February 23, 2022
Paul Mangiamele, CEO, Legendary Restaurant Group
Listen on:
I have been called a “serial CEO” and “turn-around guy” over the years, but rarely do I encounter someone like Paul Mangiamele, CEO, Legendary Restaurant Brands, who swooped in to fix long-standing fast casual brands Bennigan’s and Steak & Ale. He not only wanted to set these brands on a better course, he put his money where his mouth was and bought the company. Once he had them back on their feet (and ensured distribution of those Baby Back Ribs and Monte Cristo sandwiches again), along came the pandemic. And yes, he and his wife Gwen, the co-owners, persisted and came up with new ways of connecting with customers and even increased their reach globally.
If you are not familiar with the Fast Casual category, the Applebee’s and Sizzler’s of the restaurant world promise familiar menus nationally, but have been contracting for some time. Paul Mangiamele was brought in in 2011 to lead the turnaround of Bennigan’s and Steak & Ale but he ended up buying the firm and bringing the brands back from the brink of Chapter 7. What worked? As Paul says “Not too many CEO’s own their brands (100%) and the fact that my wife and I have significant skin in the game by investing our own money lends strong credibility to our franchise offerings and models.”
Paul’s work with these origin fast casual brands embodies the three key components of rebooting BFS’s that I teach at the Kellogg School: People/Platform/Passion.
Rather than cut costs as many turn-around experts advise, Paul decided to “invest our way into profitability, not save our way into profitability.” He followed the precepts of Ray Kroc, of McDonald’s, who always said that the quality of service, cleanliness and value equals profitability. “I bought what I saw was the unlocked value of the brand and wanted to shine up these diamonds that got a little dirty through the mismanagement of people. We brought the leadership and retained the intellectual capital that my team possesses.”
But shortly after he and his wife achieved what some thought was the impossible and set these brands on a good course again, the pandemic hit and shut the majority of his restaurants or shifted them to takeout. He oversaw Bennigan’s and Steak & Ale joining a service called Reef, which distributes restaurant meals. He helped them learn more about how to package so that they could curtail the time from order to assembly to delivery. They now have over 4000 delivery vessels around the world. In the worst possible time he got menu items internationally to a lot of homesick Americans where he would not have been able to open a franchise. Instead of the bricks and mortar piece, the capital and the timeline, it gave him a quick ramp-up internationally.
How do these “vessels” work? Somewhat like a food truck, they are set down outside a mall in the parking lot and develop contracts with all third party delivery like UberEATS. They pay minimal rent to the mall landlord. He also partnered with a company called Franklin Junction that operates “host kitchens”. Empty hotels that have full service kitchens were able to use the space and generate revenue during the peak of the pandemic. As he says “ they typically were having to pay people to literally stay home and we offered a lifeline and got our products back out there.”
