What’s With Famous Dave’s CEO Turmoil?
Famous Dave’s of America continues to revamp its executive leadership as it replaces its chief financial officer (CFO), who spent a decade at the company; moves its interim CEO into the permanent role; and replaces two of its board members.
And those are just the latest in a long series of executive-level turnover—what gives?
The Minnetonka-based barbeque joint said Richard Pawlowski would be its new CFO effective June 2, after Diana Purcel—who held the position since 2003—leaves the company to “pursue other opportunities.”
The company also said Ed Rensi, who became interim CEO when John Gilbert III resigned in February, will become the official CEO effective immediately. Rensi was formally the president and CEO of McDonalds for 14 years.
Additionally, two of Famous Dave’s board members resigned last week—Richard Monfort and Lisa Kro, who served on the board since 1996 and 2009, respectively. They will be replaced by activist investor Jonathan Lennon, founder and portfolio manager of New York-based equity investment firm Pleasant Lake Partners, and Brett Heffes, president of Minneapolis-based retail franchisor and equipment leasing company Winmark Corporation.
Since its founding in 1994, Famous Dave’s has burned through seven different CEOs, which means the average chief executive has lasted less than three years. The company’s most recent turnover came when Gilbert resigned after just 16 months in the slot.
In a recent interview, prior to Rensi’s installation as permanent CEO, Chairman Dean Riesen told Twin Cities Business that Gilbert’s resignation was a shock: “I fully expected him to be here for at least five years.” Less than a month after he left Famous Dave’s, Gilbert was named president of Romano’s Macaroni Grill.
Gilbert became CEO in 2012, displacing Christopher O’Donnell—who holds the record for longest tenure, at four years and one month. While Gilbert left of his own accord, O’Donnell was relieved of his duties. Riesen said he chose to replace O’Donnell with Gilbert to focus on growing the brand with a marketing expert at the helm.
Riesen believes the changing economic landscape is driving CEO turnover: “Often that ends up with the CEO choosing to leave or a different company seeking your CEO.”
It also may have something to do with changes on Famous Dave’s board, says Mark Smith, an analyst at Minneapolis-based Feltl and Co. In 2013, two activist investors—Patrick Walsh and Adam Wright—joined the board, in an attempt to boost shareholder value. “When there are differing views on which way the company should be run,” says Smith, “it can be a challenging environment.” And that Lennon has joined the board it’s home to three activist investors.
Rensi was put on the board a month before Gilbert announced his resignation. “When John left I was one of the only other board members with actual experience running this type of business,” Rensi recently told TCB, “so I said I’d keep the wheels on the wagon.”
Promoting Rensi rather than finding someone entirely new might be a good thing. “You could make an argument that CEOs are even more important for franchise companies,” says Allan Hickok, a restaurant industry specialist and senior advisor at Boston Consulting Group. “If franchisees don’t have confidence in the direction of the company then they’re not going to put their own capital at risk.”
In other news, the Famous Dave’s restaurant in Eden Prairie debuted a new Pepsi beverage dispenser last week called “Pepsi Spire.” The unit, which is one of the first in the country, is a countertop self-service dispenser with a 15-inch touchscreen that allows users to customize their fountain drinks by adding up to three “flavor shots” per pour to their base beverages. The device seems to be a response to Coca-Cola’s “Freestyle” drink dispenser, which debuted in 2010 and similarly allows users to choose a wide array of drinks from a touchscreen machine.
Famous Dave’s CEOs
Founded company in 1994; CEO until April 1997.
April 1997-August 1999; resigned.
August 1999-May 2003; resigned, became a Famous Dave’s franchisee in North Carolina.
August 2003-December 2007; resigned, became CEO of Redstone American Grill.
April-September 2008; resigned for personal reasons.
September 2008-October 2012; displaced by John Gilbert at board’s discretion, demoted to COO.
John Gilbert III
October 2012-February 2014; resigned, became CEO of Romano’s Macaroni Grill.
May 2014-Present; appointed interim CEO February 2014.