This past year, Bennigan’s opened three U.S. restaurants: Steubenville, Ohio; Mandan, North Dakota; and Monahans, Texas. All three are experiencing double the sales volume of legacy units in a box that’s about half the size of the original 10,000-square-foot prototype. There are 18 international units as well. Bennigan’s executed a master franchise agreement with the Baila Group of Companies last year to expand into four major cities in the Islamic Republic of Pakistan. Other overseas locations are planned for Guatemala, Honduras, El Salvador, and Amsterdam. In total, Mangiamele says, more than 100 Bennigan’s are in some stage of development.
Same-store sales are tracking positive, too. After an initial burst, they’ve leveled out to about 3 percent, year-over-year. From a compounded-annual growth rate, average-unit volumes are tracking 40 percent higher since Mangiamele jumped in.
Small markets, big wins
As you can see from 2018’s openings, Bennigan’s current growth chart is centered on small markets with large trade areas. Instead of starting in big cities and moving out, Bennigan’s is debuting in smaller cities and coming in. There are a few reasons for this but it all returns to unit-level economics and profitable franchisees, Mangiamele says.
It’s cheaper land. More affordable rent. A quicker return on investment. The trade areas expand from a few blocks to 20, 30, 40 miles, “as soon as we open the doors,” he says.
One of the challenges faced by casual brands nationwide is the proliferation of convenience-driven options into the restaurant marketplace. Impulse diners simply don’t flock to sit-down chains like they used to. Look at the mall dynamic, for example. Brands like Maggiano’s and The Cheesecake Factory have weathered the retail crisis because they serve occasions, not foot traffic. Customers are targeting these brands, for birthdays, rehearsal dinners, nights out, instead of making a lunch-time decision to drop in.
Opening in a small market can mirror the effect, Mangiamele explains.
“If I open a Bennigan’s in Manhattan, it’s ho-hum, another restaurant,” Mangiamele says. “You open in Monahans, Texas, and it’s the biggest event of the century.” And, again, people will travel from much farther to reach a destination restaurant. They don’t need to be multi-tasking. The restaurant isn’t relying on real-estate connections like shopping centers, parking garages, and so on. “It’s a whole different dynamic,” Mangiamele says. “And one that has been able to generate very, very high volumes for those stores.”
It doesn’t hurt either that it’s Bennigan’s planting a flag, he adds. Regardless of what happened in 2008, the chain doesn’t lack for brand attraction. It even features trademarked menu items, like the Death by Chocolate dessert. Mangiamele says some of the recent openings have resulted in lines snaking around the building. “I know I’m often the victim of exaggeration, but I really, truly love the response to these brands. It’s humbling. To see people, honest to goodness, pressing their noses up against the glass, waiting for us to open. I tell them, cut the preshift short. Open the door. Let the guests in so we can serve them. They’ve been waiting long enough for us.”
Past being a brand of choice, Bennigan’s immediately becomes an employer of choice in these small markets. Staffing is currently facing one of the most challenging dynamics in restaurant history. Restaurant employment has grown by more than 1.8 percent, year-over-year, during the last two months, according to TDn2K. However, the number of vacancies that need to be filled because of turnover continues to rise. In December, the U.S. jobless rate rose to 3.9 percent from a 49-year low of 3.7 percent the previous month. That tightened market isn’t quite as laced up in some of these smaller towns, Mangiamele says. You don’t run into the ultra-competitive workplace battle you see in larger cities, where incentives, like flex hours and other gig benefits, are as valuable as dollar figures. When Bennigan’s drops down it creates a stir from the consumer to the worker to the operators.