BBQ Holdings, Inc. Reports Results for Fourth Quarter and Fiscal Year 2020


MINNEAPOLIS, April 05, 2021 (GLOBE NEWSWIRE) -- BBQ Holdings, Inc. (NASDAQ: BBQ) (the “Company”), an innovating global owner and operator of restaurants, today reported financial results for the fourth fiscal quarter and fiscal year ended January 3, 2021. Note: Results of the fourth quarter and fiscal year were affected by the COVID-19 pandemic as well as federal and state level mandates requiring restaurants to limit or eliminate in-store dining during various periods throughout the year.

Fourth Quarter 2020 Highlights:

  • Adjusted EBITDA, a non-GAAP measure, was $1.4 million which includes $1.9 million of COVID-related expenses.
  • Net loss of $2.8 million, driven partially by a decrease in same store sales and franchise-related revenue caused by COVID-related restrictions.
  • Company-owned Famous Dave’s fourth quarter same store net sales decreased 5.5% compared to fourth quarter 2019, with 59% of restaurants fully closed at one point during the quarter.
  • Franchise-operated same store net sales decreased 13.6%.
  • Granite City fourth quarter same store net sales decreased 40.7% compared to fourth quarter 2019 with 50% of restaurants fully closed at one point during the quarter.
  • Famous Dave’s franchisee to open its first line-service model restaurant in Coon Rapids, Minnesota.
  • The Company to sell its Famous Dave’s Woodbury, Minnesota location for $2.6 million and open a dual concept Famous Dave’s and Cowboy Jack’s restaurant and bar in Woodbury.
  • Famous Dave’s franchisee to open its first drive-thru prototype restaurant in Salt Lake City, Utah.

Fiscal Year 2020 Highlights:

  • Adjusted EBITDA, a non-GAAP measure, was $4.3 million which includes $5.5 million of COVID-related expenses.
  • Net income of $4.9 million, driven in part by a bargain purchase gain related to the acquisition of the Granite City brand.
  • Company-owned Famous Dave’s fiscal year same store net sales decreased 8.5% compared to fiscal year 2019.
  • As a percentage of net sales, Famous Dave’s reduced its food and beverage costs by 1.1% compared to 2019 and its labor costs by 4.7% over last year.
  • Franchise-operated same store net sales decreased 17.0%.
  • Granite City fiscal year same store net sales decreased 38.6% compared to fiscal year 2019.
  • The Company opened 7 Famous Dave’s ghost kitchens within Granite City restaurants with 1 more to open in April 2021.
  • Entered into a 25-unit development agreement with Bluestone Hospitality Group to open Famous Dave’s ghost kitchens and dual restaurant concepts with the Johnny Carino’s Italian brand.
  • Purchased the Granite City Food & Brewery brand on March 9, 2020.
  • Purchased the Real Urban BBQ brand March 16, 2020.

Sales highlights for the partial first quarter 2021 (Jan 4 – March 25, 2021) compared to the same period 2020 are as follows:

  • Comparable sales for Famous Dave’s increased 9.3%. Sales decreased 3.2% in January, decreased 2.9% in February, and increased 43.9% in March.
  • Comparable sales for Granite City decreased 10.6%. Sales decreased 20.0% in January, decreased 26.3% in February, and increased 60.8% in March.

Executive Comments

Jeff Crivello, CEO, commented, “We are extremely pleased with our operating results for the year considering the unparalleled situation caused by the pandemic. Throughout 2020 our team focused on innovation, technology, and marketing to expand our off-premise service in all concepts. We opened seven Famous Dave’s ghost kitchens in existing Granite City locations, opened a dual concept with Texas T-Bone Steakhouse in Colorado Springs, entered into a 25-unit development agreement to grow the Famous Dave’s brand in select locations across the U.S., and rolled-out a new unified POS system. We have made significant strides in reducing food and labor costs at all locations and are continuing to find more improvements from some of the lessons learned over the past year. Most importantly, as we begin to emerge from the state regulations caused by the pandemic, we are beginning to see sales ramp up to levels at or above pre-pandemic levels. During the month of March when sales increased 43.9% at Famous Dave’s and 60.8% at Granite City, we were able to generate record store-level EBITDA. Given our most recent performance in Q1, we are feeling very positive about 2021 and what it means for all our stakeholders.”

