❝END QUOTES❞
HAVING WORDS WITH
Carl Howard
CHIEF EXECUTIVE,
FAZOLI’S
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.
EDUCATION: bachelor’s
degree, Ohio State University
AGE: 43
HOMETOWN: Kettering, Ohio
HOBBIES: spending time
outdoors with his animals,
swimming, dining out
PERSONAL: married
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?
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.
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?
How is Fazoli’s affected by the pasta offerings appearing at so many pizza players?
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
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.
— Elissa Elan
Suozzi’s proposed tax may seem
tiny, but it could add up for QSRs
Late last month Thomas Suozzi, county executive for Nassau Coun- ty on Long Island, N. Y., put a fast-food tax proposal on the legisla- tive menu in hopes of fattening up his county’s thinning coffers.
The proposed tax, part of Suozzi’s “Healthy Nassau” initiative, encourages residents to eat more healthfully. But if the measure were
passed, what it really would do is impose a 2-percent tithe on the
cost of, say, any item sold at quick-service restaurants in the county.
This 2-percent tax would be imposed on top of the 8.5-percent sales
tax already in place at all retail establishments. So, for example, a customer purchasing a Triple Whopper with Cheese for $5.39 would actually end up spending $5.85.
According to reports, the tax could generate
approximately $11.8 million in 2010, which
would help offset a projected budget shortfall of
some $72 million.
But the real question is, what would this tax do
to the restaurateur, the franchisee, who is struggling
to get by as more customers opt to eat at home
rather than spend discretionary dollars dining out?
What’s more unfair is the fact that independent pizzerias and Chinese restaurants would be
exempt from the tax.
Clearly, Suozzi, who heads up the executive
branch of Nassau County’s government, assumes
it is the big chains that would bear the brunt of
the tax. But he clearly is not thinking of the small
businessman who may own one or two units and
is just trying to break even during this recession.
Then there are the customers. Would they be willing to spend the additional money for their Quarter Pounder fix? In this day and age, it’s kind
of hard to know. Even though, on the face of it, 2 percent is not all that
much, it still is an increase. Those struggling to make ends meet may feel
those ends don’t justify the means and forgo the purchase altogether.
While the fast-food tax may have seemed like a good idea at the
time, many of the local politicians governing the county now are
backing off of it, saying they won’t support the measure if it comes
down to a vote. Of 19 legislators, 11 have reportedly said they would
vote no on the bill. Even Suozzi now appears to be backing down. Officials in his office recently claimed that the tax increase was only being considered as a “contingency doomsday plan,” and that “Nassau
County residents do not have to worry about the tax.”
But if Suozzi’s proposal does end up becoming law, and we probably won’t know whether it will until September or October, a lot of
regular Joes may discover that quick-service fare is, in fact, too rich
for their blood — or at least their pocketbooks. ■
WORDS FROM
ELISSA
ELAN
EAST COAST
BUREAU CHIEF
eelan@nrn.com
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