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Several high profile IPOs of fast casual restaurant chains like Noodles and Potbelly showed the potential unit growth on a regional and national level. One fast casual restaurant chain operating on a regional level is already publicly traded. Diversified Restaurant Holdings (NASDAQ:BAGR), owner of Bagger Dave's and one of the largest franchisees of Buffalo Wild Wings (NASDAQ:BWLD), had quite the 2013 with unit growth, a listing on the Nasdaq, and inclusion in the Russell 2000 Index. Shares of the company were up 19% in 2013, but with a price 35% below 52 week highs, investors should climb into this name.

Diversified Restaurant Holdings presented at the ICR XChange Conference on January 13th. The presentation offers a great look at the company and its future endeavors. At the time of the conference, the company had 55 total restaurants. Company plans call for the opening of 11 locations in 2014, consisted of 3 Buffalo Wild Wings and 8 Bagger Dave's.

Diversified Restaurant Holdings is one of the largest Buffalo Wild Wings franchisees in the nation. In the years of 2004 through 2006, Diversified recorded the highest annual sales for all Buffalo Wild Wings franchisees.

One of the key growth items for Diversified is using its strength from Buffalo Wild Wings to launch its own brand. In its presentation, the company cited these two items as shared infrastructure:

· Locations featuring both Bagger Dave's and Buffalo Wild Wings concepts can share real estate and other fixed costs

· Leverage existing infrastructure to help launch Bagger Dave's concept

Diversified has Buffalo Wild Wings locations in four states, thanks to a 2012 acquisition. After success in Michigan and Florida, Diversified bought several locations in Illinois and Indiana. This move was strategic, as those two states were the next launching locations for the Bagger Dave's concept. Through 2013, there were Bagger Dave's locations in Michigan and Indiana, along with one franchised location in Missouri. The company started its concept in Michigan in 2008 and expanded to Indiana in 2012.

Going forward, Bagger Dave's will focus on the Midwest region to grow its unit count. The company is currently seeking locations in Ohio for 2015 launches. The plans after that are toe expand in Illinois and Wisconsin by 2020. Diversified has signed one franchise agreement for Bagger Dave's, but does not plan on franchising in the near-term. The company would like to grow the concept on its own, with a regional focus to start. My guess is after the Midwest, the company will start expanding Bagger Dave's in Florida, with the success of Buffalo Wild Wings franchises there.

In 2013, Diversified ended with 36 Buffalo Wild Wings locations, along with 19 Bagger Dave's (one franchised) locations. At the end of 2014, those totals are expected to be 39 Buffalo Wild Wings and 18 Bagger Dave's. Diversified gave their unit guidance for 2017 at the ICR Conference. In 2017, Diversified hopes to have 113 locations. This total will consist of 48 Buffalo Wild Wings and 65 Bagger Dave's. As you can see, Diversified expects its own concept Bagger Dave's to pass the number of company owned Buffalo Wild Wings franchises in the next few years. Bagger Dave's, which started in 2008, is on a huge growth plan and will be the key to this company's future. However, as I have pointed out before, the success of Buffalo Wild Wings locations provides the company with cash flow and industry expertise to successfully launch additional Bagger Dave's locations.

Bagger Dave's is what the company considers an "ultra-casual" concept, bridging the gap between fast casual and sit-down. The locations are family friendly and have an emphasis on fresh food. In fact, no Bagger Dave's location has a walk-in freezer, giving customers the peace of mind that their burgers were never frozen. The company's famous burger bar features four proteins, five cheeses, four buns, seven sauces, and over 30 toppings.

Another feature of Bagger Dave's, which could also be a key growth catalyst, is its craft sodas. Along with an extensive craft beer menu, Bagger Dave's locations offer eight different flavored craft sodas. The drinks have better profit margins and provide a unique item that other restaurants don't have. Bagger Dave's plans on launching retail sales of the craft sodas in bottles soon. These bottles will be available only in-store, providing more reasons for customers to come to the restaurants.

Another key driver for Bagger Dave's and its same store sales will be the "Fresh Rewards Loyalty Program". This rewards program is in the early first phase. Phase 1 features mobile payment options, guest comments, guest surveys, social media integration, and an instant win game. The second phase, which will roll out in the third quarter of 2014, will feature POS integration, targeted offers, a tiered rewards program, and interactive gaming.

Fiscal 2013 was certainly a game changing one for Diversified. Here are several of the highlights:

· Added to the Russell 2000 Index

· Switched from OTC to Nasdaq listing

· Grew unit base to 55

· Opened largest Buffalo Wild Wings (by square footage) in the nation in Downtown Detroit

On the financial front, Diversified's revenue continues to climb thanks to additional units. The company continues to see positive same store sales growth from both Buffalo Wild Wings and Bagger Dave's locations. The company see EBITDA hitting $13.0 to $13.5 million in fiscal 2014. For the 2013 fiscal year, EBITDA grew to $8.5 million. That was a slight increase from the $7.8 million posted in fiscal 2012. As you can see, 2014 could be a big year in terms of earnings for the company. Revenue is expected to hit $125 to $130 million, according to the company. Analysts on Yahoo Finance see Diversified posting earnings per share of $0.04 in fiscal 2014 from $128 million in revenue.

From my initial February 2012 recommendation, shares of Diversified are up 66%. My second article, posted in June of 2013, came at a time when the company had seen shares increase from the Nasdaq listing. Since that time, shares are down 28.7%. I have turned even more bullish on this company after seeing the success of the Bagger Dave's unit expansion. This concept is on a very small regional scale, providing investors upside with the current Midwest expansion, national expansion, and franchising. The additional protection from the Buffalo Wild Wings locations limits the downside risk going forward. This is the restaurant company I prefer for 2014 and beyond.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BAGR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.