Key Operating Metrics

              
  Three Months Ended   Year Ended
  January 3, 2021 December 29, 2019   January 3, 2021    December 29, 2019
Restaurant count:             
Franchise-operated  98   96    98   96 
Company-owned  47   33    47   33 
Total  145   129    145   129 
Same store net restaurant sales %:             
Franchise-operated  (13.6)%  0.4%   (17.0)%  1.0%
Company-owned  (5.5)%  4.7%   (8.5)%  2.0%
Total  (11.6)%  0.9%   (15.3)%  1.1%
              
(in thousands, expect per share data)             
              
System-wide restaurant sales(1) $78,894  $77,596   $301,743  $335,244 
              
Net income attributable to shareholders $(2,836) $(1,788)  $4,947  $(649)
              
Net (loss) income attributable to shareholders, per diluted share $(0.31) $(0.20)  $0.54  $(0.07)
              
Adjusted EBITDA(2) $1,382  $(692)  $4,295  $3,423 


(1)System-wide restaurant sales include sales for all Company-owned and franchise-operated restaurants, as reported by franchisees. Restaurant sales for franchise-operated restaurants are not revenues of the Company and are not included in the Company’s consolidated financial statements.
(2)Adjusted EBITDA is a non-GAAP measures. A reconciliation of all non-GAAP measures to the most directly comparable GAAP measure is included in the accompanying financial tables. See “Non-GAAP Reconciliation.”

Fourth Quarter 2020 Review

Total revenue for the fourth quarter of 2020 was $34.3 million, up 45.3% from the fourth quarter of 2019. The increase in year-over-year restaurant net sales for the quarter ended January 3, 2021 was driven primarily by the addition of 18 Granite City restaurants, a Clark Crew BBQ and a Real Urban Barbecue restaurant.  

To-go sales, which were 62.1% of our same store sales at Company-owned Famous Dave’s restaurants, increased 82.9% in the fourth quarter of fiscal 2020 compared to the prior year period. This increase in same store sales was offset by a decrease of 46.8% of our dine-in sales which made up 29.6% of our business, and a decrease of 48.9% in net catering sales which made up 8.3% of our business. This decline in dine-in and catering same store sales was due primarily to federal, state and local mandates prohibiting large group gatherings and in-store dining in an attempt to reduce the spread of COVID-19.  

Restaurant-level operating margin, as a percentage of restaurant net sales, for Company-owned restaurants was 2.1% in the fourth quarter of fiscal 2020 compared to (3.0)% in the fourth quarter of fiscal 2019. This increase in restaurant-level operating margin was primarily a result of the reduction of labor and food costs as our restaurant operators adjusted to the increase in to-go sales and reduction of dine-in customers as a result of COVID-19 concerns.

General and administrative expenses for the quarter ended January 3, 2021 and December 29, 2019 represented approximately 12.9% and 14.6% of total revenues, respectively. The decrease in general and administrative expenses as a percentage of revenue in the fourth quarter of 2020 was due in part to the increase in the revenue base with the addition of 20 locations during 2020.

Net loss attributable to shareholders was approximately $2.8 million, or $0.31 per share, in the fourth quarter of fiscal 2020 compared to net loss of $1.8 million, or $0.20 per share, in the fourth quarter of fiscal 2019. Adjusted EBITDA, a non-GAAP measure, was approximately $1.4 million, or $0.15 per share, compared to adjusted EBITDA of approximately $(692,000), or $(0.08) per share, in the fourth quarter of fiscal 2019. A reconciliation between adjusted EBITDA and its most directly comparable GAAP measure is included in the accompanying financial tables.

Fiscal Year 2020 Review

Total revenue for fiscal year of 2020 was $121.4 million, up 45.3% from fiscal year 2019. The increase in year-over-year restaurant net sales for the year ended January 3, 2021 was driven primarily by the addition of 18 Granite City restaurants, a Clark Crew BBQ and a Real Urban BBQ restaurant.  

