Fazoli's CEO Carl Howard
It all began, in part, because of the “great cod crisis” of the late 1980s. That’s right. Fazoli’s, the national fast-casual Italian restaurant chain based in Lexington, was founded because its parent company, Jerrico, fretted about an industry shortage of cod for its Long John Silver’s chain.
Fast forward 25 years, and Fazoli’s is celebrating its silver anniversary.
“I don’t know if a roller coaster ride is the best analogy, but it certainly has been a series of ups and downs,” said Carl Howard, CEO of Fazoli’s, in a recent interview about the company’s past, present and future.
In Fazoli’s early years, new outlets opened frequently, but that was deceiving. Howard says despite growth in locations, the chain wasn’t growing sales.
“The core business was always under pressure,” he said.
There were ownership changes in the 1990s. One almost involved McDonald’s, which looked at Fazoli’s as part of a so-called “Yum! strategy” — that is, grouping restaurant chains and marketing them together. But McDonald’s never took the plunge.
Howard’s company, Sun Capital Partners, acquired an underperforming Fazoli’s in 2006. “Sun installed a new management team but, for a time, it performed worse. In 2007-08, the brand experienced double-digit sales and guest count declines,” Howard said.
Howard was named CEO. The first few months were “interesting,” he recalled.
“We had just started the Great Recession. There was a sense of panic among franchisees and concern around the home office,” Howard said.
Howard knew there were reasons for the slump. His management team did a deep brand study, known as AAU (awareness, attitudes and usage).
“I didn’t want to be another CEO standing up and saying: ‘This is what I think.’ I wanted empirical data,” he said. “What it told us was our food quality and menu variety was poor.”
Then, said Howard, everything was about speed — how fast you could dish it up. Some food was baked and held for 30 minutes, anticipating customers arriving to buy it.
“Our food was horrible,” he said. “We were the world’s fastest Italian restaurant, [and] a good value, but not good. When the only reason you exist is to serve food and you do it poorly, you’re in trouble. That’s where we were.”
In 2009, Fazoli’s drastically revamped its menu with freshly baked items. Sales and traffic inched upward from negative to about even.
“Still not very impressive,” according to Howard.
Another study revealed serving food on black foam plates with plastic utensils was a turn-off to customers. So, Fazoli’s enhanced the business in three ways. It went to traditional plates and silverware. It stopped giving customers pagers, which forced them to retrieve their own food, and it refreshed restaurant interiors.
“We then went on a pretty solid run of same-store sales — positive 33 months in a row,” said Howard. “Last winter, the streak ended briefly, but we came back and have been positive since.”
What was the lesson learned? Speed matters but not at the expense of value and food quality.
“We probably wouldn’t have survived if we hadn’t changed the food,” he said. “The key was putting flavorful, quality food at a tremendous value on real plateware, making the food come to life.”
Fazoli’s future will include even more emphasis on food quality, service and restaurant interiors. It will push a new Fab 5 line of baked foods, including chicken marsala ravioli. Howard said they couldn’t have sold it a few years ago because people would have been a bit bewildered to see it on Fazoli’s menu.
“It’s a $15 dish,” he said. “We’re selling [it] for $6.99.”
Industry wide, according to Howard, fast-casual chains are improving quality and presenting challenges. There are pretzel burgers from Wendy’s and chicken wings from McDonald’s, plus flatbreads, gourmet coffees and high-end frozen drinks out there.
“It’s not just milkshakes and fries anymore,” he said.
Howard said customers have become more sophisticated and have grown up watching TV food networks.
“We’re raising a whole new generation of foodies who enjoy food products and experiences we never had,” he said. BL