Famous Dave’s is known for barbecue, not burgers or salads.
It also has capacity in its kitchens, in particular at certain times of day, following years of weakening same-store sales.
The Minneapolis-based chain would like to change both of those things. So as the company plots its delivery-only strategy for 2019, it is planning something altogether unique: creating a delivery-only brand that it would operate out of its kitchens.
“A lot of it is, how do we use our fixed assets to capture incremental revenue,” Geovannie Concepcion, the company’s chief operating officer, said in an interview. “A lot of folks, they don’t know we have great burgers. But we do have great burgers. But when they go to an online ordering market, we’re not in the consideration set.
“If we had a branded burger concept, we might be able to get trial and drive incremental revenue out of our own kitchens.”
Essentially, Dave's would create a brand identity for a specific menu type, like salads or burgers or sandwiches, that it would use to sell those items through delivery services, in the hopes that they would bolster sales of those items. Dave's would make those items out of its own kitchens.
Concepcion stressed that the company hasn’t made final decisions on the cuisine that Dave’s would brand, or in which markets it would test out the concept. But he said that the company is in talks with third-party delivery companies and is planning to introduce such a test in the first quarter of next year.
It’s part of a continued, aggressive effort on the part of Dave’s existing management to return the brand to positive sales after a challenging decade that has seen a steady erosion in sales, closed units and a revolving door at management.
Famous Dave's Same-Store Sales
Late last month, the company introduced a new menu at all of its 151 locations nationwide that includes items like Cheese Curds, a build-your-own burger platform and a three-meat combo. Franchisees could also choose from 20 other items.
“It’s probably the biggest lift we’ve had in a decade,” Concepcion said, noting that the company handled the cost and design of the menus for the entire system.
Dave’s has been proving out its menus, along with a brand refresh, at a location in suburban Minneapolis. Concepcion said on Thursday that sales have tailed off since an early, post-refresh spike, but they are holding at a 10% increase while traffic is up 12% to 13%.
“The reimagining of the dine-in experience went a long way,” he said. “The guest feedback has been positive. There’s a lot more energy and vibrancy in the dine-in experience. It’s a new reason to come to the restaurant.”
Dave’s is eager to get operators on board. Same-store sales at the company declined 1.4% in the quarter ended Sept. 30, but company operated same-store sales increased 2.1% and are now up for five straight quarters.
Replicating that success at franchise-operated restaurants—franchisees own 135 of those 151 locations—would help overall same-store sales more consistently.
“We haven’t made the progress as quickly as we’d like to on the franchise side,” Concepcion said. “That’s why the menu is so key. What we’re doing there is key.”
Dave’s has had just one quarter of positive same-store sales in six years as the chain changed CEOs and menu strategies. It has had only seven positive quarters since early 2008, the start of the Great Recession.
But the company believes it is gaining traction. It turned a profit last quarter, of $1.5 million, even though the chain was making investments at the store level to generate sales.
“We’ve laid the tracks to get things moving on a growth trajectory going forward,” Concepcion said. “We’ve made significant investments on that side.”
That includes hiring a franchise sales team. And it includes a significant look at the manner in which it operates restaurants. Concepcion believes that future locations will likely have counter service and kiosks to handle consumer demand for kiosks, though he said, “there will always be a place for us in full service.”
The company is still planning to do delivery-only, “virtual restaurants,” though it has opted against going forward with a planned location with Kitchen United.
Concepcion said that the company is pursuing virtual kitchens in both Minneapolis and California. And Dave’s is looking at a virtual restaurant that would deliver the chain’s main menu of ribs and brisket.
Still, the company is making moves that could take the chain in a positive direction.
“We have yet a long ways to go,” Concepcion said. “But there’s been many years where management has not been able to get any traction or drive top line or bottom line improvement.
"We’re seeing ways to get the top line up. And we’re certainly more profitable.”