The new owners of O'Charley's have launched a store remodeling program they say will be a key part of improving the chain's financial performance in 2013 and beyond.
American Blue Ribbon Holdings, a division of Fidelity National Financial, recently completed work on one of the first of the new prototype restaurants, overhauling their location on Highway 96 in Franklin, pictured at left. The new look has ditched the green-and-brown brand combination (see below) for a brighter green-and-white look that uses a bolder typeface.
Officials at American Blue Ribbon were not available this week to comment on their work. But on a recent conference call with analysts and investors, the leaders of Florida-based Fidelity National said they have high hopes for the restaurant business. To start with, the integration of the O'Charley's business as well as J. Alexander's has gone well.
"We're ahead of schedule and our minimum synergy number was $20 million," said Executive Chairman William Foley. "But the guys are incented to do better than that and we are confident that we'll do significantly better than the $20 million synergy number."
The next major steps are the store renovations — both external and interior — as well as an overhaul of the O'Charley's menu, which Fidelity National CEO George Scanlon said will focus on "everyday value." Foley, who recently tested the new look, added that the chain's training programs also are getting a refresher.
"I walked away from that experience in Nashville [...] having really a lot of confidence in the direction we're taking with O'Charley's," Foley said. "And I would encourage you, in the first or second quarter of next year, to take a trip to where some of the stores have been remodeled and just take a look and try the food because it's outstanding. And this is going to be not just a fun investment for FNF, but a very profitable one."
On that front, Foley said his team's goal is to lift the average annual sales at O'Charley's restaurants from about $2.3 million to $2.6 million in the next few years. That also will help operating margins, which were negative in both 2010 and 2011 at the old O'Charley's holding company.
"We're targeting the 6.5 percent to 7 percent once our synergies are in place in terms of EBITDA," he said. "And we should get these synergies and it should be done and out of the way by the middle to the third quarter of next year."