THANKS TO A DEAL WITH REEF, THE CLASSIC CASUAL CHAIN IS READY TO BRING ITS PRODUCTS TO A GLOBAL AUDIENCE.
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Paul Mangiamele was brought on to lead a turnaround at Bennigan’s and Steak & Ale. He ended up buying the only two concepts Norman Brinker created instead. The former Salsarita’s CEO, and personal friend of Brinker, took on two brands nearly erased by a Chapter 7 bankruptcy. But Mangiamele understood something else as well.
This was a company—now called Legendary Restaurant Brands LLC—where the brand awareness far outweighed the unit count.
Yet scaling up in full service, especially casual dining, has been a challenging proposition for much of the past decade. Applebee’s effectively removed the bottom 10 percent of its system from 2016 to 2020, and the sector overall, far more often than not, has walked back an overleveraged landscape. Bennigan’s today has 11 domestic and 14 international stores. There were 288 (150 corporate) when the brand declared Chapter 7 in 2008.
However, the COVID-19 arena, for all the setbacks and darts thrown at sit-down chains, has opened up outlets to reach new guests. For Bennigan’s, this is an especially alluring point, Mangiamele says, because people have asked him “when are we getting a Bennigan’s,” or, “can you send us a World Famous Monte Cristo?” for as long as he can recall.
He couldn’t move as fast as guest demand wanted him to. Now, he can.
“A million times,” he says of Bennigan’s awareness compared to its store count. “That’s exactly the angle that I took.”
Bennigan’s just struck a deal with REEF Neighborhood Kitchens, one of the fastest-growing companies in the foodservice space. Its network of 4,500 locations continues to target a delivery-only opportunity that’s erupted in recent months. Wendy’s inked a 700-unit deal with the company. TGI Fridays signed up for 300 in early October.
REEF’s vessel operators sign licensing agreements with the brand and then fix, prepare, and deliver product from their own facilities. Customers see chains they recognize on aggregator or direct platforms and gain access without the need for brick-and-mortar development on the side of the restaurant.
So all those markets and customers asking for Bennigan’s? Mangiamele now plans to tap into that emotional equity in a hurry.
“Since our brands were pioneers of casual dining in the first place [Bennigan’s was founded in 1976 and Steak & Ale in 1966], the mission was to try to get them into as many markets, both domestically and internationally, as possible,” Mangiamele says. “But now, there have been so many roadblocks in front of us in terms of coronavirus and dealing with this going on almost two years now … So what better way to still explode the brand awareness in getting product out, not only domestically but internationally as well, then to partner with a company like REEF?”
The decision accomplishes Mangiamele’s past strategy of having Bennigan’s not only serve as a franchise model, as well as Steak & Ale, but also its fast casual, nontraditional Bennigan’s On The Fly and virtual iteration. And it also adds a piece to the chess set—a virtual network that can drive incremental business.
One thing about today’s digital space is that’s splitting at the seams. You have opportunistic brands created from inception to tap into delivery’s rise, like celebrity-backed concepts hosted out of other kitchens. Then there are established chains rebranding corners of their menus to get in front of third-party users (Chili’s “It’s Just Wings” for example). And also, classic chains aiming to meet demand and seed markets without investing in physical infrastructure, likely through macropartners such as REEF, Franklin Junction, and others.
Bennigan’s falls into that latter set. There’s no brand building campaigns needed. The chain even has a host of trademarked menu items, like its World Famous Monte Cristo, Oh Baby Back Ribs, and Death By Chocolate dessert.
“Like so many people I know, some of my favorite memories were made at a Bennigan’s or Steak & Ale,” REEF president Michael Beacham said. “These brands have formed deep emotional connections with fans across the globe that have stood the test of time, and we fully intend to tap into that through this partnership. Along with the tremendous brand equity they have established, we are committed to preserving the world-class training and ‘people first’ culture that Paul and his team have fostered over the years.”
