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Famous Dave's Reports Third Quarter Net Income of $0.11 Per Share

October 20, 2004 at 4:16 PM EDT

MINNEAPOLIS--(BUSINESS WIRE)--Oct. 20, 2004--Famous Dave's of America, Inc. (Nasdaq:DAVE) today reported net income of $1,270,000, or $0.11 per diluted share, on revenue of $26.0 million for the third quarter ended September 26, 2004. In the comparable 2003 period, the company reported net income of $478,000, or $0.04 per diluted share, on revenues of $26.0 million. For the 2004 third quarter, net sales for restaurants open year-round for 18 months or more increased 5.3% compared with a 3.5% decline in the 2003 third quarter.

"Our strong third quarter results show how our sharp focus on operating integrity and brand development is translating into improved financial performance," said David Goronkin, president and chief executive officer.

For the nine months ended September 26, 2004, Famous Dave's reported net income of $2,793,000, or $0.23 per diluted share, on revenue of $74.0 million. In the comparable 2003 period, the company reported a net loss of $2,121,000, or $0.18 per diluted share, on revenue of $74.9 million. Results for the 2003 period include pre-tax charges of approximately $5.6 million, or $0.29 per diluted share, related to losses in the Isaac Hayes Blues Clubs, costs associated with the divestiture of those clubs and impairment charges on under-performing restaurants. For the nine months ended September 26, 2004, net sales for restaurants open year-round for 18 months or more increased 0.2% compared with a decline of 2.6% in the comparable 2003 period.

The company's third quarter revenue benefited from a combination of factors, including an increase in franchise fees resulting from new area development agreements signed in the quarter and a price increase of about 2% implemented at the beginning of the quarter. The third quarter also reflected higher traffic generated by six weeks of broadcast advertising in major markets and the continued use of limited time product offerings to encourage trial and repeat visits to its restaurants, as compared to a prior year strategy of increasing traffic through discounting.

Famous Dave's opened six franchise locations during the third quarter. The company now has a total of 101 restaurants in 24 states and expects to be in 10 additional states by the end of 2005. "Our experience shows that demand for 'real, honest barbeque' is not confined to any specific region and that the Famous Dave's brand is not limited to geographic boundaries," said Goronkin.

Goronkin said the company enters the fourth quarter with momentum but that commodity prices will put pressure on food costs for the foreseeable future. He also said that the company plans to be back on air in its major markets with its advertising campaign for at least three weeks during the fourth quarter.

During the quarter, the company completed the repurchase of one million of its common shares, as authorized by its board of directors in May 2004, at an average cost of $7.44.

System-wide net sales for the first nine months of 2004 were approximately $176.5 million, up 27.7% compared with the first nine months of 2003. System-wide net sales are a non-GAAP financial measure that includes sales of all restaurants, company-owned and franchise, operating under the Famous Dave's brand name. The company believes that system-wide sales information provides a useful indication of overall growth in the business and the penetration of Famous Dave's brand.

The company is hosting a conference call tomorrow, Thursday, October 21, 2004 at 10:00 am CT to discuss its third quarter 2004 financial results, and invites all those interested in hearing management's discussion of the quarter to join the conference call by dialing (800) 374-1553. A replay will be available for one week following the call by dialing (800) 642-1687, conference ID 1267913. Participants may also access a live webcast of the discussion through the Investor Relations section of Famous Dave's web site at www.famousdaves.com.

Famous Dave's of America, Inc. (Nasdaq:DAVE) develops, owns, operates and franchises barbeque restaurants. As of September 26, 2004, the company owned 38 locations and franchised 63 additional units in 24 states, and had signed development agreements for an additional 180 franchise locations. Its menu features award-winning barbequed and grilled meats, an ample selection of salads, side items, sandwiches and unique desserts.

Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of our restaurant openings and the timing or success of our expansion 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 Famous Dave's of America, Inc. believes the expectation 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 Famous Dave's expectation include 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.


            FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
            (in thousands, except share and per share data)
                              (Unaudited)

                         Three Months Ended       Nine Months Ended
                       ----------------------- -----------------------
                        Sept. 26,   Sept. 28,   Sept. 26,   Sept. 28,
                          2004        2003        2004        2003
                       ----------- ----------- ----------- -----------
Revenue:
 Restaurant sales, net    $23,450     $24,351     $67,056     $70,766
 Franchise royalty
  revenue                   1,925       1,317       5,264       3,235
 Franchise fee revenue        380         256       1,348         755
 Licensing and other
  revenue                     212          46         350         162
                       ----------- ----------- ----------- -----------
Total revenue              25,967      25,970      74,018      74,918
                       ----------- ----------- ----------- -----------

