Louise

0

By DANIEL TAUB

Staff Reporter

Louise’s Trattoria in Brentwood had seen better days.

Carpets were worn, booths hadn’t been reupholstered in years and the d & #233;cor was mostly yellow and gray not the most up-to-date color combination. Things were similarly well-worn at the dozen other Louise’s locations throughout Los Angeles.

Worse still, the debt-ridden California Italian restaurant chain, founded in Santa Monica more than 20 years ago, had a balance sheet that looked about as shabby as its restaurants. With the chain making most of its own ingredients including pizza dough and spaghetti sauce and maintaining a menu bigger than its kitchens could handle, the bottom line was suffering.

In fact, Louise’s lost money when many of its customers came through its doors. A typical Louise’s meal for which a customer paid $12 would cost the restaurant chain $13.32.

In September 1997, a Chapter 11 bankruptcy was filed after an ill-fated expansion outside the L.A. market left the chain with $14.5 million in unsecured debt.

But today, under new ownership, the chain is emerging from bankruptcy protection and trying to reestablish itself.

At the Louise’s in Brentwood, the outdated d & #233;cor is gone. The restaurant now has French doors that open to patio seating, a contemporary interior with natural wood chairs and cobalt blue carpeting and a new bar area. Even the sign outside is new, with “Louise’s Trattoria” in wider, easier-to-read lettering.

Another dozen Louise’s locations have been overhauled in recent months, and the remodeling of the final L.A.-area location in Los Feliz soon will be finished, said Fred LeFranc, the company’s president and chief executive.

After closing its costly commissary, which made daily deliveries to Louise’s L.A. locations, switching to outside suppliers for many of its ingredients, and cutting the size of its 60-item menu in half, Louise’s is back in the black. Now, on a $15 meal (menu prices have risen over the last couple of years), the company sees a profit of about 20 cents, LeFranc said.

“It’s not tons of money,” he said, noting that the restaurant business especially the moderately priced sector in which Louise’s competes is one of low margins. “But it’s better than losing money every time you serve a dinner.”

The changes are being undertaken by LT Acquisition Corp., an investment group headed by Jon Chait, brother of the former head of Louise’s Trattoria, Bill Chait. Jon Chait’s group bought the chain for $7 million at a U.S. Bankruptcy Court auction in December 1997. The group then hired LeFranc as CEO, having been impressed with his leadership in growing the El Torito chain from 99 to 225 locations in the early ’80s.

After spending much of 1998 paying off debts, moving the headquarters from Torrance to Brentwood and undertaking internal cost-cutting measures, LT Acquisition is looking to rebuild the brand name and eventually expand again.

Still, LeFranc concedes that Louise’s still has a ways to go to before matching the success of some of its competitors, like Calabasas-based Cheesecake Factory Inc.

Sales so far this year are on pace to merely match those of 1998, when the privately held company had revenues of about $22 million. But even flat sales would be an improvement, given the declines of the past five years.

The biggest challenge is rebuilding the chain’s customer base.

“It’s a very slow process,” said Frederick R. Hipp, president and chief executive of California Pizza Kitchen Inc., a competitor of Louise’s that recently underwent a similar remodeling. “If you haven’t treated people right, it takes two or three good experiences after people have had a bad experience to get them to come back on a regular basis.”

Or as Merrill Shindler, co-editor of the Southern California edition of the Zagat Survey restaurant guide, puts it: “You don’t get a second chance. Someone will go to a restaurant 50 times, then they’ll go in and have one bad experience and they’ll never go back. There are a lot of choices out there. And if a restaurant messes up, people don’t forgive and don’t forget.”

The chain is working to bring back those customers by launching its first major direct-mail campaign sending $10 discount coupons to residents living near Louise’s locations. The campaign is part of a $750,000 marketing effort to create its new look and menu.

“It’s not a lot of money in absolute terms,” LeFranc said. “We’re trying to be much more targeted.”

Louise’s also is looking to open a new prototype restaurant somewhere on the West Coast with a full bar. LeFranc said he wants to avoid the problems that resulted when the chain previously expanded outside L.A. a costly experiment that depleted funding for its L.A. locations, leaving them shabby and outdated.

The new restaurant will be relatively small probably 6,500 to 7,500 square feet, as opposed to the 12,000-square-foot restaurant the chain had opened in Philadelphia. The end goal, LeFranc said, is to grow Louise’s to the stage where it could go public or be acquired by a larger company. But the expansion will be undertaken carefully.

“I don’t want to repeat the same mistake,” LeFranc said.

No posts to display