One Tasty BBQ Joint

Don't let Darden Restaurants (NYSE: DRI) fool you. The company's decision to dump its Smokey Bones chain doesn't mean that you can't roll out a national winner specializing in barbecue.

Look no further than Famous Dave's (Nasdaq: DAVE). In second-quarter results released Wednesday, the eatery's revenue climbed 9% to $33.5 million. Net income wafted 43% higher, to hit $0.20 per share. Analysts expected a profit of just $0.18 a share.

OK, so maybe the bottom-line comparison isn't as amazing as it looks. Last year's second-quarter results included a pair of impairment charges that knocked off $0.05 per share in earnings. Back that out, and net income growth would be flattish. Operating margins would have dipped during the period without those charges, smacked by the higher labor costs that have stung several casual-dining concepts this year.

But isn't this company growing quicker as a franchised concept? Yes. Should margins be improving under that scenario? Yes. There's the rub, or whatever they do to flavor the company's tasty ribs. Famous Dave's comprises 152 different units, but only owns 40 of them. It actually owned 41 of them at this point last year, but sold one to a franchisee this past quarter.

The popularity of this nationally portable concept drove franchise royalty revenue 16% higher in the second quarter. That's great, though keep in mind that the dynamics of running a franchise-dependent business like IHOP (NYSE: IHP) or Burger King (NYSE: BKC) produce little on the top line. Roughly 74% of the Famous Dave's locations may be franchised, but they contribute just 13% of the total revenue.  

The stock opened lower Thursday morning on the company's mixed results. So why do I like Famous Dave's? Well, look at the comps. Unit-level sales rose 3.5% during the quarter. Way too many chains like Applebee's (Nasdaq: APPB) are posting negative comps in this tricky environment. Fellow meat-lover haven Texas Roadhouse (Nasdaq: TXRH) did grow its unit-level sales for the quarter, but at a slower pace. 

It's important to keep an eye on margins, but as long as comps hold up, we know that patrons aren't giving up on the chain. Until they do, I have little reason to wipe my hands clean and bolt.

Longtime Fool contributor Rick Munarriz met Famous Dave Anderson before the company went public, back when his BBQ sauce became a key ingredient at Rainforest Cafe. Rick does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy finds Texas beef ribs and Tennessee pulled pork equally delicious.