EATZI'S PEGS 2004 FOR GROWTH

DALLAS -- EatZi's, the hybrid restaurant/market concept that riveted the food industry's attention for several years, is re-tooling and readying itself for a big expansion.New markets are high on the agenda. Chicago is next, but not till the groundwork for efficient replenishment is laid. At the same time, the company is planning to embark on a strategy of operating satellite units, which it will

DALLAS -- EatZi's, the hybrid restaurant/market concept that riveted the food industry's attention for several years, is re-tooling and readying itself for a big expansion.

New markets are high on the agenda. Chicago is next, but not till the groundwork for efficient replenishment is laid. At the same time, the company is planning to embark on a strategy of operating satellite units, which it will first try in one of its existing markets, Atlanta, officials told SN last week.

The concept, created by restaurateur Phil Romano for Brinker International here, was purchased a little over a year ago by a Boston-based private equity investment firm that has set its sights on perfecting the model and accelerating growth, said Terry Roberts, EatZi's vice president, brand management.

"We're targeting the top 20 metro markets in the United States. We have real-estate deals in the pipeline right now in our existing markets: Atlanta, Houston, Dallas and D.C.," Roberts said.

Atlanta will be the model for the "hub and spoke" system that EatZi's original owners had talked about putting in place a couple of years ago. The idea is that a hub, or primary location, will supply "spoke" units strategically located within five to 10 miles of the hub.

The Atlanta EatZi's, located in the upscale Buckhead section north of downtown, is scheduled to get its satellite store during the third quarter of this year.

Then a new store, possibly in the Chicago area, will get a send-off early in 2005. That's the plan.

"We're building up the real-estate foundation, a new efficient replenishment system, and developing market partners -- individuals who'll be able to develop their market. It'll be similar to a franchise. When we have the foundation built and know it's solid, we expect to open five to 10 stores a year," Roberts said.

New elements will go into the physical design of future stores that will make them easier to maintain and will lend flexibility, but the interior layout will remain the same. Upscale entrees and bakery will stay in the spotlight, and the intimate feel of European-style merchandising that Phil Romano engineered will still be there, Roberts said.

"Changes won't be ones that customers would notice. The Chef's Case will still be as pivotal as it has been in all EatZi's locations," Roberts said.

The Chef's Case is an oval-shaped service case placed in the middle of the floor that shows off the day's offerings of attractively merchandised, chilled entrees, sides and desserts.

While supermarket executives across the country are still debating whether ready-to-eat, meals-related fare is worth offering, EatZi's new owners are putting their money on it.

No matter who is doing the meals thing, "location, location, location" is crucial, SN has repeatedly been told. Supermarket operators have said it again and again, and EatZi's itself learned a lesson about location. After a debut with much fanfare at Macy's flagship department store in midtown Manhattan, a unit lasted there only a little more than a year and never hit the sales volume officials had expected. An EatZi's on Long Island, too, failed to prosper.

In hindsight, EatZi's officials said the locations just were not right to generate enough sales and profits.

These last few months, the EatZi's team has been hard at work in research and development to make sure its menu is in tune with the times. There will be some low-carb items on the new menu, but also, just a bigger variety of tantalizing items that will be hard to resist, Roberts said.

"We're looking to develop more trendsetting products and new flavor profiles, and we will have more rapid menu rotation," she added. "Some of the items are a twist on traditional products. Examples would be truffled white beans with smoked bacon and Peking chicken breast with blackberry sauce. And, very important, we'll be giving the customer much more frequent variety changes."