Famous Dave’s Hires Pricing Consultant to Boost Profits
Famous Dave’s of America, Inc., said Wednesday that it is hiring a major international consulting firm to analyze and optimize both its pricing and menu in the hopes of boosting profits by at least 1 percent.
The firm, Tampa, Florida-based Revenue Management Solutions (RMS), currently works with 33 brands in 34 countries. Its clients include a wide variety of well-known names, including Applebee’s, Arby’s, Au Bon Pain, Dairy Queen, McDonald’s, Noodles & Company, Old Chicago, and Outback Steakhouse.
“Menu optimization is a critical component of our strategy, which includes maximizing profits on our current transactions and developing a pricing model that encourages repeat visits,” CEO John Gilbert said in a prepared statement.
Gilbert—former CEO of Shelburne, Vermont-based e-commerce retailer Vermont Teddy Bear Company and a member of the Famous Dave’s board—took the reins at Famous Dave’s in October, replacing Christopher O’Donnell, who transitioned to the roles of president and chief operating officer.
A company spokesman said at the time that O’Donnell’s strengths lie in operations, while Gilbert would focus on growth, emphasizing marketing and brand management.
“We have substantial opportunities in front of us,” Gilbert said in his Wednesday statement, adding that RMS uses consumer demand to gauge the effectiveness of pricing and menu decisions.
Famous Dave’s develops, owns, operates, and franchises barbeque restaurants. It currently owns 54 locations and franchises 135 in 33 states and one Canadian province.
The company’s revenue grew 4 percent to $154.8 million in 2011. But net income for the period totaled $5.5 million, down 22.9 percent from the prior year.
Meanwhile, sales for the quarter that ended September 30 totaled $39.9 million, up 2.6 percent from the same period a year ago. But net income totaled $845,000, down 46 percent from the same quarter in 2011. The company said that third-quarter earnings were negatively impacted by the timing of its spending on media and direct-mail marketing initiatives, which occurred during the fourth quarter of last year. Famous Dave’s also cited “continued margin pressure from increased commodity costs and labor and benefit costs.”