Fazoli’s Rolls Out First Major Remodel in Over a Decade
Since Carl Howard joined the Fazoli’s team as chief executive officer in 2008, the brand has transformed into a leader of the niche Italian segment of fast casual. Today, the Lexington, Kentucky-based company operates 220 restaurants in 28 states.
While other chains were undergoing remodels and unveiling new prototypes, Fazoli’s only did a small reimage shortly after Howard arrived. In order to stay competitive, however, the brand needed a new look, he says.
“Our brand hasn't had a real re-imaging in the 30 years of its existence,” Howard says. “It’s time. Our facilities definitely need to be taken to the next level and be modernized.”
Customer convenience and the expansion of off-premises guided the design of the remodels. Fazoli’s updated, modern look gives a facelift to existing locations and incorporates new technology, like kiosks and a pickup counter for mobile app and online orders. Howard says Fazoli’s nailed down a high-quality product at a low price point. Now, it needs to make sure its setting also meet the demands of changing consumers.
“We're living in a stay-at-home, on-demand, bring-it-to-me economy,” Howard says. “And we really need to make sure that we're prepared for that because that's what people are looking for.”
With the first round of store remodels complete—15 company-owned locations and five franchise locations—the company is already seeing a positive impact. Howard says more employees are applying to the remodeled locations and, once hired, are staying longer. Turnover has dropped 11.6 percent at refreshed units. Franchisees are seeing the financial impact of the remodels, too, with sales lifting 11 percent to go along with a 9 percent boost in traffic.
“A remodeled location from the human resource element side of it does not have issues staffing,” Howard says.
Since the remodeling efforts began in 2016, Fazoli’s has been able to cut costs 75 percent. In turn, franchisees are able to see a return on their investment in two years.
“Not only is it the right time for us to do, it's important for us to keep our brand fresh and relevant,” Howard says. “And the results have been really strong.”
When it comes to the new prototypes, layouts are smaller—only 2,200-2,500 square feet—and feature a double drive thru. One drive-thru window will be dedicated to third-party delivery, online orders, and catering, “so people don’t have to get out of their car,” Howard says.
The smaller stores are also more cost-effective for franchisees. Howard and Fazoli’s leadership have taken steps to reduce building costs. Howard’s goal is to get the total cost, not counting land, down to $600,000.
“If we can get them opened for $600,000 and have them do a $1.5 million or more then we definitely will have put a nice model together for our franchisees,” Howard says.
With the redesign, Fazoli’s is rolling out its next generation of technology, or Fazoli’s 2.0 as Howard calls it. In November, the company will introduce a revamped mobile app and online ordering website. The importance of technology is to predict where the consumer’s heading and incorporate systems that will support that, Howard says.
“If you're not in the technology game and you're not paying attention to it and you don't have a technology strategy, you're just going to fall further and further behind,” Howard says.
Fazoli’s will streamline its third-party delivery service technology by integrating the service into its own point-of-sale system. The opportunity for error drops dramatically by eliminating tablets and having orders directly flow into the system, Howard says. Front-of-house employees have one less step in the process to fulfill off-premises orders.
Unlike other fast-casual chains where customers can get their order under two minutes, Fazoli’s process can take over five. Because the process is longer, the brand encourages customers to “skip the line and order online,” Howard says.
Howard envisions the app as the brand’s main form of communication with consumers. He wants to build the app’s database and use it for marketing and advertising. Over the next year, his goal is to get 4,000 app users per location followed by 10,000 users per location by the end of 2021.
“For small brands like us getting a high database of mobile app users in that area almost puts us on the state of parity with large brands that we're competing with around us,” Howard says.