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Fazoli's: New prototype boosts checks, sales

Quick-service Italian chain Fazoli’s calls its new unit prototype the “enhanced service” model, but the updated format is augmenting more than just the customer experience.

Check averages and sales volume have risen at locations where Fazoli’s has debuted the new look, the company said, which first debuted at a Dayton, Ohio, corporate location and the expanded most recently to 15 remodeled units in St. Louis and Kansas City, Mo. Moreover, one of Fazoli’s first two franchise locations to open in five years, in Poplar Bluff, Mo., broke opening day records with 1,700 guests served and $10,700 in sales, said chief executive Carl Howard.

“Last quarter, we were up in sales and traffic, in both the franchise and company stores, for the first time since 2002,” Howard said. “This brand is now right for the times, and we’re working on many other strategies to reposition ourselves for growth.”

This week’s remodeled-unit openings make a total of 20 corporate locations sporting the new design and service elements, which include food runners and real plateware and silverware. A staff member also roams the dining room to hand out breadsticks.

Lexington, Ky.-based Fazoli’s plans to remodel 45 more locations in the fall and winter, Howard added.

The average check at these units has inched up between 15 cents and 20 cents, and average unit volumes are running anywhere from 14 percent to 47 percent higher than Fazoli’s systemwide average of about $900,000, Howard said.

“Our guests [at the new-look units] are ordering more complete dinners, which gives us the idea that people are using us more as a full-service dining experience,” he added. “We’re selling a lot more combo meals with drinks and a salad.”

At the Dayton location, same-store sales rose 7.3 percent through its first 24 weeks since the remodel.

Such improvements in its unit economics has Fazoli’s bullish about restarting its franchise growth. The chain has hired Liberty Consulting to act as its franchise sales force, and initial target markets include Houston, Cleveland, and Knoxville and Chattanooga, Tenn., Howard said. Fazoli’s also is working with its current franchisees to pursue more unit growth, including plans to open in some nontraditional and on-site locations at college campuses and airports by 2011.

Howard said Fazoli’s is a few weeks away from announcing a deal with a major national retailer to open an on-site unit in a big-box retail store in St. Louis.

“As our model improves and the brand gets on a solid foundation, that’s going to help when these new ownership groups go for traditional forms of lending,” Howard said. “It’s a tough environment, but money is available out there if the concept’s right, and that’s what we’re focusing on. … We’re still a year or two away from being an approved concept with a major lender, but if we achieve continued gains in same-store sales and traffic, the model will work well.”

The higher incremental traffic and sales are recouping the increased expenses of fresh paint and new carpet, some added labor, and new plateware.

“All those [changes] came at a cost,” Howard said. “We’ve added expense to every guest, but the results have been terrific.”

The Fazoli’s chain has more than 240 restaurants in 27 states. Boca Raton, Fla.-based private-equity firm Sun Capital Partners has owned the brand since 2006.

Contact Mark Brandau at [email protected].

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