To-go sales, which were 61.9% of our same store sales at Company-owned Famous Dave’s restaurants, increased 72.6% in fiscal 2020 compared to fiscal 2019. This increase in same store sales was offset by a decrease of 46.3% of our dine-in sales which made up 30.9% of our business, and a decrease of 54.6% in net catering sales which made up 7.2% of our business. This decline in dine-in and catering same store sales was due primarily to federal, state and local mandates prohibiting large group gatherings and in-store dining in an attempt to reduce the spread of COVID-19.   

Restaurant-level operating margin, as a percentage of restaurant net sales, for Company-owned restaurants was 1.3% in fiscal 2020 compared to (0.1)% in fiscal 2019. This increase in restaurant-level operating margin was primarily a result of the reduction of labor and food costs as our restaurant operators adjusted to the increase in to-go sales and reduction of dine-in customers as a result of COVID-19 concerns.

General and administrative expenses for the fiscal year ended January 3, 2021 and December 29, 2019 represented approximately 11.9% and 13.2% of total revenues, respectively. The decrease in general and administrative expenses as a percentage of revenue in fiscal 2020 was due in part to the increase in the revenue base with the addition of 20 locations during 2020.

Net income attributable to shareholders was approximately $4.9 million, or $0.54 per share, in fiscal 2020 compared to net loss of $649,000, or $0.07 per share, in fiscal 2019. Adjusted EBITDA, a non-GAAP measure, was approximately $4.3 million, or $0.47 per share, compared to adjusted EBITDA of approximately $3.4 million or $0.38 per share, in fiscal 2019. A reconciliation between adjusted EBITDA and its most directly comparable GAAP measure is included in the accompanying financial tables.

About BBQ Holdings

BBQ Holdings, Inc. (NASDAQ: BBQ) BBQ Holdings is a national restaurant company engaged in the ownership and operation of casual and fast dining restaurants. As of January 3, 2021, BBQ Holdings had four brands with 145 “brick and mortar” locations in 31 states and three countries, including 47 company-owned and 98 franchise-operated restaurants. In addition to these locations, the Company opened seven Company-owned Famous Dave’s ghost kitchens operating within its Granite City locations, and seven Famous Dave’s franchisee ghost kitchens operating out of the kitchen of another restaurant location or a shared kitchen space. While BBQ Holdings continues to diversify its ownership in the restaurant community, it was founded with the principle of combining the “art and science” of barbecue to serve up the very best of the best to barbecue lovers everywhere. BBQ Holdings, through partnerships, has extended Travis Clark’s award-winning line of barbecue sauces, rubs and seasonings into the retail market. Along with a wide variety of BBQ favorites served at their BBQ restaurants, BBQ Holdings newest addition, Granite City Food and Brewery, offers award winning craft beer and a made-from-scratch, chef driven menu featuring contemporary American cuisine.  

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company uses non-GAAP measures including those indicated below. These non-GAAP measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s consolidated financial statements and are subject to inherent limitations. By providing non-GAAP measures, together with a reconciliation to the most comparable GAAP measure, the Company believes that it is enhancing investors’ understanding of the Company’s business and results of operations. These measures are not intended to be considered in isolation of, as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. The non-GAAP measures presented may be different from the measures used by other companies. The Company urges investors to review the reconciliation of its non-GAAP measures to the most directly comparable GAAP measure, included in the accompanying financial tables.

Adjusted net income attributable to shareholders is net income attributable to shareholders, plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs, and the related tax impact. This number is divided by the weighted-average number of diluted shares of common stock outstanding during each period presented to arrive at adjusted net income, per share. Adjusted EBITDA is net income (loss), plus asset impairment, estimated lease termination charges and other closing costs, settlement agreements, depreciation and amortization, interest expense, net, net (loss) gain on disposal of equipment, stock-based compensation, severance, acquisition costs and provision (benefit) for income taxes.

Forward-Looking Statements

Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of the Company’s restaurant openings, the timing of refreshes and the timing or success of refranchising plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from expected results. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectation will be attained. Factors that could cause actual results to differ materially from the Company’s expectation include the impact of the COVID-19 virus pandemic, financial performance, restaurant industry conditions, execution of restaurant development and construction programs, franchisee performance, changes in local or national economic conditions, availability of financing, governmental approvals and other risks detailed from time to time in the Company’s SEC reports.

