Famous Dave's Reports Third Quarter Earnings of $0.13 Per Share

Famous Dave's of America, Inc. (NASDAQ: DAVE) today reported revenue of $33.3 million and net income of $1.2 million, or $0.13 per diluted share, for its fiscal third quarter ended September 27, 2009. Total revenue for the quarter decreased 5.1 percent from the comparable period in 2008. For the nine months ended September 27, 2009, the company reported revenue of $103.4 million and net income of $4.9 million, or $0.54 per diluted share.

Same store sales for company-owned restaurants open for 24 months or more declined 6.8 percent during the quarter, reflecting declines in dine-in, To-Go and catering, while same store sales for its franchise-operated restaurants declined 9.5 percent. Franchise royalty revenue for the quarter totaled $4.2 million, a decrease of 2.8 percent from the comparable period in 2008. Same store sales for company-owned restaurants declined 7.3 percent on a year-to-date basis, while same store sales for franchise-operated restaurants declined 8.8 percent. Franchise royalty revenue for the year-to-date timeframe totaled $12.9 million.

'The sales environment for the entire casual dining sector remains challenging, but I remain excited about the energy we've created with our marketing efforts,' said Christopher O'Donnell, chief executive officer of Famous Dave's. 'We've continued to make progress in our efforts to control costs and have worked hard to strengthen our balance sheet.'

Sales results for the third quarter for company-owned restaurants reflect general declines in consumer spending slightly offset by the impact of weighted average price increases of approximately 2.0 percent, which were taken prior to 2009.

The company's 2009 third quarter also reflected the following:

Early Debt Repayment
During the third quarter of fiscal 2009, the company repaid $2.6 million in long-term high fixed-rate debt. As previously announced, on October 1, 2009, the company has since repaid the last of five outstanding term notes, bringing the amount of debt the company has repaid to date in 2009 to approximately $10.0 million. The total pay down of long-term debt in fiscal 2009 should result in approximately $610,000 of scheduled interest savings for fiscal 2010. The company continues to maintain its revolving line of credit, which had a balance of $14.0 million at the end of the third quarter.

Impairment and Lease Termination Charges
During the quarter, asset impairment and lease termination charges totaled $446,000. Included in this total are charges related to a final agreement to buy out the lease of a previously closed restaurant, a lease termination settlement for a restaurant site where construction never commenced, and a software product that was replaced with an alternative solution prior to implementation.

Stock-Based Compensation
Earnings results for the third quarter of 2009 included approximately $236,000, or $0.02 per diluted share, in compensation expense related to the company's stock-based incentive programs, as compared to approximately $100,000, or $0.01 per diluted share, for the prior year comparable period. Stock-based compensation expense for the nine months ended September 27, 2009 was approximately $610,000, or $0.04 per diluted share, compared to approximately $698,000 or $0.05 per diluted share for the prior year comparable period.

Marketing and Development

Marketing and Development highlights during the quarter included a 15 year anniversary celebration featuring the return of the 'Buck-A-Bone' promotion, $1.15 draft beers and a special 'Dave's Day' event. This fall, the company's Limited Time Offer is a 'Smokin' hot meatloaf and potatoes' entrée and a 12 ounce smoked rib-eye steak with Dave's special barbeque butter, roasted baby red potatoes with baby bella mushrooms and a choice of side dish. This promotion is available through November.

'We've responded to the current business climate with promotions geared towards driving traffic through a balance of value-oriented and premium items, as well as promotions that enhance our already strong brand,' O'Donnell said. 'Our 15-year anniversary celebration was an example of this, which included our 'Dave's Day' celebration, an event that we could 'own' and that drove traffic and delivered sales that rivaled our largest day, Fathers Day.'

During the third quarter of fiscal 2009, two franchise-operated restaurants opened in Thousand Oaks, California and Amarillo, Texas and one franchise-operated restaurant closed in Omaha, Nebraska. Famous Dave's ended the quarter with 177 restaurants, including 46 company-owned restaurants and 131 franchise-operated restaurants, located in 38 states.

Outlook

Subsequent to quarter-end, three franchise-operated restaurants opened in Lake Delton, Wisconsin, Ft. Collins, Colorado, and Topeka, Kansas, bringing the total number of franchise-operated restaurant openings in 2009 to 13. Additionally, the company closed a company-owned restaurant in Naperville, Illinois at the end of its lease term and a franchise-operated restaurant closed in Augusta, Georgia. The company expects to open a minimum of 8 franchise-operated units in 2010. Company-owned unit growth for 2010 is still being evaluated.

The company has taken no price increases to date in 2009, but expects to take a 1.0% price increase in December 2009.

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