A View From The Top

How Famous Dave's fueled growth during pandemic

Famous Dave's Chief Operating Officer Al Hank discusses why the nearly 130-unit chain has been focusing on off-premise service since 2017 and how that strategy fueled growth and innovation during a tumultuous year for the restaurant industry.

Famous Dave's Chief Operating Officer Al Hank discusses why the nearly 130-unit chain has been focusing on off-premise service since 2017. Provided

March 10, 2021

By Al Hank, COO, Famous Dave's

For many brands, the abrupt restaurant closures and social distancing guidelines that went in place due to the COVID-19 pandemic proved to be a major hurdle to overcome. Many restaurants closed — either temporarily or permanently — or were unable to quickly implement effective channels for online ordering, curbside pickup and delivery.

At Famous Dave's, we had our share of struggles, but growing our off-premise business has been a focus since 2017, so we were somewhat prepared to navigate the challenges that COVID-19 presented.

In 2017, we noticed the trend of demand behavior — we were seeing more and more guests wanting less human interaction, wanting more technology and wanting their food on demand. We had created a strategic plan to create solutions to meet the changing consumer behavior. Our off-premise growth strategy was threefold: ghost kitchens, dual concept restaurants and virtual concepts.

These initiatives were always part of the plan, we were just waiting for the right time to launch them. The right time becomes the right time when it gets moved up the priority list, so all three of these initiatives came into fruition during the pandemic. Of course, we had planned to strategically roll out new initiatives over the course of two or three years, but our focus was immediately sharpened when the pandemic hit, and we were able to fast-track the launch of these initiatives in just six months.

In April 2020, we launched our first ghost kitchen in a warehouse in Chicago with no signage and no dine-in menu. Customers can only order our food from our ghost kitchens by using third-party delivery apps. In areas where ghost kitchens are successful, we can graduate to a dual concept. These would still be shared kitchen spaces, but we would have a sign outside and a menu.

In October 2020, we signed a deal with Bluestone Hospitality Group to open 25 ghost kitchens in its existing Johnny Carino's restaurants after successful tests at three units. This will allow us to introduce new markets to Famous Dave's and expand our reach in existing markets — without having to invest in brick and mortar restaurants. Currently, we have 12 Ghost locations open and operating.

We have our Virtual Concept launching in late Q1. We also launched our first dual concept restaurant in August in Colorado Springs, Colorado, in partnership with Texas T-Bone. We plan to leverage our learnings as we consider how and where to launch future virtual and dual-concept restaurants.
Pre-pandemic, 50% of our sales were off-premise. We anticipate this figure to be closer to 60% in 2021. We've learned that our customer is smart and always looks for value.

Third-party delivery is noticeably more expensive, but if the food arrives hot and meets their expectations for quality, they're going to order again. Barbecue travels very well — it is dense by nature so it retains heat — which has been another benefit for us over the last year.

Since 2018, I have had a sign on the window in my office that says "DRIVE-THRU." I've always thought that a drive-thru made sense. and it was the next logical step in the evolution of Famous Dave's. Drive-thru has historically been thought of as QSR food, but there's such a big opportunity to create a drive-thru that produces higher-end, quality food — just as fast. We are actively looking for a site to build our first drive-thru prototype.

Looking ahead to a post-pandemic world, our focus will continue to be on developing our ghost kitchens, dual brands, virtual concepts and our small footprint brick and mortar restaurants. No matter what happens post-pandemic, we are committed to providing our customers and our franchisees with innovative options that meet their changing needs.