Turnaround meister Fred LeFranc, who came on board in 1997 as chief executive and president of Louise’s Trattoria, knew it would be a challenge to make the small chain of Italian restaurants profitable. But he never expected the company to file for Chapter 11 bankruptcy protection one week after he arrived.
LeFranc can laugh about those days now. “You learn things you would never learn in any other environment,” he said.
After nearly four years, he has put the L.A. company company back on track and next week is leaving the chain of restaurants that serves homemade pastas, seafood and pizza in upscale suburban neighborhoods.
The 45-year-old restaurant executive said he has no immediate plans, although he has several offers he will consider after his July 7 wedding.
“I’m leaving because my contract expired at the end of December. The majority shareholder (Jon Chait) requested I stay while they got an investor to come into the company.” LeFranc explained.
While an investment deal has been struck, the company is not releasing details about the plan. Nor is it saying who will replace LeFranc. But sources said the new chief executive will be Doug Hrdlicka, a former senior vice president of sales and operations at Odwalla Inc. in Half Moon Bay, Calif.
Revenues this year should total about $18 million to $19 million, an 8.5 percent increase over 2000, LeFranc said. The privately held company would not release income figures.
When LeFranc took over, there were 15 restaurants in the chain that generated about $22 million in revenue. But days after he started, the California Board of Equalization froze the company’s bank accounts, seeking $225,000 in overdue sales taxes. Unable to write checks to buy food and other goods, Louise’s filed for Chapter 11 bankruptcy protection.
LeFranc decided to outsource basic foodstuffs that had been made in-house, such as sauces, dressings and pasta. He also reduced deliveries from six days a week to three. Other cost-cutting measures included getting rid of two of the chain’s restaurants, one in Valencia and another in Irvine.
In December 1997, Louise’s emerged from bankruptcy after Jon Chait, the older brother of the restaurant’s founder, Bill Chait, acquired the company for $7 million.
The restaurants were spiffed up with new paint, new signs and new carpet. The menu was cut in half and entrees changed.
“He did a superb job of turning around Louise’s, coming into a really difficult situation, stabilizing the company and positioning it to grow again,” said Christopher Thomas, president of the once-bankrupt Planet Hollywood International. He and LeFranc often traded war stories.
Until their new investment deal is finalized, executives at Louise’s Trattoria would not reveal their plans.
“There are a lot of unknowns and the restaurant industry may be in a holding pattern for the next 12 to 18 months,” said industry expert Janet Lowder, president of Restaurant Management Services.