The bankruptcy of Bennigan's corporate and subsequent restaurant closures caused confusion and heartache for at least one of its franchisees - which remain opened.
Owning a franchise has its risks, but the financial collapse of the franchisor is usually not what restaurateurs place high on their worry list.
Bennigan's
When Bennigan's declared bankruptcy in August, no one was more surprised than its franchisees. Bad news, yes, but that was just the start of their problems. With the collapse - which was significant, about 150 corporate-owned units were locked - images of shuttered storefronts with "closed" signs hung on the door appeared on television and in print.
It looked bad, particularly for the 138 franchised units that remained open and were doing just fine. The parent company's implosion didn't have anything to do with them. "It caught all of us by surprise," says Dave Boozary, owner of Denway Inc., an Oklahoma-based company that owns and operates nine Bennigan's and Denny's restaurants in the Midwest. "We had some idea that they were in trouble with lenders, and that they were restructuring their loans. But we were not sure that this was happening."
Boozary and other Bennigan's franchisees have a sympathetic ear, however. "Talk about having the rug pulled out from you," says Doug Benham, the current board-level advisor for the Bennigan's Franchise Company and investment group Atalaya.
Atalaya, a primary lender to the chain's bankrupt parent company, S&A Restaurant Corp. - owned by Metromedia Restaurant Group - swept in to keep the Bennigan's Franchise Company alive, infusing cash and holding the franchise contracts and intellectual property as collateral. Benham, former CEO of Arby's; and Vince Runco, a former executive at Metromedia Restaurant Group, were installed to navigate restructuring and day-to-day operations.
The new owners stabilized the brand and then worked to earn the trust of franchisees, and to see opportunity amid the gloom by getting them to buy and reopen closed corporate stores.
Denway will embrace that opportunity, if possible, Boozary says. "We are looking at some of the corporate stores to see if we are interested to reopen them as a franchised unit," he says.
Deep thoughts
Problems with Bennigan's extend beyond the corporate closures. The pseudo-Irish pub brand is about 30 years old, and had been absorbed into casual chain dining anonymity, along with Applebee's, Chili's and T.G.I. Fridays. Where those brands are undergoing reinvention or updating, Bennigan's remained static.
"For the last five years, (corporate) had dragged its feet," Boozary says. "I think their emphasis was not in this restaurant business. They had multiple concepts, but I think the owners out of New York were not into this brand, and I think the brand had slipped off if you compare us to T.G.I. Fridays, Chili's, Applebee's."
The new management "seems to be aggressive and sincere," Boozary says, adding that if everything works out, "I think the brand will become stronger, because the franchise group is stronger and united about what we want to do."
Benham said the brand is still strong, noting that a new unit recently opened in Cancun.
Boozary, along with other franchisees, suggested the new managers purchase advertising in USA Today to announce Bennigan's remains open, and to have a more aggressive marketing campaign to grow the brand.
In the meantime, Boozary says he's instituted his own marketing campaign to keep people coming to the restaurant. He's sent out coupons to neighboring businesses and homes to let people know the restaurant was still open. If things don't improve, they'll go into the daily newspaper or TV.
It's that franchisee-resourcefulness that S&A and Metromedia corporate should have tapped all along, Benham suggested, and it's the franchisees that will save the brand. "The heroes of this story are our franchisees," he says. "These people, in general, have their life savings invested in their businesses, and to be left high and dry like that, I can just imagine the angst and anger that they felt.
"We're trying to engage them and make sure they understand that the new group of officers are there to try to salvage both their investment and the investment of Atalaya and go forward in the spirit of partnership."
