To-Go Orders Give Famous Dave's A Boost


Casual dining chains are losing customers again. Ruby Tuesday, for instance, said that its same-store sales fell 3 percent last quarter, while chains like Cheesecake Factory have underperformed expectations. But one chain saw some improvement last quarter: Famous Dave’s. And it can thank its robust to-go business for that.

To be clear, Famous Dave’s is not an exception to the casual dining rule this quarter. Its company store same-store sales grew 3.8 percent last quarter, but franchisees’ comps fell 1.9 percent—which, given that franchisees own 70 percent of the system, means that comps were flat to slightly down for the three-month stretch.

Restaurant industry same-store sales rose 0.4 percent in the second quarter, according to the closely watched index from Black Box Intelligence.

Still, Dave’s did improve for the quarter, based largely on the strength of those company stores. And much of that improvement came thanks to the chain’s robust to-go business.

According to the company’s quarterly report, to-go sales rose 4 percent last quarter, offsetting a 1.7-percent decline in the catering business, while dine-in sales rose 1.5 percent. (Similar numbers for franchise-operated restaurants weren’t available.)

The to-go business helps make Famous Dave’s unique. “There really isn’t a peer group for us,” CEO John Gilbert said on the company’s conference call—noting that his preference is for Dave’s to be compared with fast-casual players.

To-go orders should be a boon for the chain, assuming the company does it right. The items Dave’s specializes in—brisket, ribs, barbecue chicken—are increasingly popular. But they’re particularly popular in parks and backyards, rather than inside a restaurant. So focusing on that business makes lots of sense and gives the company a strong sales lever other casual dining chains don’t have. It also eliminates things like the tip from consideration. “As a strategy going forward, we would like to benefit from interest in off-premise consumption,” Gilbert said.

The big challenge for Dave’s is to close the gap between company and franchised stores—Gilbert largely blamed marketing for the difference. And investors, who have bid up Dave’s stock roughly 80 percent this year, were hardly impressed by the performance. The company’s stock is down today.

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