Louise's rolls out '110%' offer in post-Ch.-11 push

Nation's Restaurant News, March 29, 1999 by Amy Spector

Los ANGELES -- Louise's s Trattoria, the 15-unit casual-Italian restaurant chain forced into Chapter 11 bankruptcy reorganization in 1997, has stepped back into the competitive ring with a new management team, remodeled units, scaled-down menus and a systemwide employee-training program.

Corporate executives are so confident of the changes that they recently rolled out a customer satisfaction promise, backed by a "110-percent guarantee." The policy offers dissatisfied customers not only 10 percent off their meal total but also a coupon, good for up to 100 percent of the tab's value, toward their next visit to any of the chain's units. The promotion is advertised on in-store posters, printed menus and menu inserts at all Louise's branches, 14 of which are in the Greater Los Angeles area.

"We're not going to be shy about this," director of human resources Todd Gunderson said of the guarantee.

Given its operating results for 1998, Louise's seems to have found a profitable strategy: Food cost dropped 6 points, to around 26 percent, and labor cost dropped from an average 36 percent, to 32 percent, during the year, Gunderson said.

Although president and chief executive Fred LeFranc declined to state systemwide sales, he noted that same-store sales were up 1 percent in 1998 after five years of declines. Per-person dinner check averages gained $1, to $13.50, while lunch checks held steady at an average $10.50.

And management turnover, which was around 75 percent one year ago, has dropped to less than 40 percent, LeFranc said. Annual hourly staff turnover has also lowered to around the 100-percent mark, according to Gunderson.

The current management team took over 18 months ago, under the corporate name LP Acquisition Corp., after Jon Chait financed the $4.5 million bankruptcy buyout from his brother, Bill Chait, who founded Louise's and is now a member of the company's board. Jon Chait turned the reins over to LeFranc, who successfully grew both the Palo Alto, Calif.-based Mexican quick-service chain Una Mas, as its president, and Irvine-based El Torito, as its chief operating executive.

Rounding out LeFranc's team at Louise's Trattoria are vice president of operations Steve Heeley and controller James McGehee, both of whom worked under LeFranc at Una Mas.

LeFranc described 1998 as "a year of healing" for the chain, whose headquarters are in the Los Angeles district of Brentwood. He said Louise's has been repositioned to meet the demands of its typically well-heeled, well- educated, health-conscious 20- to 40-year-old customer.

A competitive analysis of Louise's product, which LeFranc conducted shortly after his arrival, taught him that although the chain's prices were 25 percent to 30 percent lower than those of such competitors as The Cheesecake Factory and California Pizza Kitchen, customers perceived his chain as offering a lower-value meal, he said: "Our customers wanted that extra $3 value."

LeFranc said he talked to his chefs and found out that the chain's 67-item Italian menu was difficult to execute consistently at some units, which range in size from 1,500 to 7,500 square feet. So he and executive chef Tom Shields trimmed the menu to 35 "California-Italian cuisine items, LeFranc said. The pared-down menu of appetizers, salads, soups, pastas and "specialties" or main courses, now offers six vegetable side-dish options as well.

A systemwide "lipstick remodel," which cost approximately $35,000 per unit and refurbished paint, carpets and upholstery, brought the chain up to competitive standard, he added.

To raise service to the level of the decor and menu, Gunderson said he initiated a systemwide training program to "hold everyone accountable." The entire chain has completed the first round of server training, begun last October; a second phase will focus on training managers to be coaches and has been targeted for a late-April launch, he said.

"The old paradigm of the training check-list doesn't work," Gunderson said of his approach. "Trainers have to coach. People have different ways of learning, so managers have to try four or five different approaches."

Decision-making at the unit level had not been a corporate goal for the previous owners, Gunderson added: "Everything came from the corporate office." The chain has recovered, he explained, by shifting decision-making onto the individual unit managers and chefs who most affect profitability. "We are teaching them everything about how to run the business," he said.

Gunderson said the server training took the staff back to the basics of acknowledging the customer and fulfilling guests' needs. "We found out that the prior procedures" -- what Gunderson described as an 18step service sequence he has boiled down to about four steps -- "didn't work for the servers. So we created a new approach with them." As part of the new program, a service manager was named at each Louise's location, and service trainers were designated to coach both new hires and experienced staff taking on new responsibilities.