Dive Brief:

• BBQ Holdings expects to open 37 ghost kitchens this year for its Bakers Square brand, which it acquired in 2021, according to an SEC filing. Of those, 17 will be at corporate-operated restaurants and 20 will be at franchise/license locations. 
• This channel would increase Bakers Square locations from 18 to 55 by the end of the year without needing to build new brick-and-mortar units.
• Ghost kitchens have long been a part of BBQ Holdings’ expansion strategy, and fill latent capacity in its current units, including locations under sister brands Famous Dave's and Granite City.

Dive Insight:

BBQ Holdings is one of the largest casual brands to lean heavily into ghost kitchens and alternative growth strategies — it's offered virtual brand $5 Burger within Famous Dave’s since 2021, for example.

In addition to ghost kitchens, the company has also been testing a drive-thru and quick-service line for Famous Dave’s. Its second drive-thru restaurant, which will be a corporate location, uses modular design and is expected to open in Q2 2023 in Avondale, Arizona, according to the filing. 

Dual concepts are also becoming a key expansion tactic for BBQ Holdings. The company is developing co-branded Famous Dave's concepts with Texas T-Bone and Tahoe Joes, brands it acquired last year. The company is also maximizing its Granite City locations by developing dual concepts with Village Inn, the first of which opened in March, and by putting Famous Dave’s ghost kitchens within Granite City units. Eight Granite City locations that house Famous Dave's ghost kitchens generated about $2.3 million in revenue in 2021, according to the filing. 

BBQ Holdings also closed a $28 million acquisition of Barrio Queen, a seven-unit Mexican fine dining chain, in April. This deal could provide additional diversification within its ghost kitchen or dual concept portfolio. The company continues to analyze additional M&A opportunities, and seeks legacy brands; franchise systems with growth potential; the potential for CPG to be sold in stores; the ability to use digital marketing to attract new customers; and concepts that can generate three to five times EBITDA, according to the filing. 

The restaurant company's diverse growth strategy has already helped grow its restaurant count from 147 for the quarter ending April 4, 2021 to 315 at the end of the first quarter ending April 3, 2022, according the filing. Systemwide restaurant sales also grew 82% to $159 million in Q1 compared to $87 million during the year-ago quarter. The company is also in the process of changing its name from BBQ Holdings to Famous Hospitality to reflect its expanded portfolio.