LEXINGTON Ky. Like nearly every company in the restaurant industry, Fazoli’s, a quick-service Italian chain, can’t wait for this year to be over and for 2010 to begin.
Fazoli’s chief executive Carl Howard said that while the 243-unit chain gained some traction in sales and traffic through 2009, thanks to an upgraded menu and effective marketing, he’s more optimistic that momentum will carry over into 2010 as Fazoli’s rolls out a new store prototype, with continued menu and service enhancements.
The chain will try to clinch that more upscale feel with service upgrades like running food to tables, presenting meals with real plateware and silverware, and continuing menu enhancements like pastas and Submarino sandwiches baked to order. As even quick-service giants like McDonald’s feel the sting of the rough economy and high unemployment, many chains are looking to solidify their brand positioning to attract customers.
“Right now you get food on Styrofoam and plastic wares; now it’ll be brought to your table and on true flatware,” Howard said. “We’re excited about that part of our service after the point of purchase. That’ll be the key differentiator for this brand. We’re often compared to fast food, but we’re premium QSR. We believe we have a real opportunity, not only to enhance our food but to make the dine-in experience better.”
For the fiscal year that ended April 1, Fazoli’s had sales of nearly $240 million, with an average unit volume just north of $900,000. The average checks of $5.92 at lunch and $5.77 at dinner had fallen slightly due to several value initiatives, like the www.freespaghetti.com giveaway and a “Kids Eat Free” weekend deal, Howard said.
Atwo-phase menu revamp launched in February and finished in May changed about 80 percent of the menu, Fazoli’s said. The key to the culinary innovation was to focus on freshly baked and prepared foods that are hard to replicate at home, Howard said, including the 12 new baked and specialty pasta entrees, seven new Submarino sandwiches, and four new desserts.
Next year, Fazoli’s will roll out a line of specialty pizzas, family meals, more portable products and a value-focused menu, he added.
“We’re doing a lot with innovation,” Howard said. “One of the mistakes we made earlier was that some of the items we took off the menu were those in the $3.49 range, and we’re going to go back and add a couple quality products in that range. We’ll focus on continuing to keep the brand fresh. We believe we have a huge opportunity in family meals and the pizza line.”
The chain plans to open seven locations next year using a new prototype. Three locations are set to go up in the first three months of 2010 and will be located in Dayton, Ohio, and near St. Louis. The chain is based in Lexington, Ky. The brand also is re-entering the Arkansas market with a new franchisee in the first quarter.
The prototypes will measure between 2,100 and 2,300 square feet, much smaller than the typical Fazoli’s locations that range from 2,900 to 3,400 square feet. Fazoli’s new restaurants not only would cut down on construction and operating costs, Howard said, but would feature an updated décor and signage to evoke a premium quick-service positioning.
Dennis Lombardi, executive vice president of foodservice strategies for Columbus, Ohio-based WD Partners, which consulted the chain on the new design, said Fazoli’s new prototype a is rife with opportunities for better unit economics.
“In general, the trick is to get smaller without compromising your revenue potential, which means your peak-period throughput,” Lombardi said. “If you can design a smaller footprint with either the same or enhanced revenue capability, you end up with less capital costs to put the building in, less rent and less hard-construction costs. Over and above that, you typically have better labor productivity because of less unnecessary walk time. And if it’s engineered correctly, you end up with higher productivity and less fatigue, which tends to improve your speed of service.”
Added service upgrades like running food to tables on real plateware also enhance the overall guest experience, he said.
“Design is huge, but it’s the customer interaction and service that makes the entire experience,” Lombardi said. “The more you can make that not only on-brand and unique but also pleasurable, you’re now creating a version of the brand that not only has lower costs, but also very likely enhanced revenues to layer on top of it. That’s how you create a win-win-win for customers, franchisees and the franchisor.”
Fazoli’s was acquired by Sun Capital Partners in 2006 and operates in 27 states.
Contact Mark Brandau at [email protected].