Famous Dave's of America today reported financial results for the first quarter ending March 29, 2015.
Company revenue decreased from $35.7 million to $32.6 million, primarily reflecting the combined impact of the closure of four company-owned restaurants since the end of the first quarter 2014 and a comparable sales decrease.
Comparable sales for company-owned restaurants open 24 months or more decreased 4.9 percent, compared to a decrease of 4.9 percent for the same period in 2014. Comparable sales for franchise-operated restaurants open 24 months or more decreased by 0.1 percent compared to a decrease of 3.3 percent for the same period in 2014.
Franchise royalty revenue of $4.3 million grew by $128,000 from the prior year.
"The quarter's comparable sales continued to be negatively impacted by the elimination of the discounting strategy that was in place last year," says Ed Rensi, Famous Dave's CEO. "And like many of our peers, our sales were also negatively impacted by the severe winter weather and the early start to Lent. Weekly sales in each of our major company-owned markets largely mirrored the corresponding Knapp Track report for those markets throughout the quarter.
"Our performance is more encouraging when we evaluate it on a region-by-region basis. Our Minneapolis and Chicago markets significantly outperformed the company on both an absolute and weighted comparable sales basis. We attribute this outperformance to a number of factors, not least of which is the regular presence and visibility of our senior management team in those two markets.
"We intend to apply the same approach as appears to be working in Chicago and Minneapolis to the East Coast. Although some of our East Coast restaurants have specific challenges, we believe that, over time, we will be able to positively impact performance.
"Our restaurant-level operating cash flow margin declined by 220 basis points. Approximately half of this decline came from anticipated increases in contracted food costs and the balance was the result of sales deleverage.
"We are pleased with the progress that we have made in reducing our core, recurring general and administrative expenses. For this quarter, general and administrative expenses included investments made to develop our new brand strategy and brand position. Strategic investments, such as these, will continue to impact general and administrative expenses through 2015.
"We will continue to actively and prudently manage our expenses to target increasing restaurant and company-level operating margins.
"Driving top-line sales growth is our highest priority. Although it is important to note that we will continue to face sales headwinds from the discounting strategy until we anniversary the end of the program later in second quarter of this year.
"We have made substantial progress on refranchising some of our company-owned restaurants. We hope to be in a position to make an announcement on this subject later in this quarter.
"Finally, we have also made substantial progress on revising our current credit agreement and hope to be in a position to make an announcement on this subject soon."
Famous Dave's ended the quarter with 184 restaurants, including 50 company-owned restaurants and 134 franchise-operated restaurants, located in 34 states, the Commonwealth of Puerto Rico, and 1 Canadian province.
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