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

November 2, 2005 at 4:13 PM EST

MINNEAPOLIS--(BUSINESS WIRE)--Nov. 2, 2005--FAMOUS DAVE'S OF AMERICA, INC. (NASDAQ:DAVE) today announced financial results for the third quarter ended October 2, 2005.

    Highlights for the third quarter of 2005 were as follows:

    --  Total revenue of $26.3 million increased 1.2% over the prior
        year.

    --  Franchise royalty revenue of $2.8 million increased 43.9% over
        the prior year.

    --  Comparable sales for company-owned restaurants were
        essentially flat to the prior year.

    --  Earnings were $0.11 per diluted share, including $0.01 of
        after-tax expense related to stock-based compensation.

"We are encouraged by our third quarter results considering the challenges our nation and the economy has faced over the last several months," said David Goronkin, President and Chief Executive Officer of Famous Dave's. "In addition, we were up against an exceptionally strong third quarter of 2004, which benefited from our first-ever television advertising campaign and our first price increase in an 18-month timeframe."

Goronkin also noted that the company's expectations for 2005 restaurant openings remain on track. Through the end of the third quarter of 2005, the company has opened 17 franchise-operated restaurants, and has closed two franchise-operated restaurants. "We are on track to open up to 9 additional restaurants in the fourth quarter, including one company-owned restaurant," said Goronkin. Famous Dave's now has restaurants in 31 states, having added Colorado and New Hampshire during the third quarter.

Net income for the third quarter ending October 2, 2005 was approximately $1.2 million, or $0.11 per diluted share, on total revenue of approximately $26.3 million. In comparison, for the third quarter of 2004, net income was approximately $1.3 million or $0.11 per diluted share, on total revenue of approximately $26.0 million. Total revenue for the third quarter of 2005 increased 1.2% over the 2004 comparable period, reflecting a 35.8% increase in franchise-related fees, partially offset by a decline in restaurant sales. For the third quarter of 2005, net sales for company-owned restaurants, open year-round for 18 months or more, declined 0.4%, as compared to an increase of 5.3% for the third quarter of 2004.

For the nine months ended October 2, 2005, the company reported net income of $3.7 million, or $0.33 per diluted share, on total revenue of approximately $77.8 million, compared with net income of $2.8 million, or $0.23 per diluted share, on total revenue of $74.0 million for the first nine months of 2004. Total revenue for the nine months ended October 2, 2005 increased 5.2% over the prior year comparable period, reflecting a 1.6% increase in sales and a 33.3% increase in franchise-related fees. For the first nine months of 2005, net sales for company-owned restaurants, open year-round for 18 months or more, increased 1.9% compared with an increase of 0.2% for the first nine months of 2004.

Goronkin added that the earnings results for the third quarter of 2005 included approximately $244,000, or $0.01 per diluted share, in compensation expense as related to the company's stock-based incentive programs, while the nine month period ended October 2, 2005 included compensation expense of approximately $453,000, or $0.02, per diluted share. In comparison, earnings results for the third quarter and nine months ended September 26, 2004 included compensation expense related to the company's stock based incentive programs of approximately $14,000 and $81,000, respectively. Stock-based compensation expense is included in general and administrative expenses.

During the third quarter of 2005, the company also entered into area development agreements for 15 new restaurants in the Tampa Bay, Florida area, the Northwestern portion of Florida, and Mobile and Montgomery, Alabama. Famous Dave's ended the quarter with 119 restaurants, including 38 company-owned restaurants and 81 franchise-operated restaurants, located in 31 states.

The company is hosting a conference call tomorrow, November 3, 2005, at 10:00 a.m. Central Time to discuss its third quarter 2005 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, conference ID 1132737. A replay will be available for one week following the call by dialing 800-642-1687, conference ID 1132737. 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.

About Famous Dave's. Famous Dave's of America, Inc. (NASDAQ:DAVE) develops, owns, operates and franchises barbeque restaurants. As of November 2, 2005, the company owned 38 locations and franchised 83 additional units in 31 states and had signed development agreements for an additional 205 franchised locations. Its menu features award-winning barbequed and grilled meats, an ample selection of salads, side items and sandwiches, and unique desserts. For more information, contact Diana G. Purcel - Vice President and Chief Financial Officer, at (952) 294-1300.

