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Famous Dave's Debuts in Canada

Consistent with its strategy of enhancing its North American presence, Famous Dave's of America Inc. (DAVE) announced the opening of its first restaurant in Canada. The new restaurant in Winnipeg, Manitoba debuted on July 16.

Manitoba’s $1.8-billion restaurant and foodservice industry is the fourth-largest private sector employer in Canada. The high-demand and high spending customers are major catalysts for this emerging restaurant market. Manitoba’s capital and one of the largest cities in Canada, Winnipeg, already boasts a class of renowned restaurant operators like The Wendy’s Company (WEN) and Burger King Worldwide, Inc. (BKW). Moreover, restaurant opening in Manitoba is expected to increase by 10% in the next five years.

Famous Dave’s inked deal with a Canadian franchisee, Tribal Council’s Investment Group of Manitoba Ltd. (:TCIG), for the new store opening. TCIG, a well known diversified investment holding company, is owned by seven First Nations tribal councils of Manitoba. The company owns and operates the area franchise rights for Wok Box, a well-known Asian quick-service chain of restaurants.

Situated in the Reenders Square shopping centre, at the intersection of Lagimodiere Boulevard and Reenders Drive, the new restaurant offers casual and private dining experience to customers. The 200-seat restaurant will feature the legendary Famous Dave’s barbeque and its top class guest service experience.

Famous Dave’s is on an expansion mode in North America. Along with the new opening, Famous Dave’s expects to open around 400-500 restaurants overall in Canada, Mexico, Puerto Rico, etc.

Canadian economy is growing at good pace, with its restaurant industry providing around 4% of overall revenue annually. The increasing number of Quick Service Restaurants (QSRs) in the region and rising inclination of the baby boomers and young adults to spend on dining outside home are major growth catalysts. The consequent demand for world class restaurants in this area has caught the attention of Famous Dave’s.

However, the company should be wary of its competitors. Renowned US-based restaurant chain companies – including Yum! Brands, Inc. (YUM) and McDonald’s Corporation (MCD) – already have a strong presence in Canada. One of Famous Dave’s peers, Buffalo Wild Wings Inc. (BWLD), is poised to beef up its portfolio in the region, with the opening of its first restaurant in Canada last year.

Minnetonka, Minnesota-based Famous Dave’s owns, develops, operates and franchises full-service and counter-service restaurants under the name- Famous Dave’s across the United States. As of April 25, 2012, the company owned 53 locations and franchised 133 additional units in 35 states.

The company will likely release its second quarter 2012 earnings on July 24. The Zacks Consensus Estimate for the second quarter is pegged at 26 cents per share. We presently have a long-term Neutral recommendation on the stock. Also, it carries a Zacks #3 Rank (short-term Hold rating).

Read the Full Research Report on DAVE

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Read the Full Research Report on YUM

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Read the Full Research Report on WEN

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