Italian Food Concept Targets C-stores for Franchising

LEXINGTON, Ky. — With a fresh infusion of new capital, Italian fast-casual restaurant chain Fazoli’s is poised to more than double its franchising growth pace this year, and convenience stores are a main target of the company’s expansion plan.

Now owned by private-equity firm Sentinel Capital Partners, Fazoli’s currently operates 123 company restaurants and 91 franchised restaurants. Eight of the franchised units are in convenience stores, located in Colorado, Indiana, West Virginia, Tennessee and Indiana (under construction). Its c-store presence includes three Kwik Stop units operated by Rainbo Oil Co., based in Dubuque, Iowa.

After opening five franchised units last year, Fazoli’s plans to open up to 12 in 2016.

At convenience stores, the Fazoli’s offering usually takes the form of a drive-thru endcap where the restaurant chain’s line of freshly-made, premium pasta dishes, subs and salads are sold.

In an interview with CSNews Online, company president Carl Howard explained that between 2008 and 2015, Fazoli’s has been in a transformative period — from a struggling quick-service restaurant (QSR) brand in a sea of QSRs, to what he now describes as a “fast-casual innovator.”

The transformation has focused on improving the quality of both its food and service, Howard said.

Later this year, technology upgrades, including new point-of-sale, back-of-house and manager systems, will be rolled out. A new freestanding restaurant prototype was also recently unveiled.

“We’ve also increased our focus on innovation and hired new talent, such as a vice president of strategy and continuous improvement; a new senior director of franchise sales; and additional field marketing personnel,” Howard noted.

To spur its franchising efforts in 2016, including in the convenience channel, the company is reducing franchise fees and royalties and adding new incentives for franchisees.

For example, an in-store endcap franchise — typical of what would be installed in a convenience store — is being offered for up to $20,000 off the initial $30,000 franchise fee. Royalty payments have been cut to 2 percent in the first year and 3 percent in the second year, from the normal 4 percent. First-year vendor discounts have also been added, Howard told CSNews Online.