Fazoli’s Readies Off-Premises 2.0
Compared to some other execs in the restaurant space, Fazoli’s CEO Carl Howard isn’t afraid to say what’s on his mind. As he prepares to launch the second generation of the Italian chain’s off-premises strategy, he shared what’s kept him at the brand for 11 years and why arch rival Olive Garden could be making a mistake by downplaying the importance of delivery.
“I look at Fazoli’s almost as if it’s my own company,” Howard said of rejecting other opportunities that have come his way over the years. “It’s in my blood and ingrained into my DNA—20 percent of my life I’ve spent at Fazoli's.”
In the wake of a years-long turnaround for the brand that included across-the-board changes, upgrades in food quality and nudging the casual Italian concept slightly upmarket, the company’s CEO said store traffic is up slightly, and that the brand has sales rise during 12 of the last 13 months, which isn't bad compared to other casual brands that have struggled with traffic numbers. Zooming out, he said they’ve been up 87 out of the last 120 months, which was a stat I especially enjoyed for its specificity.
While it’s clear that things like better food, nicer plates and refreshed dining rooms moved the needle with guests, Howard was quick to call out other long-standing members of the company’s Kentucky-based leadership team for their long-term contributions to the effort.
“My ops leader has been with the brand for almost 20 years and Blaine [Adams] who runs supply chain has been with the brand for five years, and our CFO I hired right after I started, so we have this flywheel effect of great executives who want to win and know the brand pretty well,” he said.
Known in the industry for his candor, Howard reiterated his previously stated mantra that new hires will quickly know where they stand, stressing that he’s a very hands-on executive. “If you’re good, you’re going to love it and if you’re not, you’re not going to last long,” he said of his management style. “If you’re good, it’s great because I let you do your thing.”
Asked about current priorities, he shined the spotlight on ongoing tweaks to the brand’s off-premises strategy that includes takeout, drive-thru, as well as catering and delivery, and everything else required to outperform the competition in each of those channels. Some of the finer points of the strategy include a tablet-free software system, dedicated parking spaces for to-go customers and tweaking the menus for catering and delivery. More than 55 percent of Fazoli’s sales end up leaving the restaurant to be consumed off site.
“Third-party aggregators are not inexpensive, so how do you overcome those costs, how do you design it to where you have enough variety and popular items and the right items that are kicking off the most gross profits so you don’t have to take pricing in order to cover all the transaction costs that are involved?” he said. “That’s just the beginning.”
With its primary competitor, the larger Olive Garden brand, thus far avoiding the delivery game, Howard suggested that the brand was making a strategic error—while randomly challenging the brand to a blind taste test. Let this serve as my formal application for the role of a badge-wearing moderator for any potential tête-à-tête.
“They’re in nice facilities, they’re very well capitalized, they’re very well run and they don’t need to go in this direction yet,” Howard said of Darden’s delivery reticence. “At some point in time as things change, they may not enjoy that success and be forced to jump into the game—and the only thing I can say is they’ll be late to the dance.”
As the real estate side of the restaurant world remains difficult, with most brands looking at smaller footprints, Fazoli’s is following the herd, looking at a new template that’s 2,500 square feet, or even smaller. Drive-thrus are a requirement for all locations going forward, and the brand is even considering double drive-thru lanes to accommodate delivery drivers.