited Famous Dave’s with its founder, Dave Anderson, who split with the company in 2015 under previous management. Together, Anderson and the new executive team designed a restaurant with a fresh look and menu that paid homage to Famous Dave’s past.
It reported double-digit sales growth in early reports before leveling out around 10 percent higher with traffic gains in the 12–13 percent range. That store also featured 23 new menu items developed by Anderson.
Then, in late October, Famous Dave’s broadly rolled the menu changes. Franchisees implemented four core items that were picked from the update—cheese curds, build-your-own burgers, 3-meat combo, and hand-breaded chicken tenders. Five changes were asked of operators so that, no matter where consumers dined, they’d see about 10 new items on the menu.
This was also a chance for Famous Dave’s new head of culinary, Sylvia Matzke-Hill, who came to the brand from Buffalo Wild Wings earlier in the fall, to direct changes. She told FSR earlier in the year that Famous Dave’s wanted to keep its core ingredients at the forefront, but tap into relevant trends perhaps skirted before. Things like Brussels sprouts, fried and tossed in a bacon and onion glaze. Also some international flair, like the jalapeño Sweet & Sour sauce that accompanied its new chicken tenders.
But throughout the process, unlike in past years, Famous Dave’s kept Famous Dave himself involved. “He’s got an amazing palate,” Matzke-Hill said. “He knows flavors and knows combining different flavors and different seasonings together to create some really, really tasty products.”
“We believe that further training and operational efficiency surrounding the new menu will improve food costs as a percentage of restaurant sales, net, in fiscal 2019,” CEO Jeff Crivello added in a statement. “We look forward to honing these initiatives in fiscal 2019 and remain excited about plans to complete refreshes of certain company-owned and franchise-operated stores.”
Q4 restaurant-level operating margin, as a percentage of restaurant sales, net, for company-owned restaurants was 2.9 percent compared to 1.3 percent in the prior year. The decline was primarily a result of the new initiatives tested in corporate stores, the company said, including the new menu