Famous Dave’s of America this week said that it turned a profit in the first quarter ended April 1, reversing a series of losses thanks to cost cuts and store closures and more franchising.
The company late Monday reported net income of $998,000 in the quarter ended April 1, or 13 cents per share, up from a loss of $1.4 million, or 21 cents, in the same period a year ago.
It was the first time since the second quarter of 2016 that the chain reported a profit.
The primary reason for the better profitability: Steep cuts in general and administrative spending. Dave’s general and administrative expenses were $1.9 million, down from the $4.5 million in G&A spending in the first quarter of 2017.
The company said the decline in spending was due to an alignment of spending “commensurate with that of a more dedicated franchisor.”
The number of company-owned locations declined from 35 a year ago to 16 in the first quarter. Of the 19-unit reduction, 12 restaurants were closed, seven were sold to franchisees. Dave’s has 152 locations, down from 173 a year ago.
Famous Dave’s same-store sales declined 0.9% in the quarter. Franchisees’ same-store sales declined 1.6%. Company-operated same-store sales increased 5.2.
Revenues declined 24% due largely to the company store closures. System sales at the chain declined 13% in the quarter to $87.2 million.
Jeff Crivello, named CEO last year, suggested that one of the biggest strategies to generate more sales in the coming years will be delivery.
“We believe continued adoption of third-party delivery will help drive the top-line performance of our franchisees throughout the year,” he said in a statement, noting that only half of the company’s locations have delivery at the moment.
Famous Dave’s stock declined slightly on Tuesday.
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