Contact:Jeff Crivello – Chief Executive Officer
 jeff.crivello@bbq-holdings.com
  

BBQ HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

            
 Three Months Ended Year Ended
 January 3, 2021 December 29, 2019 January 3, 2021    December 29, 2019
Revenue:           
Restaurant sales, net$31,293  $20,296  $109,544  $68,564 
Franchise royalty and fee revenue 2,291   2,566   8,919   12,126 
Franchisee national advertising fund contributions 298   341   1,124   1,616 
Licensing and other revenue 427   410   1,850   1,249 
Total revenue 34,309   23,613   121,437   83,555 
            
Costs and expenses:           
Food and beverage costs 9,661   6,473   33,867   21,541 
Labor and benefits costs 10,252   7,312   37,228   24,565 
Operating expenses 10,733   7,124   36,984   22,555 
Depreciation and amortization expenses 1,301   876   5,121   2,231 
General and administrative expenses 4,422   3,445   14,395   10,992 
National advertising fund expenses 298   341   1,124   1,616 
Asset impairment, estimated lease termination charges and other closing costs, net 869   578   5,683   1,296 
Pre-opening expenses 103   366   10   460 
Gain on disposal of property, net (703)  100   (1,810)  (74)
Total costs and expenses 36,936   26,615   132,602   85,182 
            
Loss from operations (2,627)  (3,002)  (11,165)  (1,627)
            
Other (expense) income :           
Interest expense (214)  (102)  (805)  (494)
Interest income 49   101   154   215 
Gain on bargain purchase (429)     13,246    
Total other income (expense) (594)  (1)  12,595   (279)
            
Income (loss) before income taxes (3,221)  (3,003)  1,430   (1,906)
            
Income tax benefit  318   684   2,837   659 
            
Net income (loss) (2,903)  (2,319)  4,267   (1,247)
Net loss attributable to non-controlling interest 67   531   680   598 
Net income (loss) attributable to shareholders$(2,836) $(1,788) $4,947  $(649)
            
            
Income (loss) per common share:           
Basic net income (loss) per share attributable to shareholders$(0.31) $(0.20) $0.54  $(0.07)
Diluted net income (loss) per share attributable to shareholders$(0.31) $(0.20) $0.54  $(0.07)
Weighted average shares outstanding - basic 9,175   9,117   9,155   9,099 
Weighted average shares outstanding - diluted 9,175   9,117   9,168   9,099 
                
                

BBQ HOLDINGS, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)

          
  Three Months Ended  Year Ended
  January 3, 2021    December 29, 2019        January 3, 2021    December 29, 2019
Food and beverage costs(1) 30.9  31.9   30.9  31.4
Labor and benefits costs(1) 32.8  36.0   34.0  35.8
Operating expenses(1) 34.3  35.1   33.8  32.9
Restaurant level operating margin(1)(3)   2.1  (3.0)%   1.3  (0.1)%
Depreciation and amortization expenses(2) 3.8  3.7   4.2  2.7
General and administrative expenses(2) 12.9  14.6   11.9  13.2
(Loss) income from operations(2) (7.7)%  (12.7)%   (9.2)%  (1.9)%


(1)As a percentage of restaurant sales, net
(2)As a percentage of total revenue
(3)Restaurant level margins are equal to restaurant sales, net, less restaurant level food and beverage costs, labor and benefit costs, and operating expenses.
  
