Famous Dave’s parent BBQ Holdings, which is changing its name to Famous Hospitality due to all of its recent acquisitions—operates nearly a dozen brands, but none are experiencing more growth this year than Bakers Square. And it’s not particularly close.
The 53-year-old chain finished Q1 with 18 locations, and BBQ Holdings expects that total to be 55 by the end of the year. All of the expansion will come as a virtual brand inside another restaurant.
In Q1, Bakers Square operated as a ghost concept inside three corporate and four franchised Famous Dave’s locations. At the conclusion of 2022, the company is projecting 20 Bakers Square virtual brand locations inside company-run stores and 24 in franchised outlets, to go along with 11 brick-and-mortar units.
The strategy is years in the making for CEO Jeff Crivello, who told FSR he’s admired Bakers Square for more than 30 years. Prior to COVID, he put a presentation together for his board of directors in hopes of acquiring the chain. The timing wasn’t right at that moment, nor was it in early 2020 when the parent of Bakers Square filed bankruptcy.
Crivello finally found the opportunity last year, leading BBQ Holdings to buy Bakers Square and Village Inn for $13.5 million. The brand’s brick-and-mortar and virtual brand locations are all based in the Midwest.
“You hear Famous Dave’s and it’s synonymous with ribs. You hear Bakers Square and it’s synonymous with pies,” The CEO told FSR in July 2021. “So there’s some proprietary aspect that instantly you think about when you hear the brand name.”
The casual-dining chain, which sells only pies out of Famous Dave’s kitchens, is still recovering from COVID’s impact. In Q1, same-store sales lifted 17 percent year-over-year, but declined 12.5 percent against 2020 and decreased 17.7 percent versus 2019.
Overall, BBQ Holdings operates 315 locations across Famous Dave’s, Village Inn, Granite City, Real Urban BBQ, Clark Crew BBQ, Tahoe Joe’s, Barrio Queen, Fox & Hound Bar + Grill, and Craft Republic Bar & Grill.
Going forward, the primary goal of Bakers Square will be to fill latent capacity in Famous Dave’s restaurants, as BBQ Holdings believes the chain’s 6,500-square-foot stores were meant to execute higher AUV than $2.9 million. The casual-dining brand’s other ghost concept is $5 Burger, which is estimated to have 25 percent flow through.
In addition to virtual brands, the barbecue chain is exploring dual-concept locations with Tahoe Joe’s steakhouse, a growth channel it’s already implemented in Colorado Springs with Texas T-Bone Steakhouse and with Cowboy Jack’s steakhouse in Woodbury, Minnesota. The format is expected to add $800,000 in revenue and $200,000 in EBITDA.
And that’s just for the full-service business. Famous Dave’s opened two line-service restaurants in Las Vegas and Coon Rapids, Minnesota, in 2021, and debuted a third in Grand Forks, North Dakota in April. The first drive-thru unit opened in South Salt Lake, Utah in March, and another is planned for Avondale, Arizona, by Q2 2023.
Famous Dave’s operates 144 stores, including 104 franchises and 40 corporate outlets. Of that total, 27 are ghost kitchens. The barbecue brand’s company-owned restaurants saw same-store sales lift 7.9 percent year-over-year, 22.6 percent versus 2020, and 12.6 percent compared to 2019. Looking at the same set of years, the franchise-operated footprint increased 8.6 percent, 21.3 percent, and 5.6 percent.
Bakers Square’s sister concept, Village Inn, is undergoing a brand refresh involving a handful of higher-end choices that complement pie flavors, while keeping value for core customers. The first prototype should open in Q3 in Omaha, Nebraska. Village Inn has 125 restaurants, 82 percent of which are franchised. Same-store sales at franchise-led units grew 19.9 percent year-over-year. Data was not available for comparisons against 2020 or 2019.
BBQ Holdings also opened a Village Inn/Granite City dual concept in March. Granite City is designed for $6 million in AUV, but it was earning just $3.9 million before COVID. The partnership with Village Inn is expected to add $750,000 in revenue and $225,000 in EBITDA.
All of BBQ Holdings’ acquisitions have been completed within the past two years, starting with Granite City in March 2020 and as recently as Barrio Queen in April. The company may not be done yet either. It continues to seek restaurants with the following qualities: legacy brands that have stood the test of time, franchise systems with growth potential, potential CPG in retail, expertise in digital marketing, and accretive purchases (3-5x EBITDA) that fold into current infrastructure.
“The beginning of 2022 marked another successful quarter executing on our three core growth initiatives which include filling latent capacity of our current restaurants, organic unit growth, and building a diversified portfolio of food and beverage brands via accretive M&A,” Crivello said in a statement. “ … Despite a challenging inflationary environment, and acknowledge continued headwinds, we continue to deliver consistent results, and look forward to a successful 2022.”