But all the rich colors, wood floors, and track lighting won’t make a difference if the real problem is service or food. And upscaling the prices and menu options too much can chase away core customers.

“It’s about moving up the ladder without losing certain customers, like the person who only eats off the value menu,’’ says Lee Peterson, executive director of design and branding with WD Partners in Columbus, Ohio.

Often, restaurants fail in this area because they do one thing: offer some upgraded meals or remodel to get that cozy, homier look but forget to consider other factors. “You can offer an $8 sandwich that is the best $8 sandwich around, but if the place doesn’t look like you would want to eat an $8 sandwich in it, it doesn’t work,’’ Peterson says.

Any restaurant considering moving from quick-serve to fast-casual or some spot in between needs to factor in all the “Ps”—price, place, people, process, product, and projection/marketing. The people, for instance, that a company hires will need to be a little different. In quick-serve, it’s about getting the right order to the customer quickly. In fast-casual, it’s about that and a little more personality—staff who like people and engage them, “like the staff at Starbucks that will tell some jokes as they get the coffee ready,’’ Peterson says.

Because the cost of executing an upscale image can often be looked at suspiciously by franchisees, lenders, and stockholders, it has become increasingly important to first prove results in test stores before rolling out systemwide. “You need data,” says Michael Shepardson, of Trustreet Partners in Orlando, a company that purchases sites for restaurants and leases them to operators. “You don’t

want to spend $75,000 on a facial upgrade if you don’t know what kind of return you’re going to get.’’ Trustreet often partners on remodel projects with operators, paying for upgrades up front, then passing the cost to the operator in the form of higher rent.

If a company can show franchisees that the upgrade will pay for itself in no more than three years with increased sales and profits, the project is worthwhile, says Dennis Lombardi, executive vice president of foodservice strategies with WD Partners.

For instance, if a unit with $1.5 million in annual sales spends $150,000 on a re-imaging project, it should get at least a $150,000 boost in sales, which corresponds to a 17-percent rate of return over three years.

“A good upgrade should get you a 10-percent increase in sales, if not more,’’ Lombardi suggests. His advice to hesitant franchise holders: Demand proof. Ask for sales information on corporate stores, and check with franchisees who took the plunge early. If they’re willing to spend (and assuming they aren’t forced to by their franchise agreements) to upgrade the rest of their units, that’s a sign of a strong redesign.

Meanwhile, the home office has to come up with a redesign that will make those numbers.

Massachusetts-based D’Angelo Grilled Sandwiches is working through the process right now. The 35-year-old company, with 140 corporate-owned and 52 franchised stores, began to struggle a few years ago, when chains like Panera Bread and Quiznos started penetrating the Northeast, where the brand already competed with Subway and Blimpie. Same-store sales slipped for three consecutive years by a percent or two, says Mike McManama, vice president of marketing.

The company began surveying regular customers and those who visited sporadically. The results were interesting: Customers liked the food, but they didn’t want to eat it at the restaurants. That explained why weekday takeout was popular, while nighttime and weekend sales weren’t as strong. “The sterile environment didn’t match the food quality,’’ McManama says.

D’Angelo decided to shoot for an emerging niche that falls between quick-serve and fast-casual, a niche already occupied by restaurants like Quiznos. Surveys suggested that customers thought the food already compared to fast-casual, but the company needed a look to match the food. next >