Restaurants Dishing Out New Looks

With green walls punctuated by dark wood, the interior decor at Sizzler restaurants was so dreary that one customer compared it to Disneyland’s Haunted Mansion.

Now the folks at Sizzler are hoping that a brighter look featuring sunny yellow walls, cherry-stained table tops and more contemporary lighting will scare up more sales.

“Our stores had become dated,� admitted Kenneth Cole, president and chief executive of Sizzler USA. “They had become very dark, and of course here in California in particular, everybody loves light colors.�

A desire to stay competitive in the $450-billion restaurant industry is driving California companies, including Sizzler parent Worldwide Restaurant Concepts Inc., IHOP Corp. and California Pizza Kitchen Inc., to launch extensive remodeling programs.

San Diego-based Jack in the Box Inc., hoping to increase dine-in sales, will test new interior and exterior designs at about 50 locations during the first half of fiscal 2005, which began in October.

Rubio’s Restaurants Inc., the Carlsbad chain best known for its fish tacos, plans to update about 20% of the 151 outlets this year by changing out furniture to improve seating flexibility or adding fresh, Baja-themed art work.

“We know the bar is always being raised by competitors. And guests’ expectations continue to increase in terms of what they get when they go out to eat,� said Rubio’s President Sheri Miksa, whose competitors include Baja Fresh, Chipotle and Qdoba Mexican grills.

To be certain, not every restaurant company thinks it needs to remodel to remain relevant. Bob Sandelman, a Villa Park restaurant consultant, pointed to the success of In-N-Out Burger, the popular fast-food chain that has kept its basic red-and-white look for decades.

“The workers are in white aprons and hats,� Sandelman said. “They haven’t changed at all.�

At the same time, one of the most important attributes for diners when selecting a fast-food chain is cleanliness -- a characteristic that encompasses far more than whether an outlet is tidy, Sandelman said.

“The way people rate cleanliness ... also goes to decor and atmosphere,� he said. If the perception is a restaurant is “old or tired, it could get a lower mark even if it is clean.�

Makeovers can also help bolster earnings. In fact, a good interior and exterior remodel will lift sales by about 10%, said Dennis Lombardi, executive vice president of foodservice strategies for WD Partners, a restaurant development firm.

Restaurant companies typically roll out remodel programs every five to seven years, said Lombardi. They often require franchisees to undertake renovations as part of their franchise agreements.

Because franchisees often must foot the tab, makeovers can cause tension when it comes to their timing and frequency.

Chris White, director of development for Glendale-based IHOP, said there had been a wide range of reactions toward his company’s latest remodel program from franchisees, who are required to remodel every five years. “Some have embraced it fully and are going to speed-up their remodel process,� White said. “Others are of the wait-and-see mind-set.�

IHOP’s changes are designed to boost lunch and dinner crowds by downplaying the company’s pancake-heavy history. The old International House of Pancake signs, for example, are being replaced with the generic IHOP emblem.

“What we need to do is create an environment where the guest coming in feels comfortable it’s more than just a breakfast place,� White said. “The trick is not to make it so it’s uncomfortable for breakfast.�

About 65 IHOP units feature the new look, which includes softer lighting inside and concrete stamped to resemble cobblestone outside. Plans call for makeovers at as many as 250 more outlets this year at a cost to franchisees of as much as $80,000 each.

Executives at Westchester-based California Pizza Kitchen recently announced plans to remodel six restaurants this year following major makeovers at outlets in Pasadena and Hawaii, which the company says have led to increased dinner business and alcohol sales.

“The check average at these two stores is breaking barriers never before reached,� Rick Rosenfield, the company’s co-chief executive, said during a Feb. 3 conference call with Wall Street analysts. “We are very pleased.�

The return on investment can vary depending on how well a remodel program suits a restaurant’s needs, said Eric Wold, an analyst with San Francisco-based Merriman Curhan Ford & Co. In some cases, he said it might be wiser to expand a bustling restaurant or close a moribund one rather than spend money on a makeover.

“If a restaurant isn’t doing that well, it may not be just because of the way it looks,� Wold said. “If you’re trying to remodel to capture a customer that is no longer living near you or driving by you, you’re fighting a losing battle.�

Nor should decorating come at the expense of the menu, given the significance of food to diners, he added. “Most consumers can tolerate having the wall paper not being the right color, but if the food stinks they’re not coming back,� he said.

Sizzler executives hope the new look will complement the Sherman Oaks company’s renewed emphasis on its steak, seafood and salad lineup and help unify the chain. They want to attract new customers as well as old ones they have lost over the years, in some cases because the company fell behind on remodeling.

It the late 1990s, the chain launched the green-and-white color scheme that drew the Haunted Mansion comparison by a customer in a focus group, said spokeswoman Lesley Rollo. Even some executives at Sizzler referred to the look as “mean and green,� she said.

The company has mandated that all Sizzlers feature at least some elements of its latest remodel package by May, including new menu boards, signs and paint. The goal is for every outlet to undergo a complete remodel, which can cost from $50,000 to $225,000 per restaurant, over the next three years.

It’s unclear whether the overhauls will dramatically improve the fortunes of the chain and those of its parent company, which operates or franchises 22 Pat & Oscar’s restaurants, 307 Sizzlers in the U.S. and Australia and 112 franchised KFC units. In December, the company announced it had hired an advisor to weigh options including a sale or merger, saying Worldwide’s stock price failed to reflect the company’s value and prospects.

After little movement during most of 2004, Worldwide’s share price has shot up nearly 33% since Nov. 23, closing up 4 cents Friday at $4.44 on the New York Stock Exchange.

One fan of Sizzler’s remodel program is Ron Higgins, chief executive of Forbco Management Corp., franchisee of 22 Sizzler outlets from Goleta, Calif., to San Diego. Higgins said the six stores that have undergone remodels have experienced dramatic improvements in sales, varying from 8% to 20% depending on the level of changes.

A revamped Sizzler located in Los Angeles’ Atwater Village district received mixed reviews from customers during a recent lunch hour.

“It’s brighter,� acknowledged Ana Demirjian, an 18-year-old high school student. “You don’t get all tired now when come here to eat.�

But Alden Nash, a 73-year-old retiree, suggested he chose Sizzler for its value and service as opposed to its decor. Nash, who said he had eaten at Sizzler restaurants for 30 years and at the Atwater Village outlet on a practically daily basis for the last two years, described the restaurant’s new look as “OK.�

“It was nice before,� Nash said. “They should have paid their help better wages.