Back on track: Louise's Trattoria reorganizes in wake of chapter 11 filing.

Louise's Trattoria, the Torrance-based Italian restaurant chain that recently filed for bankruptcy protection, plans to emerge from Chapter 11 by next January and resume a modest West Coast expansion late next year.

Officials with the popular eatery also said that during the bankruptcy, the restaurant's menu may face some tinkering. However, there are no plans to close any of the chain's 16 restaurants.

The company got in trouble when it tried to expand through a joint venture on the East Coast. The venture failed, leaving Louise's holding nearly $6 million in additional debt.

"It's very difficult for a restaurant to hop across the country like they did. They have to deal with all new supply lines," said Alan Liddle, West Coast editor of Nation's Restaurant News.

"The proper way to expand - without going the franchise route - is gradually, throughout a particular region, eventually spreading across the country. It's good that the new management is thinking along those lines."

Louise's bankruptcy counsel, Ron Bender of the Century City law firm of Levene, Neale and Bender, said the recovery plan will be submitted to the U.S. Bankruptcy Court in January. That plan calls for a $4.2 million cash infusion from Jon Chait, the brother of founder Bill Chait and managing director of temporary services giant Manpower International.

As part of the deal, Jon Chait has assumed the post of chairman, although he will still be working for Manpower, primarily in its Brussels office.

The plan also calls for the sale of $8.7 million in notes to creditors payable over five years and the deeding of 30 percent of the company's stock to creditors. Bender said that creditors would get anywhere from 65 cents to 100 cents on the dollar, depending on the value of the company's stock when the company comes out of bankruptcy.

New President and Chief Executive Fred LeFranc, the former chief operating officer of Una Mas and El Torito Restaurants, said the company would resume its expansion late next year.

"We're beginning to work on the expansion model right now," LeFranc said. "We'll start slowly, with three to four new restaurants a year, primarily on the West Coast. Then, if that is successful, we'll pick up the pace."

Meanwhile, LeFranc said he plans to review the menu, which he characterized as "too broad" with too many labor-intensive processes going into the preparation of dishes - such as the making of fresh pastas, sauces and dough for pizzas.

LeFranc has also started additional customer service training sessions at all the restaurants.

LeFranc hopes to avoid the mistake that the company's previous management made when it expanded to the East Coast, leaving the company saddled with $5.6 million in debt from three failed restaurants. Louise's total unsecured debts came to $14.5 million.

Company founder Bill Chait, who started the chain with the purchase of a Brentwood pizza restaurant in 1985, had developed a "hub-and-spoke" system of restaurants in the Los Angeles region, with a main restaurant and commissary and a food distribution system to the satellite restaurants. This arrangement, Chait said, allowed Louise's to keep its per-restaurant operating costs low while getting food prepared by a small number of quality chefs out to all the restaurants.

In what he now admits was a mistake, Chait abandoned this model in an expansion on the East Coast, choosing instead to go in with Dallas-based Lincoln Restaurant Group as a joint-venture partner. Louise's opened up restaurants in Philadelphia, Baltimore and Bethesda, Md.

Within a year, it became prohibitively expensive to operate the three restaurants. The restaurants were closed down in mid-1995.

Only the Milwaukee restaurant remains from the out-of-state expansion.