Upstarts: Second Time Around for Italian Oven
Jim Frye resurrects Italian Oven as a slimmed-down, fast-casual concept.
By Maya Norris, Managing Editor -- Chain Leader, 3/1/2007
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Jim Frye is not ready to give up on The Italian Oven just yet. The founder of the once successful family-dining chain that crashed and burned in the mid-’90s has relaunched the concept as Italian Oven Cafe, a fast-casual version of the original.
Same but Different
Italian Oven Cafe debuted in 2004 in Pittsburgh after Frye saw the success of fast-casual players like Panera Bread. "We took the original Italian Oven, we skinnied down the size of the box, skinnied down the investment, skinnied down the menu," he says.
The 2,000-square-foot unit cost $225,000 to open. The European, sophisticated decor includes leather chairs, black marble countertops, blond wood tables, a display kitchen, and track and pendant lighting.
The menu consists of wood-fired pizzas, paninis, salads and pastas, driven by the principles of the Mediterranean diet. Best-sellers include Grilled Mahi Mahi panini, $6.25, with provolone cheese and lemon-caper aioli; and Lobster and Shrimp Ravioli, $9.95, in tomato-basil sauce. A complimentary olive bar features a variety of olives, peppers, vinegars and oils. "We’re not a spaghetti and meatballs and sausage and peppers kind of restaurant," Frye says.
Lessons Learned
Frye hopes this version of Italian Oven will fare better than the one he founded in 1989. The company grew to 110 units in 17 states and Australia. But it quickly disintegrated after raising $21.6 million in an IPO in November 1995. Less than a year later, the company saw the stock price tumble to $1 a share from a high of $8 and faced creditor claims of $7.4 million. It filed for bankruptcy in October 1996. Whitecliff Capital Partners, a Minneapolis-based investment firm, acquired the company for $3.5 million in 1997 but dissolved it within 18 months. Frye bought the rights to the name in 2004 and is working out licensing agreements with the 20 Italian Ovens still operating.
Frye admits the company went public before it had the earnings, sales and infrastructure in place for aggressive expansion. "If you miss your earnings projections and you don’t open up stores in a quarter that you say you’re going to because of bad weather or one of your franchisees is stumbling, it becomes a huge problem with Wall Street," he says. "They are unforgiving."
While Frye is not ruling out an IPO for Italian Oven Cafe, he does not see it in the near future. Rather, he is focused on keeping unit economics tight and expenses down as the company prepares to expand.
Future units will average 2,800 square feet to 3,200 square feet and cost $600,000 to $750,000. Although they will be more expensive to open than the Pittsburgh unit, which is smaller and located in a C location, Frye says the new units will post at least $1.8 million per store because they will be bigger and in A locations. He won’t reveal the Pittsburgh unit’s sales except to say that they are less than $1.8 million.
Italian Oven will open a unit in West Palm Beach, Fla., this summer. Investigating sites in Arizona and Nevada, the company expects five more units to open in 2008 including one or two company restaurants in West Palm Beach.
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