Luke Mangan earned his first chef’s hat in 1995 at Hotel CBD in the centre of the Sydney business district and four years later opened Salt in nearby Darlinghurst, achieving rapid success as the capital rode the 2000 Olympics boom.
Daniel Kjellsson: The Luke Mangan & Co of today, with 19 restaurants, almost 700 staff, licence products and partnerships all in place – looks like a very efficient group of businesses. That wasn’t always the case, was it?
Luke Mangan: Well it was certainly never planned, no. Things just happen don’t they? I was kicked out of school young and just sort of fell into it.
You accidentally fell into owning 19 restaurants?
– Haha, no. But you know, probably ten, eleven years ago I was nearly broke. Like you said; on the outside looking in, it looks great. But the amount of staff you need behind a group of restaurants, rents, intense competition and things like that – it’s a big and risky business.
At that time, when you were nearly going broke – what were your misstakes?
– I had three restaurants at the time and I think i tried to grow too quickly. I also had all three restaurants in one city, which is not ideal. You know, we started our first business in 2000, restaurant Salt in Sydney. We did $5M in turnover – I had predicted about $2.5M. So that was a good thing. But you know, I was a chef and all I thought about was food. But there’s all the other costs to consider too. All of a sudden you have to pay $5k a month in linen, superannuations and so forth – things you didn’t necessarily consider early on. All I used to think about was cooking and food and a restaurant is about the whole package. But in saying that, we also have 19 restaurants now and I sort of have a different head on my shoulders because of that negative experience I had. So nearly going broke. Best thing that ever happened.
How do you work with the profit margin on a restaurant menu?
– Profit margin is always present, if you don’t make a profit the doors won’t open. You’re only going to do well if people want to pay a certain price for the product, and if you’ve got a $90 steak on the menu – thankfully we don’t – but if you do, it’s got to be worth $90. As with everything else it’s a price versus value proposition and you have to over-deliver to the one who’s paying.
What’s a good profit margin for a restaurant?
– A café can work on 3%. Good restaurants can work on between 10% and 20%. Some restaurants only do that 3% to 5%.
Running one restaurant versus running 19 restaurants demand a different skillset. How did you develop your ability to build strong teams?
– I learned to step back. To grow you probably need to. All our head chefs in our restaurants have come up through the ranks. From starting out as apprentices to now being head chefs. To me, that makes sense. I’m a big believer in promoting from within. The team see that and then they continue to stay. I also believe in individual freedom, to give talented people the opportunity to actually run a restaurant or a menu in the way they see fit.
What does money mean to you?
– Money means growth. Early on I recognised that the only way for me to avoid being “chained to a stove” was to get out there and get multiple streams of revenue. Balancing the cashflow. When you’ve got multiple streams of income you can do more things. When I first started Salt, I did a cookbook – another stream of income. From the cookbook came an opportunity to make my own olive oil. Another stream of income. And it just built and built and built. So years ago one restaurant nearly brought the whole thing down. But today? They’re not all going to go down.
Beer with an Entrepreneur is proudly supported by Hahn SuperDry. Luke’s success shows that you can achieve anything if you set your mind to it and step out of your comfort zone. Click here if you also want to Never Settle!