Costs and expenses:
 Food and beverage
  costs                     7,282       7,519      20,992      21,407
 Labor and benefits         6,789       7,251      19,604      21,015
 Operating expenses         5,503       6,233      16,337      17,491
 Total depreciation
  and amortization          1,092       1,195       3,306       3,684
 Asset impairment and
  restructuring
  charges                     ---         ---         ---       3,474
 Pre-opening expenses         ---          38         ---         543
 General and
  administrative            2,719       2,487       7,801       6,785
                       ----------- ----------- ----------- -----------
Total costs and
 expenses                  23,385      24,723      68,040      74,399
                       ----------- ----------- ----------- -----------

Income from operations      2,582       1,247       5,978         519
                       ----------- ----------- ----------- -----------

Other income
 (expense):
 Interest (expense)          (512)       (505)     (1,461)     (1,368)
 Interest income               73          43         226         163
 Other expense, net           (53)         (2)       (160)       (635)
 Equity in loss of
  unconsolidated
  affiliate                   ---         ---         ---      (2,155)
                       ----------- ----------- ----------- -----------
Total other expense          (492)       (464)     (1,395)     (3,995)
                       ----------- ----------- ----------- -----------

Income (loss) before
 income taxes               2,090         783       4,583      (3,476)

Income tax (expense)
 benefit                     (820)       (305)     (1,790)      1,355
                       ----------- ----------- ----------- -----------

Net income (loss)          $1,270        $478      $2,793     $(2,121)
                       =========== =========== =========== ===========

Basic and diluted net
 income (loss) per
 common share               $0.11       $0.04       $0.23      $(0.18)
                       =========== =========== =========== ===========

Weighted average
 common shares
 outstanding - basic   11,633,489  12,100,045  12,048,947  11,649,671
                       =========== =========== =========== ===========
Weighted average
 common shares
 outstanding - diluted 11,956,494  12,676,035  12,383,744  11,649,671
                       =========== =========== =========== ===========


            FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
    RESTAURANT OPERATING RESULTS(1) AS A % OF NET RESTAURANT SALES
                              (Unaudited)

                               ---------------------------------------
                               Three Months Ended   Nine Months Ended
                               ------------------- -------------------
                               Sept. 26, Sept. 28, Sept. 26, Sept. 28,
                                 2004      2003      2004      2003
                               --------- --------- --------- ---------
Food and Beverage Costs            31.0%     30.9%     31.3%     30.3%
Labor and Benefits                 29.0%     29.8%     29.2%     29.7%
Operating Expenses                 23.5%     25.6%     24.2%     24.7%
Depreciation & Amortization         4.3%      4.6%      4.5%      4.9%
                               --------- --------- --------- ---------
 Total Costs and Expenses          87.8%     90.9%     89.2%     89.6%
 Income from Restaurant
  Operations                       12.2%      9.1%     10.8%     10.4%

(1) Data regarding our restaurant operations as presented in the table
above, excludes sales, costs and expenses associated with our Rib
Team. The Rib Team is a brand-building marketing tool consisting of a
team that travels around the country competing in rib competitions
nation-wide and gives us relevancy in a category defined by
independent operators.


            FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
               SEPTEMBER 26, 2004 AND DECEMBER 28, 2003
                            (in thousands)

                                               -----------------------
                                                Sept. 26,    Dec. 28,
                                                  2004        2003
                                               ----------- -----------
ASSETS                                         (Unaudited)

 Current assets                                   $14,042     $16,350
 Property, equipment and leasehold
  improvements, net                                45,168      47,147
 Other assets                                      10,059      10,270
                                               ----------- -----------
 Total assets                                     $69,269     $73,767

LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities                               $6,903      $7,309
 Long-term obligations                             19,582      19,586
 Shareholders' equity                              42,784      46,872
                                               ----------- -----------
 Total liabilities and shareholders' equity       $69,269     $73,767


                    SUPPLEMENTAL SALES INFORMATION
                              (Unaudited)

                 -----------------------------------------------------
                    Three Months Ended          Nine Months Ended
                 ------------------------- ---------------------------
                   Sept. 26,    Sept. 28,    Sept. 26,     Sept. 28,
                     2004         2003         2004          2003
                 ------------ ------------ ------------- -------------
Weighted average
 weekly net
 sales:
 Company-owned       $47,169      $43,577       $45,068       $43,597
 Franchise-
  operated           $53,955      $52,062       $52,400       $49,014
System-wide net
 sales:
 Company-owned   $23,450,205  $24,350,646   $67,055,867   $70,766,424
 Franchise-
  operated        39,818,831   27,332,425   109,462,951    67,516,505
                 ------------ ------------ ------------- -------------
 Total system-
  wide net sales $63,269,036  $51,683,071  $176,518,818  $138,282,929
Comparable net
 sales:
 Company-owned           5.3%       (3.5%)          0.2%        (2.6%)
 Franchise-
  operated             (1.4%)       (4.3%)        (2.3%)        (6.8%)
Total number of
 units:
 Company-owned            38           43            38            43
 Franchise-
  operated                63           44            63            44

    CONTACT: Famous Dave's of America, Inc., Minneapolis
             Diana G. Purcel, 952-294-1300
             diana.purcel@famousdaves.com

    SOURCE: Famous Dave's of America, Inc.