Article
Fazoli's new prototype strategic to company's growth
Fazoli's new prototype reflects a completely new store design, more pizza varieties and lower prices.
March 9, 2010 by Chelsey Levingston
Fazoli's new prototype, launched this week in Dayton, has the potential to make or break the Italian restaurant chain's recent growth strategy. The Dayton opening March 9 follows the opening of another prototype near St. Louis in Jan. 2010. Sales in St. Louis exceeded expectations 40 percent, said the company's chief executive officer Carl Howard.
But Dayton is an important location. The new prototype opened Tuesday and four other Fazoli's locations in the company-owned Dayton, Ohio, market are the only stores testing new dining ware and service concepts nationwide, Howard said. In addition, the prototype adds to these concepts a completely new store design, more pizza varieties and lower prices.
The new store sits in the middle of a strip mall — it's not an end cap or stand alone store and there's no drive thru. It's also across from the Dayton Mall next to its biggest competitors that include Olive Garden and Bravo on brand and McDonald's, Subway and Pizza Hut on price, he said.
If Fazoli's makes it here, it'll look at opening more company locations.
"That's how important this location is. If we can make this one work, we have the license pretty much to do it anywhere," Howard said.
It's been a big time for Fazoli's up to this point.
When named CEO in June 2008, Howard said his goals were to stabilize store closures and get the team growing in the same direction. A study found guest migration because of menu quality and variety was a top issue, which is why in 2009 the Italian chain changed 90 percent of the menu.
He added how previously the menu was boring and easily replicated at home. A new line of about 11 baked pastas is doing really well, he said. The service concepts also being tested in the Dayton area are real dining ware instead of plastic, serving meals to tables and a breadstick person.
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The Dayton prototype is the second of its kind to open for Fazoli's. The first, located in Edwardsville, Ill., marked the first new company-owned location to open in five years.Click hereto view images of Fazoli's 2010 prototype. |
Cups can't go on the road, but silverware makes it easier to eat pasta, said Terry Owens during lunch with wife Helen at the Wilmington Pike location in Dayton.
"I like it a whole lot better [the silverware]," Owens said.
Dayton stores like this one, which are refreshed and testing services, have seen a 10 percent increase in sales in the last 30 days, according to executives. Moreover, the chain celebrated its 20th anniversary and was named in the top 10 fast casual restaurants by Parents magazine in 2009.
The recently opened location in Edwardsville, Ill, a St. Louis suburb, is the first company location in five years. Next week, a new location in Jonesboro, Ark., will be the first franchise location opened in five years.
Edwardsville and Dayton markets were chosen to test new concepts because of high performance in year-to-year sales comparisons and guest counts. To expect the same 40 percent markup in sales at Dayton's prototype is overly optimistic, but if it meets sales projections of $1 million a year, Howard said he'd be happy.
"Well, we're very optimistic. We think the changes that we've made over the course of the last 12 months has really positioned the brand for growth," Howard said. "We still have quite a bit of work to do, but we're very optimistic that the changes we've made are starting to pan off. Got some good franchise growth, so this is a really good period for Fazoli's."
Nearby in Columbus, a franchise owner is paying attention and finds the focus on getting the menu current encouraging. If the strip mall locations work, it opens new venues to expand, said Bob Hoseus, Colfazco Ltd. president. The corporate company is doing what its supposed to by testing and trying new things with franchise fees, said Hoseus.
"Great, let them test it, I'm looking forward to seeing the results in a few months," Hoseus said, whose company owns six locations in greater Columbus.
If this newest prototype does well, Fazoli's might look selectively for one or two more company units in Dayton. Howard said growth projections are to do five more company locations by this time next year, in addition to two franchise locations under construction now.
That's seven new locations by the end of their fiscal year 2010. And if that goes well, plans are to double the number of store openings to 14 in FY 2011.Part of the strategy is to build in markets where it currently operates, such as Kansas City, St. Louis, Indianapolis, Lexington and Dayton.
Howard also said no one in Fazoli's price range, an average $5.80 per person, is giving the same food quality and service.
"And we've felt like that's a good strategy for us — we've enhanced the environment, we've enhanced the food, we've enhanced the service and we haven't changed the price. In fact our menu here's lower priced than our other locations," Howard said. "I'm optimistic that strategy's going to work, but we'll see."
The Kentucky based chain opened in 1988. It has 126 company and 118 franchise restaurants in 27 states. Ohio has 17 stores, including seven in the Dayton area.
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