Fazoli's Joins an Elite Club in Fast Casual

Fazoli’s had to work with roughly 50 suppliers to guarantee that a total of 81 artificial ingredients, colors, and preservatives were wiped from the menu.
Fazoli’s had to work with roughly 50 suppliers to guarantee that a total of 81 artificial ingredients, colors, and preservatives were wiped from the menu.
Fazoli's

Panera Bread. Chipotle. And now, Fazoli’s.

If a restaurant can be judged by the company it keeps, CEO Carl Howard feels pretty good about the club his 220-unit fast casual is poised to join. On June 19, the Italian chain will become the first national brand under 1,000 units—and the third restaurant overall—to offer a completely clean food menu.

It took over a year, more than $1.5 million, 1,000 hours of labor, and many (many) taste-tasting sessions. “There were some days when I was eating 18 slices of turkey,” Howard says.

The entire process, which involved “cleaning” 81 ingredients from Fazoli’s menu, gave Howard an appreciation for his peers.

“The fact that we’re going to be the third group behind Panera and Chipotle I think says a lot,” he says.  “I give a lot of credit to Panera. They probably had the same amount of heavy lifting that we had to do. It takes a lot of hard work. … It’s arduous. I see why brands aren’t doing it.”

Fazoli’s had to work with roughly 50 suppliers to guarantee that a total of 81 artificial ingredients, colors, and preservatives were wiped from the menu. This included Calcium Propionate, Nitrates, and Sodium Benzoate from proteins, salad dressings and signature breadsticks, as well as artificial flavors, colors and high-fructose corn syrup from all desserts.

As for why, Fazoli’s began asking that question 18 months ago. Unlike many competitors, the menu overhaul wasn’t designed to catch up. Fazoli’s is riding 16 consecutive quarters of positives sales and, from pretty much every vital measurable, is doing just fine as a company. Then why make an investment of this scale? Howard says it’s about understanding why a customer’s wish list today will become their demand list tomorrow.

“You’re trying to build a business that’s built to last,” he says. “Our brand has certainly been through its share of up and downs in its going on 30-year-history of the company, and I’m trying to build something great. I think this is one thing that the consumer wants now, that the consumer will expect in the future, and will demand at some point and time in my career.”

A couple of years ago, the Fazoli’s team was attending a live focus group where restaurant consumers were split into five age groups: 16—21, 21—25, 25—35, 35—45, and over 45. Among the discussion topics were things like artificial ingredients, clean labels, GMOs, and so on. Not surprisingly, the younger consumers cared deeply, while the importance of mindful eating declined by the decade. But it doesn’t take a soothsayer to see how these demographic categories are shifting—and what’s coming next.

“That’s part of why some brands are more successful than others. The consumer is your true north star and you have to be able to serve their needs today and their future needs,” Howard says.

It is impossible, he adds, to predict an early return on investment from this plan. To do so, however, would be short sighted. Fazoli’s will be able to forge ahead as an early adopter while remaining atop the pack when everyone starts falling in line, as he expects to happen. And, in addition to the brand’s health, the commodity market makes this an ideal time to get started.

“If there was ever a time to make changes in your menu, and make steps to improve your menu, you should do it now,” Howard says. “Why not do it when your food costs are at record low instead of trying to squeeze every last penny out of the brand?”

The move will be joined by a company-wide rollout of a premium menu at 122 locations across the country. The remaining units and all new franchised locations will feature the upgraded offerings starting in January. All the plateware will also be swapped out and service enhanced. Think Parmesan grated tableside and new dishes like a Brownie Gelato Sundae and Create Your Own Lasagna.

Part of the inspiration for this was the revelation that cleaning up the menu did not threaten the cravability of Fazoli’s. It was the opposite. “At the end of the day what we found out is that we created a menu that actually has a lot more flavor. We’re actually going to supply our guests not only with a cleaner menu without artificial ingredients, preservatives, additives, but it’s going to taste better,” Howard says.

Twelve restaurants have tested the menu and value scores are off the charts. Consumers are also methodically being introduced to remodeled stores. Fazoli’s is working through the summer and beyond to add white brick and other natural materials to units, as well as WiFi bars and communal dining tables. Howard says between nine and 12 stores are going to be upgraded soon, with more to follow.

All of these moves have Fazoli’s on the brink of a major breakout, Howard believes. The company’s franchisees have enjoyed four years of compounded sales growth, close to 30 percent in that span. In 2016, Fazoli’s signed 13 franchise groups for 30 restaurants—more than the brand signed in the five previous years combined. Through June 30, Fazoli’s is also offering a franchise development incentive program. New franchisees who sign a multi-unit agreement for three or more locations will receive reduced franchise and royalty feeds for the first two years of operations. A reduced franchise fee is also available for new multi-unit agreements for three or more non-traditional units, including college campuses, airports, and casinos.

“I don’t think that the success that we’ve had so far, I don’t view it as the true success,” Howard says. “I think that’s in front of us. The real breakout hasn’t even happened yet.”