In April, Famous Dave’s parent BBQ Holdings revealed an ambitious co-brand strategy for Granite City Food and Brewery.
The chain’s kitchens are built to hold $6 million in AUV, instead of the pre-COVID level of $3.9 million. BBQ Holdings knew what it needed to increase volume—a concept that layers in the morning daypart.
That path gained some clarity in July when the company agreed to purchase Village Inn and Bakers Square for $13.5 million. However, at the time, CEO Jeff Crivello wasn’t sure whether Village Inn was the right breakfast concept to go inside Granite City, noting “it really hasn’t been fleshed out yet.”
A few months later, it appears plans are indeed fleshed out, with a dual-concept Granite City/Village Inn restaurant scheduled to open in January. Village Inn will open from 7 a.m. to 3 p.m. while Granite City will open from 3 p.m. to 11 p.m. The company estimated that this type of dual-concept format could generate $1 million in additional revenue and $250,000 in additional EBITDA per location.
The move builds off a strategy leveraged by Famous Dave’s. In October 2020, BBQ Holdings announced a 25-unit development deal with Bluestone Hospitality Group to open Famous Dave’s ghost kitchens and dual concepts with Italian chain Johnny Carino’s. The barbecue chain also has a co-branding format with Texas T-Bone Steakhouse in Colorado Springs and with Cowboy Jack’s steakhouse in Woodbury, Minnesota. Additionally, BBQ Holdings said the most-productive Famous Dave’s ghost kitchens inside Granite City stores will evolve into dual concepts. These eight digital kitchens are averaging $5,500 per store per week.
The approach gained even more steam when BBQ Holdings agreed in October to acquire Tahoe Joe’s Famous Steakhouse out of bankruptcy for $5.2 million. The idea is that Famous Dave’s 6,500-square-foot restaurants were designed to earn higher than a $2.8 million AUV. The company believes a co-branded restaurant with a concept like Tahoe Joe’s could add $800,000 in revenue and $200,000 in EBITDA per store.
READ MORE: Famous Dave’s Soars Past Pre-Pandemic Levels
In addition to steakhouses, BBQ Holdings also suggested Famous Dave’s could enter a dual/virtual concept relationship with a known pizza brand that has simplistic operations and low up-front costs. The company said that with this hypothetical deal, there’s potential for $200,000 in additional EBITDA per location.
After purchasing Village Inn, Bakers Square, and Tahoe Joe’s in 2021, and Granite City and Real Urban Barbecue in 2020, BBQ Holdings is still analyzing more M&A opportunities. The company is looking for legacy brands, growth-ready franchise systems, potential with consumer packaged goods, opportunities to leverage digital marketing, and accretive acquisitions (roughly 3-4x EBITDA) that fold into the current infrastructure.
In the third quarter, Famous Dave’s company-owned same-store sales lifted 12.4 percent compared to 2019, while franchises grew 6.9 percent. Granite City’s comps fell 0.5 percent in Q3. As for new acquisitions, Village Inn’s same-store sales dropped 8.1 percent against two years ago, and Bakers Square saw comps drop 20.2 percent versus 2019.
BBQ Holding’s portfolio now includes 303 brick-and-mortar locations across seven brands, including 135 Famous Dave’s stores and 131 Village Inn locations. Those figures don’t include the eight company-run Famous Dave’s ghost kitchens inside Granite City locations and 20 franchise ghost kitchens operating out of another restaurant or shared kitchen space. Ten additional operator-led digital kitchens are projected to open this year.
The barbecue brand’s virtual portfolio also features digital brand $5 Burgers, available in Arizona, Colorado, Indiana, Iowa, Michigan, Minnesota, New Jersey, New York, Ohio, and Wisconsin.
Famous Dave’s franchisees recently opened the chain’s first quick-service prototypes in Las Vegas and Coon Rapids, Minnesota. The chain’s first drive-thru store is expected to debut in Salt Lake City in December. Also, a second Real Urban Barbecue unit opened in Chicago, and a new Village Inn prototype, labeled “VI Café,” is scheduled to open in Omaha, Nebraska, early in the first quarter.
“This was a quarter of strong execution for BBQ Holdings, as our growth strategies continue to deliver positive top and bottom-line results, including a steady improvement in same store sales and solid free cash flow,” Crivello said in a statement. “Management is focused on executing against our three core growth initiatives, including accretive M&A, opening new units, and filling the latent capacity of our current restaurants.”
