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Fatz Facts

JUST FOLKS: Fatz Cafes open in small, underserved markets and feature generous portions and comfortable settings.
STRONG TEAM: Richie Cannon (above) was recently named operations VP; Steve Bruce took over as president and CEO.

HAPPY STAFFERS, HAPPY GUESTS: Servers rely on technology to cater to guests; manager-partners have a lot of latitude to keep staffers loyal.

The first Fatz Cafe opened in 1988 on the site of a roadside peach stand in Spartanburg, SC. Founder James Rogers succeeded by focusing on portions and value with friendly service, eventually expanding to four locations. The full parking lots at those operations caught the eye of Bill Burton, who had been CEO of the Quincy's Steakhouse chain, and he decided to approach Rogers. The timing was perfect.

"(Rogers) had experience running single operations, but he had grown the concept to four units," Burton says. "He probably needed a bit of help with various aspects of the business."

Burton brought in fellow Quincy's alum Steve Bruce to manage operations, while Rogers tended to marketing, purchasing and real estate. In 1991, Burton bought half the business and continued to develop a management team while Fatz Cafe expanded to more locations. By 1999, Burton was ready to buy the other half of the business.

"We took a startup company that really was sort of bare bones and turned it into a concept that competes professionally with the national chains," says Bruce, recently named president and CEO. In fact, today Fatz operates in four states and its primary competition is national casual concepts like Applebee's, O'Charley's and Ruby Tuesdays. The target market is the 18- to 54-year-old crowd and their families, "middle hometown America," says Eric Holman, vice president of concept development.

After the converted peach stand, the first few Fatz locations didn't really have a similar feel—they tended to be conversions of old foodservice locations—but once Holman joined in 1997, he worked on establishing a more unified look. "We were going for a comfortable, lodge-like feel, with a warm interior and stacked stone and earth-tone wood on the exterior," Holman explains. Newer locations have an inviting front porch and a 5,700-square-foot, 212-seat interior accented with exposed wood beams,with welcoming oversized booths and nostalgic photos of local heroes, picked up from historical societies, lining the walls. "That allows the community to 'own' what is there," Bruce explains. "They see their friends, neighbors, parents, places that are familiar to them. It creates an automatic bond to something they're fond of."

Slow But Steady Growth
The menu, like the interiors, has also evolved. In the beginning, it consisted of simple regional favorites such as Calabash Chicken (a half-pound of marinated chicken tenders, hand-breaded and fried, served with honey mustard sauce). Today's offerings include that top seller along with barbecued baby back ribs, next to healthier selections (dubbed "Low Fatz" or "Low Carbz") such as seafood and salads (although at least one of the salads, the Bacon Cheeseburger Salad, with a half-pound beef patty, bacon and two kinds of cheese teetering atop a bed of romaine lettuce, admittedly challenges the spirit of the word "salad").

Word of mouth and community involvement are the two primary forms of marketing used by Fatz Cafe to grow the business. Local store marketing is supported by spot TV ads, radio and billboard promotions, and the chain is a stickler for realism.

"We think that's a big deal, that we market the truth," Burton says. "We have very professional commercials on TV, and the people in those commercials are our guests, our associates and for the most part our food, not something a food stylist spent a day coming up with."

"We don't want people coming in expecting one thing and getting another; we try to tell folks the way it is," Bruce adds.

Slow But Steady Growth
Fatz Cafe's homey menu belies a well-oiled development and operations machine. Fatz Cafe has taken a leisurely, Southern-style approach to expansion (recently accelerated) by design. "We've only grown as quickly as we could maintain our level of quality and the culture within our company, which we think is very strong," Burton observes. "One of the nice things about being a private company is that we don't have outside forces pushing us to grow, so we can grow at a rate we can feel good about," he adds. For years, Fatz added one or two units a year, but last year five new locations debuted, and this year six more are expected. New units are opening further and further away from the Taylors, SC base, but not so far that the company can't control the consistency. A team of area managers has been recruited to help keep the growing portfolio running smoothly.

New locations tend to open in underserved smaller communities, where populations can be as low as 10,000-50,000. "Often we look not only for activity generators, like most people do, but we look really hard at rooftops," Burton says. What that means, he explains, is that "we're comfortable going into a more residential-type location as opposed to simply where all the retail activity is." The company also uses a proprietary statistical formula to select sites. Cafe Enterprises owns all the stores and will continue to do so, financing expansion through cash flow and debt.

Slow But Steady Growth

To be considered as an operating partner, managers must complete a six-month probationary period. After that they are invited to invest in the business and are asked to sign a five-year employment agreement. In return, they receive a portion of their restaurant's pretax profits plus a lump sum payment equaling 25 percent of the average of the last two years' total pretax profits at the end of the contract.

Operating partner/managers are also encouraged to follow the "happy associates equal happy guests" philosophy. They have some latitude to introduce store-level incentives and other initiatives to keep staffers happy. Employees at every level, from the kitchen staff to the home office staff, are motivated and rewarded for helping the company achieve its goals.

And despite the down-home culture, Fatz Cafe management isn't afraid to introduce a little high-tech into the mix. This year the company is rolling out a wireless system that will allow guests to alert servers when they need something—more bread, the check, another bottle of wine—as well as alert servers when they have new customers in their area. Servers wear a watch-like devise that provides information from guests, the kitchen, the bar and each other. It tells servers, among other things, how long it's been since the guest has been seated or the order has been taken. Bruce says the company saw it as a way to improve service, and it's no coincidence that more efficient service allows more table turns—and more success for Fatz Cafe.


CONCEPT: Classic regional favorites at great values served in a comfortable, casual atmosphere

OWNERSHIP: Cafe Enterprises, Taylors, SC; privately held with controlling interest by Bill Burton

LEADERSHIP: Bill Burton, chairman; Steve Bruce, president and CEO; Eric Holman, vice president, concept development; Richie Cannon, vice president operations

EXPANSION PLANS: 6 in 2006; total of 50 units by 2008

AVERAGE CHECK: $9 at lunch, $12-$13 at dinner

AVERAGE UNIT SALES: $2.5-$2.8 million


Grilled Shrimp & Veggie Skewers (right)
Jumbo shrimp and fresh veggies, basted, lightly seasoned and chargrilled. Served on skewers top a bed of garden blend rice. $10.99

Bacon Cheeseburger Salad
A half-pound Angus beef patty atop a bed of romaine lettuce with Monterey jack and cheddar cheeses, cherry tomatoes, red onions, cucumbers and bacon. Served with a lowcarb dressing. $7.49

Carolina Stacked Chicken
A grilled mesquite chicken breast, basted with honey Dijon sauce and topped with bacon, ham and melted Monterey jack cheese. Served with choice of side. $9.99

Steakhouse Salmon
Chargilled Atlantic salmon topped with creamy alfredo sauce and lightly blackened popcorn shrimp, served on a bed of garden blend rice with choice of side item. $12.99

Edisto Shrimp & Grits
A Low Country classic: Stone-ground grits with Cajun jumbo and popcorn shrimp, burgundy mushroom gravy, chopped bacon and Monterey jack, cheddar and parmesan cheeses. $10.99