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Fast-food eateries cooking up fresh looks

Drab fast-food places are remodeling as consumers get picky about atmosphere

December 05, 2012|By Tiffany Hsu, Los Angeles Times

Franchisees end up footing the remodeling bills, but many companies are offering incentives such as financing help, royalty reductions and discounts on franchise fees.

Wendy's is setting aside roughly $750,000 for each of the 48 units slated for a refresh this year. And with 19 new stores en route, the chain expects to spend up to $85 million this year sprucing up its image.

Next year, it will offer $10 million in perks for franchisees that remodel.

And the returns seem promising so far, chains say.

Wendy's said average sales volumes for remodeled branches are already up more than 25%. Sbarro said revenue at its modernized stores is 10% higher than existing ones.

Burger King, which plans to have 40% of its North American stores refreshed within three years, said updated branches have seen sales 15% above comparable locations on average. The chain said it doesn't plan to pass on the costs of its system-wide makeover to guests through higher menu prices.

Other restaurant chains also are in remodeling mode. Sit-down chains, which were hit harder by the recession and have taken longer to recover, are facing many of the same market pressures as fast-food companies.

Companies such as P.F. Chang's are changing the ambience in their restaurants, inspired by "elements in high-end casual and low-end fine dining restaurants," said Chief Executive Richard L. Federico.

The P.F. Chang's Innovation Bistro concept in Irvine is "the best performing store in the entire system by a long shot" with a double-digit percentage advantage over the rest of the chain, Federico said. He would not provide specific figures.

Mimi's Cafe has set up a French-themed prototype restaurant in Santa Clarita, aimed at giving guests "more and different reasons to come in," said Mark Mears, the company's president.

"We live in a Food Network culture," Mears said. "People don't just want a meal; they want an experience."

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