Daphne’s California Greek is preparing to grow again with its first franchising push following a yearlong revamp aimed at transforming the regional chain into a healthy lifestyle concept with national appeal.
Formerly called Daphne’s Greek Café, the Carlsbad, Calif.-based fast-casual chain was acquired out of bankruptcy in August 2010 by Wreath Equity LLC, an investment firm lead by Bill Trefethen, who is now the company’s chief executive.
Trefethen quickly changed the brand’s name to Daphne’s California Greek, reflecting a California-meets-Mediterranean emphasis, and embarked on a brand refresh that has included a more healthful menu, a more contemporary décor package and innovative marketing initiatives.
Now the company is developing a franchising program with the goal of building a national brand.
At 1,200- to 2,000-square feet, Daphne’s restaurants have a $300,000 to $500,000 build-out cost, and would fit into a variety of locations, from shopping malls to urban areas, Trefethen said.
Daphne’s seeks experienced, multi-unit operators who might be looking for a brand to add to their portfolio that wouldn’t cannibalize existing burger or sandwich brands, he added.
Trefethen said he has been a fan of Daphne’s since the late 1990s, when he was co-founder of commercial lender American Commercial Capital, which he later sold to Wells Fargo & Co. Years ago, Trefethen was approached by Daphne’s founder George Katakalidis for financing.
Trefethen said he saw the brand’s potential then. Later, however, the chain fell victim to rapid expansion just as the recession hit.
“It was the classic story of what happens when things grow too quickly,” he said.
Additionally, Daphne’s was left behind as other fast-casual chains redefined the segment, including Chipotle and Panera Bread, he said.
“Daphne’s never tweaked their model to be current against that competition,” Trefethen said.
Now, the company is attempting to do just that.
About 11 of the chain’s 56 locations have been remodeled with the new décor, including art that reflects the California surfing and healthy lifestyle themes, carefully curated music and better lighting.
Remodeled units are showing 10-percent to 30-percent increases in sales, Trefethen said.
Roughly 15 items have been added to the menu, with across-the-board upgrades including the addition of whole-grain pita bread, flatbread pizzas, grilled shrimp and salmon, and guacamole.
Many of the new dishes are under 700 calories, and Daphne’s has been reducing sodium levels where possible, Trefethen said. Most items can be customized to be vegetarian, vegan or gluten-free, he added.
The classic pita sandwich with various grilled meats remains a top seller. New to the menu are smaller versions of the item called “street pitas,” for those who want a snack or fewer calories.
Daphne’s has also added Pita Burgers, beef, chicken or veggie burgers that can be topped with the chain’s signature spicy Fire Feta dip, hummus, feta cheese or guacamole.
Some locations have also added beer and wine, Trefethen said. Such additions have helped build the chain’s average check to $12.17.
Daphne’s didn’t even have a full-time research-and-development chef when Trefethen came on board, he said. Now the chain has three, including one dedicated fully to engineering new products.
Music has become a key aspect of the brand, Trefethen said. Daphne’s has begun promoting up-and-coming artists by playing music and videos in restaurants and on a streaming radio channel via the company’s website. A new artist is showcased each month, with promotions on Facebook and Twitter offering guests the opportunity to download free tracks.
Daphne’s has also been identifying key influencers — from celebrities to PTA moms — to serve as brand advocates.
Last year, champion surfer Kelly Slater signed on as a partner and spokesman. The chain sponsors youth sports and events for surfing, snowboarding and skateboarding, cycling, climbing and volleyball, Trefethen said.
Some restaurants also host in-house movie screenings to build business during typically slow later evening hours.
Trefethen said the brand revamp is “a work in progress, but we’re well down the line in figuring it out.”
The company is planning to build a flagship location in Los Angeles that will incorporate all the new elements, he said.
Daphne’s is also working on licensed products for grocery stores, including a possible line of pre-packaged salads under development for Costco.
Ultimately, Trefethen said he hopes to communicate the brand’s authenticity.
“A hot button for people now is being truly authentic,” he said. “We’re not a corporate brand. It’s truly Californian.”