Total revenue for the third quarter declined 13.7 percent to $21.9 million, the company said, driven primarily by the closure of 12 restaurants, including seven in the third quarter of 2017. The net closure of 10 franchise restaurants drove declines in franchise royalty and fee revenue, according to the company.
Comparable restaurant sales at franchises improved to 2.1 percent, while company-owned comparable restaurant sales improved to 0.9 percent.
“We continued to show great progress in many areas of our business during the third quarter of 2017,” said Mike Lister, CEO. “Not only did we continue to execute on our restaurant optimization program and take further steps to optimize our general and administrative expense structure, we generated positive comparable sales for company-owned restaurants for the first time since the second quarter of 2013.”
General and administrative [G&A] expenses decreased to $3.8 million from $4.4 million primarily because of a decline in professional fees and reduced costs incurred for franchise-related matters, the company said. Bad debts expense recognized for a previously struggling franchisee partially offset decreases in G&A expenses.
“We were pleased with both our franchise-operated and company-owned comparable sales performances that were able to outpace the casual dining industry, amidst one of its more challenging quarters in recent memory,” Lister continued. “Additionally, subsequent to the end of the quarter, we announced the refranchising of eight restaurants in Maryland and Virginia.”
As of Nov. 13, Famous Dave’s America owns 16 locations and franchises an additional 136 restaurants in 32 states, the Commonwealth of Puerto Rico, Canada and United Arab Emirates.
This is the final earnings call for Lister who is leaving the company. The board of directors appointed Jeffery Crivello as Famous Dave’s new CEO effective Nov. 14.
“I am thrilled to be joining the company during such a pivotal time,” Crivello said in a statement. “With the refranchising effort well underway, my focus will be on improving the existing value proposition, while expeditiously addressing the development and evolution of the Famous Dave’s concept. Additionally, although the team has made substantial progress with their general and administrative optimization plan, I believe that we can strategically reduce G&A expenses to approximately an $8.0 million run-rate within the next 90 days, while continuing to improve upon the franchisor services that we provide. It truly is an exciting time to become a part of the Famous Dave’s team.”
Additionally, Geovannie Concepcion was appointed COO effective Nov. 14. Concepcion previously served as chief development and franchising officer for Famous Dave’s.