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Famous Dave's of America Inc. Message Board

  • Spaldo44 Spaldo44 Oct 28, 2009 9:08 PM Flag

    Tomorrow's close


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    • DAVE is rolling over; though the company continues to execute strategy well there is little reason to buy the stock. New opened locations exceed closed locations however sales continue to decline. Based on the post earnings conference call management strives to keep the business 'meal cost competetive' by slightly lowering portions as they create marketing promotions. This can only go so far based on a premium branding based business, which is what DAVE claims to be. Positively, DAVE seems to be holding cash flow steady, paying off debt. Without meaningful growth in the economy it is hard to envision a change in DAVE's business. DAVE has a plan for a smaller prototype building but seems unable or hesitant to implement. With 90+ pending franchisee controlled locations it would seem a few prototype stores would be forthcoming. The company results, and probably overall business condition, remains better than the franchisees (in general). I suspect a 'collision of interests' is building whereby franchisees will demand/require more marketing help from the parent company in order to sustain the business. The call provided no specific answer to analyst inquiry into how DAVE plans to continue using cash flow. Debt payoffs and stock buybacks may be coming to an end; I bet free cash flow will be for further restructuring and support of franchisees. Growth remains in the future, today it is all about survival, it remains to be seen if DAVE's business model can hold its own in the sitdown restraurant market. Current upside is probably speculative, as an acquisition to a larger firm that wants to add some of the food to an existing menu, apart from the actual DAVE stores.

    • make that 6.84

6.02Aug 26 3:59 PMEDT