Daphne's California Greek Launches National Franchise Plan

It has taken slightly more than a year for entrepreneur Bill Trefethen to change the face of Daphne's Greek Cafe. Since Trefethen's purchase of the chain in August 2010 -- through his investment firm, Wreath Equity LLC -- the name, menu items and consumer messaging has been changed to reflect a lifestyle-oriented concept focused on healthy dining.

Daphne's California Greek, as it's now called, has 56 locations: 54 in California, one in Boulder, Colo., and one in Scottsdale, Ariz. This week, the company announced plans to double the company's unit count over the next three years through a new franchise program.

"The plan has always been to enter the franchise space," Trefethen said. "Fast casual is a great sector of the marketplace and then the Mediterranean segment within fast casual has really good legs. We think the (franchise) market will receive it pretty well." Mediterranean concepts within fast casual include Zoe's Kitchen, which closed 2011 with 60 locations, and regional chains such as 16-unit Garbanzo Mediterranean Grill, with locations throughout Colorado.

The limited number of competitors will make Daphne's an appealing concept for multi-unit franchisees, who can sign development deals without competing against their own, existing concepts. The average cost to develop a Daphne's will be between $300,000 and $500,000.

"We really want sophisticated franchisees who have proven ability with other concepts," Trefethen said. "The one attractive thing is its fast casual and it doesn't compete against the other major classifications of QSRs." Cultural changes Trefethen's rebranding efforts have touched almost every aspect of the restaurant.

Daphne's revamped menu now features more healthful California-inspired Mediterranean fare, such as specialty salads, flatbread pizzas, pita sandwiches and additional sides.

Meanwhile, store remodels showcase a contemporary feel and have utilized materials that are either re-used or sustainable.

The goal was to attract a wider and younger audience and "to create something people would respect," Trefethen said. "We really wanted to diversify and broaden the concept appeal." Before the turnaround, Daphne's customer base was higher in income and age, and 50 percent female. Trefethen said remodeled locations, of which there are 10, have shown a more diverse demographic across age and gender.

"Proof of the rebranding success lies in the continually improving unit economics," said Shannon Bane, Daphne's CFO. "The new menu items now account for more than 20 percent of sales system wide, while the remodeled restaurants are delivering double digit sales growth in the range of 10-30 percent." Daphne's reinvention also included a digital and social media-based music program built around emerging musicians, a Brand Ambassador initiative spearheaded by professional surfer Kelly Slater, and a local store-marketing program rooted in community support and lifestyle events.

"(Kelly) is the centerpoint of our Brand Ambassador program and he put together his top picks for an amateur surfing team. There aren't a lot of other restaurant concepts putting together a surf team and we're looking to do that with other aspirational sports as well," Trefethen said.

The music program was developed to give an eclectic group of emerging independent artists, who span various genres, a multi-platform opportunity to reach new audiences. The program incorporates both internal and external elements, including in-house music and videos, to a streaming radio channel on Daphne's website, and an Artist of the Month program with monthly free downloads, special live concerts, and exclusive concert videos.

These changes were part of the company's Stage One rebranding effort and it wasn't until these modifications were successfully implemented that they would move onto Stage Two: franchising.

"Obviously we had some pretty ambitious plans about what we wanted to do with the concept," Trefethen said. "Now, we feel we have it 95 percent worked out and that remaining 5 percent is what we'll change every year to stay current."

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