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WIKI ANALYSIS
Famous Dave's of America (NASDAQ: DAVE) is a casual restaurant that specializes in BBQ food. From ribs to burgers to steaks, DAVE is a popular choice amongst carniverous consumers. Famous Dave's competes against othe BBQ-style restaurants such as Buffalo Wild Wings (BWLD) and Texas Roadhouse (TXRH).
Business Financials
Although Famous Dave's did have an 11.5% revenue growth from 2007 to 2008, the firm has had slower sales in Q209.[1] DAVE posted Q2 2009 revenues of 36.30 million, which was less than analysts' estimates of $37.14 million.[2] The beginning of summer is a key seasonal period for DAVE, as college and high school graduation parties have typically included Famous Dave's barbecue food.[1]
Famous Dave's operates in one business segment: Foodservice. Within the Foodservice segment, Dave's offers its barbecue food to both casual dining and catering business. While Dave's menu is dominated by barbecued meats and poultry, the menu also offers fish, soup, and salads to less-carniverous customers.[3]
Trends and Forces
Recession
Many consumers cut back on purchasing luxury items during the recession on fear of job security and budget cuts. Mass psychology implied that restaurant sales would decline, as consumers would prefer cheaper options such as getting groceries or going to McDonald's (MCD). +
From 2007 to 2008, Famous Dave's Sales per Restaurant increased 6%. DAVE share prices have risen 84% in 2009.[4]
Increased Obesity Awareness
In the past five years, United States consumers have become more conscious of unhealthy eating habits -- turning to low-calorie food. Famous Dave's menu, filled with belly-filling baby back ribs, hamburgers, and steaks,[3] can be seen as a high-calorie meal.
In response to eating style changes, Famous Dave's has evolved its menu to include less-fattening items such as salads, soups, and fish.[3]
Changing Cattle Prices.
Since Famous Dave's specialty is barbecued meats, the firm's operating margins are conditional upon fluctuating cattle prices. Rising lean hog, pork bellies, and live cattle prices cause DAVE operating costs to go up, which will reduce profits. From Q12008 to Q12009, pork bellies prices decreased 40%[5] live cattle prices decreased 20%,[6] and lean hog prices decreased 30%[7] which in turn caused DAVE operating margins to increase 2%. Note that Lean Hog, Live Cattle, and Pork Bellies prices are contingent upon other markets, such as Feed.
Competition
- Buffalo Wild Wings (BWLD) -- Although a chicken wing specialist, BWLD does attract similar-eating consumers as DAVE. BWLD also offers some similar menu items as DAVE, such as hamburgers and baby back ribs.[8]
- Red Robin Gourmet Burgers (RRGB) -- Although a burger specialist, RRGB also attracts similar-eating consumers as DAVE. RRGB also offers some similar menu items as DAVE, such as burgers and chicken fingers.[9]
- Ruby Tuesday (RT) -- RT has a more omnivorous menu, but competes with DAVE for casual dining customers.
- Texas Roadhouse (TXRH) -- TXRH offers a similar menu as DAVE, filled with BBQ foods.[10]
| Competition | Famous Dave's of America (DAVE)[11] | Buffalo Wild Wings (BWLD)[12] | Red Robin Gourmet Burgers (RRGB)[13] | Ruby Tuesday (RT)[14] | Texas Roadhouse (TXRH)[15] |
| Revenue $Mil | 140.4 | 422.4 | 869.2 | 1,248.6 | 880.5 |
| Net Income $Mil | 0.4 | 24.4 | 27.1 | (17.4) | 38.2 |
| Net Profit Margin % | 0.62 | 5.78 | 2.68 | -1.44 | 4.33 |
| Number of Franchised Restaurants | 123 | 363 | 129 | 224 | 69 |
| Number of Company-Owned Restaurants | 47 | 197 | 294 | 721 | 245 |
| Sales per Restaurant $Mil | 2.6 | 1.93 | 3.23 | 1.87 | 3.82 |
References
- ↑ 1.0 1.1 Minneapolis Post, "Grad Parties Aren't Cooking Up the Sales Famous Dave's Expected," 07/01/09
- ↑ Street Insider, "Famous Dave's (DAVE) Reports Mixed Q2 Results," 07/29/09
- ↑ Motley Fool, "Put Your Money Where Your Mouth Is," 07/08/09
- ↑ Trading Charts, "Pork Bellies"
- ↑ Trading Charts, "Live Cattle"
- ↑ Trading Charts, "Lean Hogs"
- ↑ DAVE 2008 10-k, Item 6: Selected Financial Data, page 26
- ↑ BWLD 2008 10-k, Item 6: Selected Financial Data, page 19
- ↑ RRGB 2008 10-k, Item 6: Selected Financial Data, page 25
- ↑ RT 2008 10-k, Item 6: Selected Financial Data, page 18
- ↑ TXRH 2008 10-k, Item 6: Selected Financial Data, page 30
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