Roughly 18 months ago, Famous Dave’s was one transaction away having zero corporate stores. In the second quarter of fiscal 2019, the brand reacquired eight franchises to bring the company-run count to 29. This time last year, it was 15.
There are a variety of reasons the barbecue chain, which has 136 total restaurants (107 franchised), is suddenly buying back shops. But the main one is a reflection of what’s happening within Famous Dave’s system: The 25-year-old company has a new story to tell.
And Famous Dave’s freshest hire, KC Glaser, is here to tell it.
In early June, the company announced Glaser as its director of marketing, officially welcoming him July 8. Glaser arrived at Famous Dave’s from Buffalo Wild Wings, where he served as director of marketing and guest experience at Inspire Brands’ 1,200-unit giant. He oversaw off-premises initiatives and digital content strategy, as well as dine-in customer experience. Before, Glaser held brand management duties at International Dairy Queen, tasked with managing and growing the Blizzard property.
While Glaser might have been a stranger to Famous Dave’s professionally, he was well acquainted off the clock. In a six degrees of Kevin Bacon kind of twist, Glaser’s sister attended a high school dance with founder “Famous” Dave Anderson’s daughter. Anderson himself gave the commencement speech at Glaser’s University of Minnesota graduation.
Born and raised in the Minneapolis suburbs, Glaser says the Famous Dave’s story wove in and out of his life over the years. That’s any marketer’s dream—personal over sterile connection—but it’s really only one stroke of the picture.
“It’s a restaurant that’s got just a ton of potential,” he says. “The work for me, I think, is going to be fun and relatively easy because there’s so much great material to work with.”
“There’s a lot of low-hanging fruit,” Glaser adds. “And it’s less about me changing what we’re doing and more about me coming in and structuring how we tell that story.”
Firstly, why is Famous Dave’s getting skin in the game again? The eight stores it just purchased are slated for upgrades and relaunches. In Q1, the brand spent $4.2 million to reacquire four restaurants in Colorado. It then added six more, including shops in Wisconsin, Michigan, and Ohio, for $132,000.
Famous Dave’s has spent $5.7 million during the first half of 2019 on repurchasing franchises, as well as updating corporate locations.
In each case, the deals are innovation accelerators for recent changes, from décor to menu. Also, and this can’t be understated, once refreshed, Famous Dave’s has direct and tangible examples to showcase to franchisees. Success stories to inspire investment back into the business.
When Famous Dave’s first pushed its remodel effort in 2018, it was slow to gain traction. Previous reports said operators would need to fork up between $100,000–$300,00 to update stores, and it could take about two years to recover investment. According to Maxim Group research analyst Stephen Anderson at the time, some franchisees were hesitant to make changes given the revolving door of CEOs and past management missteps. But Famous Dave’s head Jeff Crivello, formerly CFO of PW Partners Capital Management, instilled stability at the top. Crivello took the helm in November 2017 and has now directed Famous Dave’s longer than the four executives who came before him—the brand cycled through five CEO changes in five years.
Consistent direction is always a positive, but running profitable stores from the trenches is hard to rival.
Crivello recently told The Star Tribune that a franchisee with five stores in Seattle and Utah saw a 20 percent lift after updating.
In Q2, Famous Dave’s same-store sales increased 0.4 percent. Notably, comps lifted 0.7 percent at domestic franchises, marking only the second time in eight years they’ve moved in a positive direction.
“In 18 months, we’ve done a 180,” Crivello says. “It’s really exciting to be the owner/operator of these restaurants and prove out the evolutionary vision that I have for the company.”
In certain cases, Famous Dave’s is buying back stores because franchisees don’t have the resources to make changes. Not at the level of the company at least. Attrition came into play, too.
“The restaurant business is extremely difficult,” Crivello says. “Extremely tiresome. It’s a seven day a week thing. So, after 10–15 years, some restaurateurs don’t have energy to go to that next evolutionary cycle. We’re excited to take the reins from them and put the resources necessary into the restaurants, and the effort necessary, to make them successful for the next 10–15 years.”
This tightening of Famous Dave’s footprint has progressed over the last couple of years. It’s down to 136 restaurants from 150 on July 1, 2018. There were 176 restaurants in October 2016.
Q2 revenue increased to $21.1 million from $14.5 million in the comparable period. Famous Dave’s earned $1.44 million, adjusted for ongoing profits—a 15 percent drop from $1.7 million, year-over-year. Adjusted per-share profit was 16 cents, which sailed analyst forecasts of 7 cents.
Tell the message
Glaser’s task is to take some of these store and culinary updates and spin them against a backdrop that hasn’t changed over the years, and doesn’t need to. Meats are still smoked in house. Famous Dave’s story is a quality-of-product and preparation one, he says, one few chains at this scale can rival.
