Fazoli's sales record offers proof of turnaround, CEO says

ssloan@herald-leader.comSeptember 5, 2012 

Marking more evidence of its far-reaching turnaround, Lexington-based restaurant chain Fazoli's announced this week that it has set a record for sales growth.

Same-store sales growth at company-owned fast-casual restaurants, which serve Italian fare, in August marked the 25th straight month of increases, a feat not seen since 1999, said CEO Carl Howard. Franchisee-owned restaurants broke their record in July and experienced their 26th straight month of same-store sales growth in August.

Same-store sales is a key retail measurement that looks at sales at stores open at least a year to factor out the effects of openings and closings.

"It validates all the changes we've made to the product and service and environment," Howard said. "I feel happy that our team is enjoying working for a vibrant brand again versus when I started four years ago, when morale wasn't real great.

"Morale has never been better in our office and franchise community."

Among the changes the company has made in recent years is a series of physical updates at stores including updated décor and exteriors, table service and having a person dedicated to handing out breadsticks in the dining rooms. The company also replaced disposable plates, cups and utensils with reusable dishes, silverware and glasses.

Earlier this year, it launched a new customer service initiative that sees managers milling about dining rooms to be closer to customers. The plan also provides extra training to employees on the company's revamped menu.

The sales accomplishment garnered praise from industry observers.

"They need to do exactly what they're doing and keep the focus and the priority aligned with what's working for them so far," said Dennis Lombardi, executive vice president of food-service strategies for design-development company WD Partners in Columbus, Ohio. "They've done the right things for the turnaround, and it's starting to bear fruit.

"Turnarounds are longer-term processes than most people in the industry understand and realize."

Another change is coming, too, for local customers. The company recently installed a Coca-Cola Freestyle beverage machine at its location near the UK campus, so customers can pick from a much broader combination of drinks. That location also began selling beer and wine.

Howard said the company will expand that test with alcohol sales to its stores on Richmond Road and Nicholasville Road at Zandale tentatively by early November.

Sales of beer and wine have been slow, he said, but "what we are finding out is the people that are finding it are very glad that it's there and the people who didn't want it aren't turned off by the fact that it's there."

The company tested the offerings at the Euclid store, on the edge of the University of Kentucky campus, because it tends to have fewer family-oriented customers. The Nicholasville Road store, though, "really does fit the family mold," Howard said.

"I want to see what happens," Howard said. "I can always take it out."

In another milestone, Howard noted, ground has been broken for a new restaurant in Murray in Western Kentucky. It will be the first free-standing franchise location built from the ground up in more than a decade, he said.

And on top of that, it's being built by a new franchisee rather than an existing one, a move that Lombardi said shows increased confidence in Fazoli's.

"It's just one more indicator that the brand is back on track," Lombardi said.

Scott Sloan: (859) 231-1447. Twitter: @HeraldLeaderBiz

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