  

BBQ HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

       
ASSETS      
Current assets:  January 3, 2021    December 29, 2019
Cash and cash equivalents $18,101  $5,325 
Restricted cash  1,502   761 
Accounts receivable, net of allowance for doubtful accounts of $277,000 and $132,000, respectively  4,823   4,379 
Inventories  2,271   1,346 
Prepaid income taxes and income taxes receivable     264 
Prepaid expenses and other current assets  1,252   1,356 
Assets held for sale  1,070   2,842 
Total current assets   29,019   16,273 
       
Property, equipment and leasehold improvements, net  32,389   19,756 
       
Other assets:      
Operating lease right-of-use assets  61,634   25,962 
Goodwill  601   640 
Intangible assets, net  9,967   2,213 
Deferred tax asset, net  4,934   6,646 
Other assets  1,724   1,591 
  $140,268  $73,081 
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
       
Current liabilities:       
Accounts payable $6,385  $3,967 
Current portion of lease liabilities  6,185   4,230 
Current portion of long-term debt  2,111   616 
Accrued compensation and benefits  2,390   2,694 
Other current liabilities  9,766   4,975 
Total current liabilities  26,837   16,482 
       
Long-term liabilities:      
Lease liabilities, less current portion  63,105   26,957 
Long-term debt, less current portion  22,169   6,258 
Other liabilities  1,224   1,610 
Total liabilities  113,335   51,307 
       
Shareholders’ equity:       
Common stock, $.01 par value, 100,000 shares authorized, 9,307 and 9,272 shares issued and outstanding at January 3, 2021 and December 29, 2019, respectively  93   93 
Additional paid-in capital  8,748   7,856 
Retained earnings  19,370   14,423 
Total shareholders’ equity  28,211   22,372 
Non-controlling interest  (1,278)  (598)
Total equity  26,933   21,774 
  $140,268  $73,081 
 
 

BBQ HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

       
  Year Ended
     January 3, 2021    December 29, 2019
Cash flows from operating activities:      
Net income (loss) $4,267  $(1,247)
Adjustments to reconcile net income (loss) to cash flows provided by operations:      
Depreciation and amortization  5,121   2,231 
Stock-based compensation  886   463 
Net gain on disposal  (1,783)  (74)
Asset impairment, estimated lease termination charges and other closing costs, net  5,483   1,273 
Gain on bargain purchase  (13,246)   
Deferred income taxes  (2,837)  (688)
Bad debts expense (recovery)  567   239 
Other non-cash items  699   291 
Changes in operating assets and liabilities:      
Accounts receivable, net  (1,011)  (1,582)
Other assets  (752)  (449)
Accounts payable  2,418   258 
Accrued and other liabilities  2,276   1,867 
Cash flows provided by operating activities  2,088   2,582 
       
Cash flows from investing activities:      
Proceeds from the sale of assets  2,869   33 
Purchases of property, equipment and leasehold improvements  (3,499)  (6,755)
Payments for acquired restaurants  (5,381)  (6,188)
Advances on notes receivable     (150)
Payments received on note receivable  42   31 
Cash flows used for investing activities  (5,969)  (13,029)
       
Cash flows from financing activities:      
Proceeds from long-term debt  22,058   4,300 
Payments for debt issuance costs  (45)  (54)
Payments on long-term debt  (4,621)  (175)
Proceeds from exercise of stock options  6   22 
Cash provided by financing activities  17,398   4,093 
       
Increase (decrease) in cash, cash equivalents and restricted cash  13,517   (6,354)
Cash, cash equivalents and restricted cash, beginning of period  6,086   12,440 
Cash, cash equivalents and restricted cash, end of period $19,603  $6,086 
 
 

BBQ HOLDINGS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
(in thousands, except per share data)
(unaudited)

              
  Three Months Ended   Year Ended
(dollars in thousands) January 3, 2021 December 29, 2019   January 3, 2021     December 29, 2019
Net income $(2,903) $(2,319)  $4,267  $(1,247)
Asset impairment and estimated lease termination charges and other closing costs  869   578    5,683   1,296 
Depreciation and amortization  1,301   876    5,121   2,231 
Interest expense, net  165   1    651   279 
Net (gain) loss on disposal of equipment  (703)  100    (1,810)  (74)
Stock-based compensation  517   131    939   354 
Acquisition costs  (58)  249    (105)  770 
Pre-opening costs  103   366    10   460 
Severance  35   10    86   13 
Gain on bargain purchase  429       (13,246)   
Provision for income taxes  (318)  (684)   (2,837)  (659)
COVID-19-related expense  1,945       5,536    
Adjusted EBITDA $1,382  $(692)  $4,295  $3,423