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
               ($'s in thousands, except per share data)
                              (unaudited)

                         Three Months Ended       Nine Months Ended
                       ----------------------- -----------------------
                       October 2,   Sept. 26,  October 2,   Sept. 26,
                          2005        2004        2005        2004
                       ----------- ----------- ----------- -----------
Revenue:
 Restaurant sales, net    $22,941     $23,450     $68,152     $67,056
 Franchise royalty
  revenue                   2,770       1,925       7,682       5,264
 Franchise fee revenue        360         380       1,135       1,348
 Licensing and other
  revenue                     197         212         861         350
                       ----------- ----------- ----------- -----------
   Total revenue           26,268      25,967      77,830      74,018
                       ----------- ----------- ----------- -----------

Costs and expenses:
 Food and beverage
  costs                     7,029       7,282      20,888      20,992
 Labor and benefits         6,758       6,789      19,843      19,604
 Operating expenses         5,540       5,503      16,465      16,337
 Depreciation and
  amortization              1,055       1,092       3,269       3,306
 General and
  administrative            3,405       2,719      10,248       7,801
                       ----------- ----------- ----------- -----------
   Total costs and
    expenses               23,787      23,385      70,713      68,040
                       ----------- ----------- ----------- -----------

Income from operations      2,481       2,582       7,117       5,978
                       ----------- ----------- ----------- -----------

Other expense:
 Interest expense            (462)       (512)     (1,318)     (1,461)
 Interest income               54          73         205         226
 Other income
  (expense), net              (85)        (53)        (88)       (160)
                       ----------- ----------- ----------- -----------
   Total other expense       (493)       (492)     (1,201)     (1,395)
                       ----------- ----------- ----------- -----------

Income before income
 taxes                      1,988       2,090       5,916       4,583

Income tax expense           (760)       (820)     (2,250)     (1,790)
                       ----------- ----------- ----------- -----------

Net income                 $1,228      $1,270      $3,666      $2,793
                       =========== =========== =========== ===========

Basic net income per
  common share              $0.12       $0.11       $0.34       $0.23
                       =========== =========== =========== ===========
Diluted net income per
 common share               $0.11       $0.11       $0.33       $0.23
                       =========== =========== =========== ===========

Weighted average
 common shares
 outstanding - basic   10,554,000  11,663,000  10,905,000  12,049,000
                       =========== =========== =========== ===========
Weighted average
 common shares
 outstanding - diluted 10,879,000  11,956,000  11,254,000  12,384,000
                       =========== =========== =========== ===========


            FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
      RESTAURANT OPERATING RESULTS AS A % OF NET RESTAURANT SALES
                              (unaudited)
                       -----------------------------------------------
                         Three Months Ended       Nine Months Ended
                       ----------------------- -----------------------
                       October 2,   Sept. 26,  October 2,   Sept. 26,
                          2005        2004        2005        2004
                       ----------- ----------- ----------- -----------
Food and beverage
 costs                       30.6%       31.1%       30.6%       31.3%
Labor and benefits           29.4%       28.9%       29.1%       29.2%
Operating expenses           24.2%       23.5%       24.2%       24.4%
Depreciation &
 amortization
 (restaurant level)           4.2%        4.3%        4.4%        4.6%
                       ----------- ----------- ----------- -----------
 Total costs and
  expenses                   88.4%       87.8%       88.3%       89.5%
 Income from
  restaurant
  operations                 11.6%       12.2%       11.7%       10.5%


            FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                  OCTOBER 2, 2005 AND JANUARY 2, 2005
                              (unaudited)
                                               -----------------------
(in thousands)                                 October 2,  January 2,
                                                  2005        2005
                                               ----------- -----------
ASSETS
 Current assets                                   $12,352     $19,768
 Property, equipment and leasehold
  improvements, net                                45,933      44,664
 Other assets                                       7,153       7,481
                                               ----------- -----------
 Total assets                                     $65,438     $71,913
                                               =========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities                               $9,176      $9,011
 Long-term obligations                             19,951      19,559
 Shareholders' equity                              36,311      43,343
                                               ----------- -----------
 Total liabilities and shareholders' equity       $65,438     $71,913
                                               =========== ===========


                    SUPPLEMENTAL SALES INFORMATION
                              (unaudited)
                       -----------------------------------------------
                         Three Months Ended       Nine Months Ended
                       ----------------------- -----------------------
                       October 2,   Sept. 26,  October 2,   Sept. 26,
                          2005        2004        2005        2004
                       ----------- ----------- ----------- -----------
Weighted average
 weekly net sales:
  Company-Owned           $46,385     $47,169     $45,894     $45,086
  Franchise-Operated      $55,802     $53,955     $56,187     $52,400
Comparable net sales:
  Company-Owned             (0.4)%       5.3 %       1.9 %       0.2 %
  Franchise-Operated        (2.0)%      (1.4)%      (1.0)%      (2.3)%
Total number of
 restaurants:
  Company-Owned                38          38          38          38
  Franchise-Operated           81          63          81          63
                       ----------- ----------- ----------- -----------
    Total                     119         101         119         101

    CONTACT: Famous Dave's of America, Inc.
             Diana G. Purcel, 952-294-1300

    SOURCE: Famous Dave's of America, Inc.