Italian Oven founder giving it another shot

It's the same man who led the original company to grow — according to a new marketing prospectus — to more than $120 million in annual sales and raised $13 million in an IPO. At one time, Italian Oven had more than 100 locations in 17 states. It's also the same man who was removed as CEO by his own board when the company faced creditor claims of $7.4 million in Chapter 11 a few short years later.

Pittsburgh Business Times
July 2, 2004

Italian Oven founder giving it another shot
Jim Frye's first effort ended in Chapter 11
Tim Schooley

BRENTWOOD — A restaurant phoenix may be rising out of the olive oil here.

At Brentwood Towne Square, an Italian Oven Cafe Pizzeria opened last week. Featuring posh leather chairs, crisp wood paneling, stainless steel trim and a bright decor, it opened nearly seven years after the company that ran the original Italian Oven chain disappeared in bankruptcy court.

Around that same time, shareholders filed a class action suit against Italian Oven, alleging the company misrepresented its growth plans and projections. The suit was eventually settled.

Leading the resurgence is Italian Oven's original founder, an older, more resigned Jim Frye.

It's the same man who led the original company to grow — according to a new marketing prospectus — to more than $120 million in annual sales and raised $13 million in an IPO. At one time, Italian Oven had more than 100 locations in 17 states. It's also the same man who was removed as CEO by his own board when the company faced creditor claims of $7.4 million in Chapter 11 a few short years later.

After a 30-year career that has veered from splashy success to failure, Mr. Frye is confident he now has it right.

"I think the fundamental concept was always sound," he said.

As proof, he points to several dozen Italian Oven locations still operating throughout the country. The stores are independent of Mr. Frye's operation, the only link being Mr. Frye's new ownership of the Italian Oven name. He has negotiating with the established Italian Oven owners over name rights.

"What we had was a bad strategic plan," he says, adding that the company probably shouldn't have gone public when it did, and should have done a better job of managing its growth.

But after seven years of ruminating on what went wrong, Mr. Frye believes he's learned his lessons. During the past three years, he revamped the menu and reformulated the restaurant for a new era, developing a restaurant that is smaller, more efficient to run and simpler overall.

A few months ago, he incorporated the Italian Oven Development Group LLC in Delaware.

Most important, he has established new investment partners, the names of whom he wouldn't divulge. He described himself as the concept creator and consultant, and said the Brentwood location was owned by a local family

Through it all, Mr. Frye's ambition remains. He, along with an other investor, have committed to open a second location on Route 60 in Robinson. A third in the North Hills and a fourth elsewhere could open this year. The marketing prospectus describes the desire to become the "dominant fast-casual Italian chain in the world."

"This is a concept worthy of significant growth far beyond the boundaries of Western Pennsylvania," said Mr. Frye.

Key to the new Italian Oven Pizzeria Cafe's strategy is its new format as a fast-casual restaurant.

That translates into a restaurant that at 2,300 to 2,800 square feet is half the size of the original. Instead of a full staff of servers and a dining area that seated more than 100, the new concept is self-serve. As such, staff can be cut from about 20 per shift to around eight. Customers can sit in the restaurant's 40-seat dining area, take their orders with them or have them delivered.

The new restaurant still features the iconic oven, which this time offers both gas and wood-fired heat. And nearly half the dishes on the menu are original favorites. While there's no shortage of Italian restaurants, Mr. Frye said he sees the fast-casual segment as void of any strong Italian offering, crowded instead with Mexican chains such as QDoba and Baja Fresh.

Italian Oven marketing materials quote the Chicago-based restaurant research firm Technomic Inc., which projects the fast-casual restaurant segment will grow from $6.6 billion in sales last year to more than $15 billion by 2010.

Mr. Frye has recruited real estate broker Ron Tarquinio of the South Side to handle his site search in the tri-state area. He also has tapped Rob Weich, a Milwaukee-area based retail broker who formerly was the director of leasing for the Soffer Organization, and Irv Siegel, who is based in Beverly Hills, and spent more than 10 years as the real estate director for celebrity chef Wolfgang Puck, to conduct a site search nationwide.

Currently, Mr. Weich and Mr. Siegel are scouting as many as six locations in the Milwaukee and Madison, Wis. markets. Mr. Weich added that they have begun to scout sites in the Washington, D.C., market as well.

"I wasn't privy to the reasons why it failed before," said Mr. Weich of Italian Oven. "But my understanding is that there still seems to be a core of loyal franchisees that still had loyalty to the brand and to the chain."

Mr. Weich sees the Italian Oven as broadly comparable to Wolfgang Puck Express, a fast-casual gourmet chain that also offers a selection of pizzas, salads, soups and sandwiches.

"I think it has national potential. I wouldn't get involved otherwise," said Mr. Siegel.

During an interview with the Business Times, Mr. Frye consistently spoke of the inspiration for the newly revamped Italian Oven: chains such as Panera Bread and Starbucks. Like them, he hopes to offer diners affordable luxury, featuring a menu of entrees that cost from $5 to $10 that include a variety of fine ingredients.

"I reengineered it from the consumers' standpoint," he said, noting that the new restaurant is streamlined for consumer convenience.

While diner frequency levels at the former restaurants were about three trips a month, he hopes the new one will top four. He is still working to develop a corporate structure, and is undecided on whether he will license new restaurants, franchise them or do some combination.

Regardless, he's optimistic.

"I have a better feeling about this than I had about the original Italian Oven," he added.

How others feel is open to question. Garvin Warden, the turnaround specialist the Italian Oven's former board hired to replace Mr. Frye as CEO, chose not to comment.

Jim Dunn, who owns four successful Italian Oven locations in the Atlanta market, doesn't expect Mr. Frye's new efforts to affect his business, which he said remains strong.

Closer to home, Gordon Miller, who owns two original Italian Oven locations in Connellsville and Uniontown, wouldn't comment.

Bill Brown, managing director of Whitecliff Group Inc., the Minneapolis-based firm that acquired the remaining Italian Oven franchise system out of bankruptcy court, expressed apathy toward the new launch.

"I couldn't care less," said Mr. Brown. "He took it into bankruptcy. It lost a lot of money. It was a concept that didn't work."

Terri Sokoloff, co-owner of Ross-based Specialty Group, a restaurant services firm, reacted to Mr. Frye's venture with both caution and praise. "If it doesn't work, Frye, Frye again," she quipped. She said Italian Oven was a good concept and that Mr. Frye was a salesman "who could probably sell ice to an Eskimo."

"Only in America can you come back and reinvent yourself and get new investors and reappear in the same town," she added

Describing the period after the original failure as both "dark" and "awful," Mr. Frye admits he has run into his share of doubters. In the years since, he has operated an Italian-meets-Western themed restaurant called Rome on the Range, ran Buck's restaurant in Aspinwall and also a small pizza chain in Florida.

"I don't worry about my detractors," he said, advising skeptics to "come up here and see for yourself what this is all about."

He has won over Mr. Siegel, who along with expanding the Wolfgang Puck food empire has also worked with major developers nationwide. "You learn from your mistakes, and they learned from theirs," Mr. Siegel said.

However, Mr. Frye feels this may be his last shot in the restaurant industry. And he admits he's been intrigued by who has been willing to help, and who hasn't.

"When you go through everything that I've gone through, it's interesting to see who saddles up with you and who doesn't," he said.

But he's moving forward.

"It takes a lot of guts to try something like that and more guts to try it again," he said.

MR. SCHOOLEY may be contacted at moc.slanruojzib|yeloohcst#moc.slanruojzib|yeloohcst.

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