Fazoli's to open inside Wal-Mart in St. Louis

Lexington-based restaurant chain Fazoli's announced Monday that it has struck a deal to open a location inside a Wal-Mart in St. Louis. It's the first location that's in the so-called non-traditional segment that includes stores inside retailers and airports and on college campuses.

The location will be company-owned and will feature the majority of a series of innovations that have begun to be rolled out during the past few months to stimulate business. Those include updated decor and exteriors; table service; having a dedicated breadstick person in dining rooms; and replacing disposable plates, cups and utensils with actual plates, silverware and glasses.

The company has completed those upgrades at its nine restaurants in St. Louis, where the company also plans to open seven new locations.

The Wal-Mart location, which will be 2,000 square feet and seat about 50, is expected to open in early January. It will feature the various upgrades, though it will still use disposable plates, utensils and glasses for convenience to shoppers, the company said.

Fazoli's CEO Carl T. Howard said the Wal-Mart opening is part of the company's three-pronged approach to growing stores — establishing more company-owned locations, encouraging franchisee growth and opening more non-traditional restaurants.

The Wal-Mart deal began about six months ago, he said, and the company is also working to finalize a deal to serve concessions in a Memphis arena, and to establish locations inside airports including Cleveland Hopkins International Airport.

The Wal-Mart location worked well for the company because it was in an area of St. Louis that the company wanted to develop further. "It fits multiple needs," Howard said.

"It's really good for them," said Valerie Killifer, senior editor at the restaurant trade publication Fast Casual, based in Louisville. "In the past couple of years, we've seen a lot of fast casual brands go after the non-traditional markets."

Howard said the company's demographic profiles match up well with Wal-Mart's customer base, and he noted Fazoli's is more of a destination restaurant than typical Wal-Mart restaurant fare such as McDonald's or Subway.

"We do a lot of traffic a week," Howard said. "We certainly don't do what Wal-Mart does, but some of the guests who will come there will be guests who live in the area who want to come for the Fazoli's experience, and those guests may cross over."

The deal presents a number of intriguing positives for Wal-Mart, said Dennis Lombardi, an executive specializing in restaurants with the design development company WD Partners in Columbus, Ohio.

"It brings the idea of a sit-down hot meal and the idea of Italian cuisine as opposed to a sandwich," Lombardi said, noting it also could mean more business with evening shoppers looking for a quick bite or to take food home.

The move comes in the midst of a rebound year for Fazoli's, as it returns to growth after a number of years in which it was closing stores for various reasons. Its most recent quarter boasted the best sales and customer counts since 2002, Howard said. And in September, the chain's year-over-year sales growth was 5.9 percent, its best performance since December 2002. The company's sales also have been up year over year for 83 of the past 85 days.

The improved performance comes as the chain has rolled out its upgrades in some markets, including Kansas City, Mo., and Cleveland, Tenn. Areas due for upgrades soon include Elizabethtown, Paducah, and two cities in Illinois, Normal and Champaign.

Restaurants in Lexington and Louisville are expected to be upgraded beginning in April, Howard said.

This story was originally published October 26, 2010 at 12:00 AM with the headline "Fazoli's to open inside Wal-Mart in St. Louis."