Today, we initiate coverage of casual barbecue chain Famous Dave's (DAVE) with a neutral "2" rating.
Famous Dave's has had trouble competing in the restaurant industry even as the economy has been recovering since the Great Recession. After peaking at 194 locations nationwide at the end of 2013, DAVE has been shrinking considerably, with only 147 units open as of the most recently reported quarterly period.
Source: Company Annual Reports
When we examined the company's financials, it quickly became clear that the business model is seeing rapid margin erosion and