Five years after a bankruptcy filing closed all of the Bennigan’s restaurants in North Jersey, the Irish-themed bar-and-grill chain is back in business here. Investors supporting the resurrection of the brand are betting that the way to become the next big thing in the casual-dining sector is to bring back an old favorite.
An Italian-American chief executive with roots in New York’s Little Italy and two 40-something sons of Indian immigrants are leading the local revival of a chain best known for being the place where you can celebrate St. Patrick’s Day every day.
The first New Jersey example of the made-over Bennigan’s opened last month in Saddle Brook, on the site of a former Bennigan’s that has sat empty since 2008.
The revived Bennigan’s will have to battle for market share with three other casual-dining, bar-and-grill restaurant chains that already have a presence in North Jersey.
Applebee’s – The country’s largest casual-dining chain, Applebee’s has some 2,000 locations in 49 states, with annual sales of more than $4 billion. The company, based in Kansas City, Mo., was founded in 1980. There are six Applebee’s in Bergen and Passaic counties.
T.G.I Friday’s – Founded in 1965, it has more than 900 restaurants in 61 countries and annual U.S. sales of close to $2 billion. It is owned by Carlson Cos., a privately held hotel, restaurant and travel corporation based in Minnesota. It has four restaurants in Bergen and Passaic counties.
Houlihan’s – Founded in 1972, Houlihan’s has about 80 locations, mostly in the Midwest and East. Based in Leawood, Kan., it is owned by private equity investors and has annual sales of about $250 million. There are three Houlihan’s in Bergen and Passaic counties
Bennigan’s – Founded in 1976 in Atlanta, Bennigan’s grew rapidly in the 1980s and 1990s, then filed for bankruptcy in 2008. The private-equity firm Atalaya Capital Management bought the chain and introduced a plan to revive the brand in 2011. There are 85 Bennigan’s restaurants, and the first new-concept Bennigan’s in New Jersey opened last month in Saddle Brook, on the site of a former Bennigan’s.
“We love the brand,” said Suketu Shah, one of the new franchise owners. “We both used to go to Bennigan’s all the time, and we were nostalgic for the brand.”
The restaurants have been given a new logo, a new one-page menu, and a brighter, more modern interior design.
But Bennigan’s is going to face the same bar-and-grill rivals that made survival difficult in the past – chains like Applebee’s, Houlihan’s and T.G.I. Friday’s – as well as fresh competition from the explosion of fast-casual restaurants like Chipotle and Smashburger.
Bennigan’s reopening comes as restaurants are reporting their worst three months since 2010, according to the Knapp-Track Index of monthly restaurant sales. Diners facing higher payroll taxes are cutting back on eating out.
It’s not expected to become easier. The research firm NPD Group is forecasting that the restaurant industry will essentially be flat over the next decade, meaning any chains that gain customers will be stealing them from other restaurants.
“It really is going to be a battle for market share, and those who are the most creative, the most innovative and best able to meet consumers’ wants and needs will win,” said Bonnie Riggs, restaurant industry analyst for NPD.
“There’s lots of potential competitors out there” for Bennigan’s, said Alan Liddle, an editor at Nation’s Restaurant News.
But, he said, the starting-over story may give Bennigan’s an edge.
“Given they’ve been away from the scene for a little while, it may be that that absence works to their advantage because people remember all the good stuff — and not the most recent reports about them going bankrupt.”
In Saddle Brook, there apparently are many customers who were waiting for Bennigan’s to return. The restaurant, which can seat 260 inside and 94 on the patio, has had waits of more than two hours on busy days.
Carrie Hook of Saddle Brook, one of the more than 2,600 Facebook fans of the Saddle Brook Bennigan’s, said the parking lot at the restaurant has been full nearly every day since it opened. She dined there, she said, on a rainy night when she drove by and spotted some empty parking spaces.
“I called my son and said, ‘There’s space in the Bennigan’s parking lot. Let’s go.’ ” she said.
The Saddle Brook Bennigan’s is owned by Kedar Shah, 40, and Suketu Shah, 41, friends who share the same surname but aren’t related. They signed on to be franchise owners for the revived brand because they were fans of Bennigan’s when they were in their 20s and because they like the direction that Paul Mangiamele, the new chief executive, is taking the company.
Bennigan’s was bought out of bankruptcy in 2008 by the New York-based private-equity firm Atalaya Capital Management. Mangiamele, a restaurant industry veteran who was recruited by investors in 2011 to lead the turnaround, is seeking franchise owners to reestablish the brand.
After the bankruptcy, Bennigan’s, which had over 300 locations at its peak, closed all of the company-owned restaurants, including the Saddle Brook location and one in Englewood. Many of the franchise locations closed as well, but 70 remained open during the bankruptcy proceedings. Most franchise locations that survived were in countries like South Korea, where Bennigan’s remained popular.
Since the turnaround began, the company has opened 15 Bennigan’s and has development deals for 30 more locations worldwide for 2013.
Mangiamele, who spent St. Patrick’s Day at the Saddle Brook Bennigan’s — between trips to Korea and Dubai for other Bennigan’s openings — said Saddle Brook is an important reopening for the company because that restaurant was a top-seller in the past and because Saddle Brook has the kind of neighborhood atmosphere he wants to create in all of the new Bennigan’s.
“It’s an unusually Bennigan’s neighborhood,” he said. “People grew up coming here.”
To demonstrate his point, he called over a waitress, Cayla Apgar, 18, of Saddle Brook. She said Bennigan’s was the place her family came “for birthdays, Communions, everything.”
The chain failed, Mangiamele said, because previous executives “mismanaged it into oblivion” and didn’t “reinvest and reinvent.”
Franchisees pay a $35,000 upfront fee and a 4 percent royalty on sales, Mangiamele said. They also need a net worth of at least $2 million, with at least $500,000 in cash available.
Kedar Shah and Suketu Shah said they spent about $2 million to remodel and reopen the Saddle Brook site. Kedar Shah has a master’s degree in business administration/finance and worked on Wall Street before joining his family’s business, which owns and manages restaurants and hotels. Suketu Shah has a background in finance and technology.
“When Bennigan’s left Saddle Brook, it was still very popular,” Kedar Shah said. “It left a big void in this part of New Jersey.”
The Saddle Brook restaurant has done well enough that Mangiamele and both Shahs said they already are in discussions about opening a second location.
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