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Bennigan's puts virtual kitchens in hotels as growth strategy evolves

The casual-dining franchise has licensed its On The Fly offshoot to two hotels in Iowa and has plans for more.
Bennigan's On The Fly exterior
Photograph courtesy of Legendary Restaurant Brands

Legendary Restaurant Brands takes great pride in its pair of iconic casual-dining brands, Bennigan's and Steak & Ale.

But its conviction in classic sit-down restaurants has not stopped it from evolving in step with the changes brought about by the coronavirus pandemic. 

"The typical way that we developed in the past is certainly not the way we’re going to be developing in the future," said Legendary owner and CEO Paul Mangiamele. "The pandemic has forced us to take greater measure of our brand and how we’re developing and even where we’re going to be developing."

Case in point: The company is expanding the reach of its scaled-down Bennigan's On The Fly concept as a virtual brand, with hotels as a primary destination. On The Fly was originally conceived as a "polished fast-casual" version of Bennigan's for nontraditional locations like airports and cruise ships.

In February, Legendary put On The Fly in two hotels in Iowa through a licensing agreement with Kinseth Hospitality Companies. It is operating as a virtual kitchen from a Radisson in Coralville and a Holiday Inn in Dubuque, providing delivery and takeout for hotel guests and the public. 

Legendary approached Kinseth, an existing franchisee, with the idea of using excess kitchen space to launch On The Fly, at a lower cost and on a shorter timeline than that of a brick-and-mortar restaurant.

Like full-service restaurants, hotels have struggled during the pandemic as fewer people traveled.

"You’ve got this humongous kitchen and you’re not utilizing it all," Mangiamele said, adding that hotels tend to see food and beverage as an amenity rather than a profit center.

"I think that’s erroneous. Everything should be looked at as profit center," he said.

Legendary is working on deals for hotel and stand-alone On The Fly outposts in Florida, Georgia, Tennessee, Texas and even Anchorage, Alaska, Mangiamele said. An Arizona franchisee is opening one in the shell of a former quick-service restaurant in Peoria. 

Legendary's three concepts give franchisees a way to diversify their market strategy, Mangiamele said. They can offer a higher-end experience with a Steak & Ale and more traditional sit-down dining with Bennigan's, while On The Fly can be used to drive frequency and brand awareness, he said.

And business at the two full-service concepts has been returning in a big way recently.

"I’m very pleased to see that the pent-up demand and the nostalgia for brands that you always felt good about is still very strong, and in a lot of cases even stronger," Mangiamele said.

Same-store sales for Bennigan's, a popular St. Patty's Day spot, were up more than 1,000% on the holiday compared to last year, when the pandemic put a major damper on the festivities, he said. Same-store sales more generally are up 15% to 20%, he said.

Pickup and delivery are accounting for about 10% to 15% of sales at Steak & Ale and Bennigan's, a number Mangiamele expects to settle in at around 8% to 10%, on top of their regular dine-in business.

And, he added, "A lot of restaurants have closed," which has helped the Legendary brands. 

"We’re picking up that casual diner and adding to the market share," he said.

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