A Famous Dave’s near you may soon come with a side of Papa Murphy’s or Cold Stone Creamery.
The 109-unit barbecue chain is launching a new co-branding push, with plans to open units featuring other brands from MTY Food Group, the restaurant conglomerate that acquired Dave’s parent BBQ Holdings in 2022.
The first two dual units will combine Famous Dave’s and take-and-bake pizza chain Papa Murphy’s, in Highland Park, Minnesota, and Cold Stone Creamery, in Hermitage, Tennessee, with the potential for more locations and combinations to come.
Co-branding is not a foreign concept for Minnesota-based Famous Dave’s. It began dabbling in the idea as takeout and catering grew to about 50% of its business over the years, leaving its large dining rooms underutilized. It has opened co-branded units with Texas T-Bone and Johnny Carino’s. It has also tried ghost kitchens and virtual brands as a way to squeeze more revenue out of its 6,000- to 7,000-square-foot restaurants.
“That [co-branding] idea has been there for a while,” said Al Hank, COO of BBQ Holdings, in an interview. “I just don't think anybody’s perfected it.”
Co-branding has its challenges. It can be confusing for customers and taxing on staff who have to operate two brands. As BBQ studied the strategy, including its own successful mashup with Johnny Carino’s, it determined that the best way to combine restaurant brands was to keep them mostly separate, but under the same roof.
That means Famous Dave’s and its co-brand partners will have their own dedicated entrances, signage and dining areas, as well as hourly staff. A single management team will oversee both concepts, and they will share a back-of-house. But from the customer and employee perspective, the two restaurants are more like close neighbors than roommates—though there will be a door that allows customers to move between the two.
And there will be other synergies. Famous Dave’s will likely offer some Cold Stone items on its menu in that location, Hank said. It could also offer a takeout deal combining barbecue for tonight and a take-and-bake pizza from Papa Murphy’s for another time.
“We'll try a bunch of stuff, and again, ultimately our objective is to drive incremental revenue to the site,” Hank said. He estimated that co-branding could boost the revenue of a standalone Famous Dave’s by 10% to 40%. A typical Famous Dave's generates about $2.6 million a year, according to Technomic.
Famous Dave's and Cold Stone. | Courtesy of BBQ Holdings
The first two co-branded units will be in existing Famous Dave’s, which will get full remodels as part of the conversion. Overall, the company believes tacking on a concept to an existing restaurant will cost less than building a new store from the ground up.
“That's the model that we need to perfect as we open up a couple of these over the next year or two is getting that initial upfront capital investment as low as we can, increasing the return on that investment, and then ultimately driving that incremental revenue and profitability,” Hank said.
The company is already receiving interest from franchisees in the new model, he added.
Co-branding is experiencing a bit of a revival in the restaurant industry. Dine Brands has reported strong results from combined Applebee’s/IHOP units, which have separate dining rooms but a shared menu. GoTo Foods is also pursuing co-branding with some of its concepts, like Auntie Anne’s, Cinnabon, Jamba and Carvel. The idea is that putting two brands in one location gives operators more revenue opportunities as competition for traffic heats up.
Famous Dave’s has no shortage of potential co-branding partners at MTY, which owns around 90 restaurant brands. Aside from Papa Murphy’s and Cold Stone—the two largest brands in the portfolio—Hank said Wetzel’s Pretzels, Baja Fresh, TacoTime and Planet Smoothie could all make sense next to a Famous Dave’s. And it can pick and choose depending on the market.
“One of the beauties of MTY is there's a lot of brands under the MTY banner and portfolio, right?” Hank said. “So anything you can think of, whatever that market is demanding or whatever that market needs, generally speaking we have a concept that can fulfill that.”
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