“The first thing is just going to be kind of evaluate our overall positioning statement and figure out where we fit into the bigger picture here, and then start crafting how we’re going to tell that story from an execution standpoint,” Glaser says.
“There are a lot of opportunities,” he adds. “Whether that’s in the digital space, from a loyalty perspective, there are definitely a bunch of ideas in my head for how we’re going to go about executing that message. But first and foremost, we want to craft that story and make sure that guests understand our purpose and what we’re all about.”
Crivello put it simply. “I think as any company evolves that message also evolves with it. I think that’s why KC is here. Nobody here had the ability to do it, and we’ve very confident that KC’s going to get it right.”
Famous Dave’s evolution is ongoing from multiple angles. In terms of its box, the chain recently replaced a Tucson Arizona, location with a counter-service, downsized version just a couple of miles away. The 2,500-square-foot store has only 75 seats—about a third the size of a typical unit, which generates average-unit volumes of roughly $2.4 million (Per a 2018 franchise disclosure document, the systemwide average at Famous Dave’s was $2,489,323 in the prior year).
Provo, Utah, is on deck for a smaller-footprint store as well, which also features a trimmed-down menu. Additionally, the company has talked about ghost restaurant concepts to capitalize on off-premises demand.
Crivello says the real, immediate challenge is to find real estate at prices where openings can still be profitable. “We’re just being very careful with long-term leases that we sign and in which areas before we get ourselves down that path,” he says. “In the past, this company has had some trouble by not choosing the correct real estate. So, we don’t want to make the same mistake twice.”
He adds they’ll approach possible conversions, like the Tucson store, on a case-by-case basis. Crivello says the fast casual “is doing very well.” Famous Dave’s has also begun the process, it revealed in its Q2 report, of opening new, small footprint restaurants in select markets.
“Certainly a more efficient business model that’s profitable is important,” he says. “So is the guest demand of convenience.”
Famous Dave’s corporate same-store sales declined 0.8 percent in Q2, driven down by traffic declines in dine-in business. To-go sales, however, hiked 6.8 percent.
On a weighted basis, same-store sales for Famous Dave’s to-go side upped 2.2 percent in Q2 versus the prior-year period. Dine-in and catering fell 2.7 and 0.3 percent, respectively. In the period, dine-in represented about 51 percent of Famous Dave’s total sales. To-go and catering mixed 36 and 13 percent, respectively.
“There are a lot of brands that get a lot of credit for fast and convenient but they don’t have a really quality food story to tell. And this is really exciting for me to be a part of because the quality is so great and the story is so fantastic.” — KC Glaser, Famous Dave’s director of marketing.
Glaser says Famous Dave’s will push this shift moving forward. “We want to meet the guest where they are,” he says.
A key will be to nurture a one-to-one marketing strategy. Glaser says he wrote down “a bunch of questions” on day one to ask coworkers about, and then tackle. Among them was evolving from a mass marketing approach, which is great for awareness, to one where Famous Dave’s can engage with customers on a more direct path.
Some of Famous Dave’s digital plans are still finding their footing. The chain collaborated with MomentFeed and OpenTable in 2018. In a different initiative, Punchh built and launched a loyalty app in February “to allow us to engage with guests in ways that we have not been able to historically, and allow our guests to engage with our brand conveniently,” Famous Dave’s said.
Some highlights include a free sandwich or burger giveaway upon download. Then customers receive one “bone” for every $1 spent at Famous Dave’s. When they hit 100 bones, they unlock $5 in rewards. The app also features information about promotions and brand news.
Famous Dave’s introduced third-party delivery and online ordering via its website in 2017.
Glaser has plenty of learnings to pull from, especially in regards to loyalty. Buffalo Wild Wings’ Blazin Rewards is one of the full-service space’s more recognizable platforms. It went national in June 2017 with more than 1.6 million guests and 21 percent of sales tied to loyalty member checks.
“I think part of the success story there was less about dollar-to-dollar loyalty and more about other ways to not just engage the consumer, but provide them with added value in terms of additional discounts or whatever it might be,” Glaser says.
On the menu front, Crivello says, Famous Dave’s is working toward becoming more of a “Southern kitchen” themed culinary concept than a straight barbecue one.
Famous Dave’s rolled out a comprehensive new lineup in October 18 that asked franchisees to implement four core items from the earlier Anderson 23-product offering at a Coon Rapids, Minnesota, location—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.
The program was spearheaded by Famous Dave’s head of culinary, Sylvia Matzke-Hill, who also came from Buffalo Wild Wings last fall. As Crivello points out, many of the additions, like Brussels sprouts, weren’t specifically barbecue items.
Glaser says Famous Dave’s food speaks for itself.
“There are a lot of brands that get a lot of credit for fast and convenient but they don’t have a really quality food story to tell,” he says. “And this is really exciting for me to be a part of because the quality is so great and the story is so fantastic.”