After years of inactivity, Fazoli’s, a 260-unit quick-service Italian chain, is in the midst of a top-to-bottom overhaul that includes new menu items, including a gourmet-pizza line, and a new prototype, says Carl Howard, chief executive of the Lexington, Ky.-based concept.
Why so many changes?
When I started in June of last year, our guest counts were declining and we were closing units. At that point we did quite a few consumer studies, and the information was glaring: We had issues with our menu; we were suffering from a menu variety standpoint. According to our data, about 72 percent of our customers were migrating away. They were unhappy with the food quality and variety. The brand had stopped innovating for a time. It had been about seven or eight years since they’d had a product introduction.
Why did it take so long?
The former owner was an entrepreneur who was in the process of selling the concept to McDonald’s. He realigned the company and then put it back up for sale. As a result there was a period where the brand was quiet, dormant.… In February, we rolled out our baked-pasta products and sub [sandwich] line. We have a Gorgonzola-beef sandwich and a smoked-turkey [sandwich] with basil mayonnaise. On May 11, we rolled out our specialty pastas line featuring five entrée pastas and five new entrée salads and desserts. At the same time we changed our marinara and Alfredo sauces and added higher-quality ingredients. We enlisted a panel of 700 people who tested the sauces and rated them really high.
How is Fazoli’s affected by the pasta offerings appearing at so many pizza players?
FAST FACTS EDUCATION: bachelor’s degree, Ohio State UniversityAGE: 43HOMETOWN: Kettering, OhioHOBBIES: spending time outdoors with his animals, swimming, dining outPERSONAL: married
It certainly gives our consumers another option and makes it that much more important for our food to be more superior than those who would bring it to your door. Domino’s has done a nice job, but their food doesn’t match what we’ve got. It’s certainly going to put pressure on us to outperform their offerings.
How has Fazoli’s weathered the recession?
The unemployment rate certainly is not helping. It was a little difficult for us, but it’s getting better. Starting in April we had a pretty solid change in traffic. Once we started running ads in two-thirds of our markets, we experienced about an 8-percent change in traffic and comp-store sales increased roughly around 5 percent. The brand had been declining for the last few years as far as same-store sales are concerned. Now we’re seeing a change in the 13-week trends; in some cases where it was trending down in double digits, it is now trending positive.
What’s next?
The next big thing is to really develop an upscale, gourmet-pizza line. We’re confident we can steal share in the pizza business. We already do some pizza—pepperoni only—but we’ve got five or six varieties going to a focus group soon. The next piece for us after that is to start [development on] a new prototype that will be about 2,100 square feet. It will seat 75 people and might not necessarily have a drive-thru. We’re working with WD Partners to come up with the right size and searching the top 10 markets on where to build the first two. It will be the first time in five years that we’ve built any company restaurants.