Mangiamele calls the opportunity ahead “New-stalgia,” or the chance to recreate Bennigan’s intimacy of product. The idea that retro is in again, and his company could take casual dining global through a virtual accelerator. This allows Mangiamele to present franchisees with new options as well.
Meanwhile, virtual isn’t just an avenue to bring classics back to life. “It will also expose new people to Steak & Ale and Bennigan’s that might not have even heard of us,” he says.
Mangiamele sees plenty of potential in REEF’s model overall, which optimizes parking lots to stand up these vessels. REEF raised $700 million from SoftBank last year to bring its value above $1 billion. It grew from 50 kitchen hubs pre-COVID to nearly 300 by July 2021 (there are about 450 ghost kitchens operating today). Just a couple of weeks ago, the company acquired logistics partner Bond, a New York-based startup that offers e-commerce brands delivery and distribution center services. Last year, the two teamed to add Bond’s refrigerated, last-mile delivery “nano warehouses” to REEF’s parking lots. Bond’s delivery couriers collect orders and transport them. Given the labor challenges afoot, it’s another example of why so many companies are turning to partner companies to broaden delivery reach.
“Depending on all the business conditions, and who knows what the future portends, but if [REEF] can continue to capitalize on the availability of the spaces that they need for vessels and they can get the right people and the delivery aspects in place, I don’t think there’s any cap to the opportunity,” Mangiamele says.
And it’s a straightforward concept on the other side for Bennigan’s—one that reflects why Mangiamele and his wife purchased the chains in the first place. “It’s the perfect vehicle and within the strategy that we created years ago,” he says. “Deliver our product to as many people as possible who love our brands.”
He believes virtual success should spur franchise growth. It would give Mangiamele proof for why operators should open a Bennigan’s or Steak & Ale, and just how concrete the demand is.
Speaking broadly about casual dining, Mangiamele has always been fond of saying “the guest never abandoned casual dining; casual dining as a category abandoned the guest.” It was something slow-burning before COVID, and is still a danger area today.
Brands failed to innovate on the menu and beverage side, Mangiamele says. They strayed too far from core values in an effort to reach millennials and younger groups. Turnover was rampant. Mangiamele says chains that have been successful, like Texas Roadhouse, managed to do so by preserving their culture.
“I will not let the integrity of the culture be violated by raising prices,” he says of a recent widespread trend, “by making our guests suffer because we don’t have enough brand knowledge to figure it out. That’s what I see happening in a lot of casual-dining concepts.”
Surcharges on tickets are another reaction he believes “violates the bond that a brand has with their guest.”
“I really think that the guest’s affection will drive more people to the brands that do deliver and that’s why I’ve been pushing this for almost 12 years now,” he says of service and hospitality. “That we have to deliver a legendary guest experience. All the time, for every meal period, for every guest, and also make sure that our teams in the front of the house, back of the house, bar, hostess, are well-trained to deliver that.”
“At the end of the day, look, you talk all around this stuff, but it’s about execution, treating your people right, getting your training right, and delivering on your promise of quality food at a reasonable price point that makes people feel that they got the value,” Mangiamele adds. “And when value is lost, people defect. When value is guaranteed and delivered, people don’t mind spending more money.”
While Bennigan’s has had to reduce operating hours and pivot to offset inflationary and labor challenges, comps are running positive over 2019, he says. No stores closed and franchise interest is picking up.
The brand is even set to pose as the backdrop, or as Mangiamele puts it, “another cast member,” of an upcoming movie “About Fate,” which stars Thomas Mann and Emma Roberts. The romantic comedy largely will take place in a Bennigan’s, Mangiamele says. The timing should align this winter with Bennigan’s REEF activation and whatever might come next.
“I realize I’m standing on the shoulders of those that came before me, like Norm Brinker, and to be running and continuing the legacy of the only two brands that he created and providing literally thousands of team members opportunities to learn this industry, is really, for me, that’s my mission,” Mangiamele says.