Media Contact: Beth Floyd
bethfloyd@zoeskitchen.com

7/29/2003 - Zoës Kitchen turns up heat with expansion plan, new look

LINDA PARHAM 
News staff writer

The opening of his Nashville restaurant might have been enough for another entrepreneur, but it set Birmingham's John Cassimus to thinking long and hard.

The result was a blueprint for the future that mapped out explosive growth for the Zoe's Kitchen chain and introduced an ambitious branding campaign his most valued collaborators initially opposed.

When the dust settled, Cassimus had lost his first business partner, acquired new deep-pocketed investors and persuaded the founder of Zoe's Kitchen, his mother, that an expensive re-packaging would pay off.

Cassimus says he is convinced the changes to his firm, Zoe's Kitchen USA, will earn investors a return that tops the average in what's called the "fast casual" food business by at least 10 percent.

"We were doing pretty decent in Nashville, a little better than we did in Birmingham when we opened the restaurants, but it wasn't what we really anticipated," said Cassimus. He had thought the Tennessee operation, which opened in spring 2002, would match the earnings of the Birmingham stores that had been open three or four years.

"We didn't kill it like we thought we would," said Cassimus.

"Obviously, if we were going to succeed on the national level, we were really going to have to make a decision on what we were going to do with the business, how we were going to grow," said Cassimus.

University of Alabama experts in marketing and industrial engineering helped him start re-thinking his approach.

He paid a six-figure sum to hire Chute Gerdeman, a Columbus, Ohio, firm to come up with a branding campaign that included a new, more sophisticated and upscale look for the chain's restaurants.

The restaurant founder, Zoe Cassimus, and the company's financial analyst, Kasey Burleson, heartily disliked the idea, he said.

"They thought, `If it's not broke, why fix it?'" said Cassimus.

Resistance ceased when his mother saw the clean, linear look for the remodeled restaurants and Burleson saw the projected figures. "She realized it's going to make you feel alive and really happy to be there. He realized the money we spent will be worth five times that much," said Cassimus.

Split:

The casualty in the changes has been his partnership with Archie Andrews, who bought into Zoe's Restaurants LLC four years ago soon after the opening of the Riverchase location.

"It's not like anything bad happened," said Cassimus. "The bottom line is that Archie and I have very different goals. I wanted to take it to a national level, and he wanted to sort of slow down and not grow as fast."

The two ended their partnership about three months ago.

Andrews now owns two of the chain's original stores, in Hoover's Riverchase and in Tuscaloosa. He plans to open additional restaurants in Montgomery, Auburn and Columbus, Ga.

"There's no animosity," said Andrews. "John's mother and John own the name and the rights to the restaurant. John wanted to get more into the franchising aspects."

Andrews added: "We are two different individuals with two different business ideas. Partnerships are wonderful, but sometimes partnerships deteriorate."

Under the current structure of the Zoe's organization, the founders, Zoe and Marcus Cassimus, own Zoe's Kitchen Inc., which operates one outlet in Homewood. Their son, John, owns and is CEO of Zoe's Kitchen USA. The company he shared with Andrews, Zoe's Restaurants LLC, operates restaurants in Birmingham and Nashville as a licensee of Zoe's Kitchen USA.

Andrews has launched APA Ventures Inc.

Investors Donald Hess, former CEO of Parisian Inc. and a Saks Inc. board member, will own Zoe's restaurants with his daughter and son-in-law, Lisa and Nathan Lowrie in Phoenix, Ariz., as well as in California, Colorado, and Nevada. Cassimus will retain management control over those operations.

Cassimus said the company expects to develop 60 stores in five years.

Zoe's franchises will open in Memphis by the end of September and in Destin, Fla., by the first of November.

Cassimus says his restaurants are designed to beat the fast casual food chain average of 15 percent net profit.

"Most investors in fast casual restaurants are happy to recoup their initial investment in seven years. We want to do it in less than three years," said Cassimus. "That's important to our investors."

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