Famous Dave's of America reported financial results for the third quarter ending September 27, 2015. Revenue decreased from $37.7 million to $31.8 million.
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This is primarily reflecting the combined impact of the closure of four company restaurants and the refranchising of another five company restaurants since the end of the third quarter 2014 as well as a comparable sales decrease.
Comparable sales for company-owned restaurants open 24 months or more decreased 9.8% compared to a decrease of 5.7% for the same period in 2014.
Franchise royalty revenue declined slightly from $4.4 million to $4.3 million primarily reflecting the net closure of seven franchise-operated restaurants and a comparable sale decrease of 3.6%.
Restaurant-level cash flow margins at company-owned restaurants decreased 910 basis points primarily as a result of an adverse impact on margins due to year-over-year sale declines, anticipated increases in contracted food costs and increased labor costs due to operational challenges during the transition to a new labor management system.
General and administrative expenses increased by approximately $269,000 to approximately $4.2 million for the third quarter of 2015. and were 13.2% of revenue compared to 10.4% of revenue for the third quarter of 2014.
This increase largely reflected various one-time expenses resulting from management and strategy changes, a year-over-year increase in severance costs related to headcount reductions at the corporate office, and revenue deleverage as a result of lower restaurant sales.
As a reminder, the third quarter of 2014 included approximately of $249,000, or $0.02 per diluted share, of recaptured severance costs that were recorded in the second quarter of 2014.
During the quarter, the company re-franchised five restaurants, sold the real estate associated with one of these locations and sold the real estate for a previously closed restaurant. These transactions generated $5.3 million in cash proceeds and resulted in one-time gain of approximately $1.8 million.
During the quarter, the company closed the Chicago field office and extended the lease at its North Riverside location, electing not to move forward with a planned relocation of this restaurant. This resulted in lease reserve charges and abandoned development costs of approximately $599,000, or $0.09, per diluted share.
Net income was $708,000 compared to $2.0 million for the third quarter of 2014.
Diluted net income per share was $0.10 compared to $0.28 for the third quarter of 2014.
Diluted adjusted net (loss) income per share was ($0.05) compared to $0.26 for the third quarter of 2014. and
Adjusted EBITDA for the third quarter of 2015 was $1.1 million compared to $4.4 million for the same period in 2014 ■