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The recipe for an international restaurant business empire

In the tightly-controlled rhythm of lunch service at his restaurant glass brasserie in Sydney's Hilton Hotel, chef and entrepreneur Luke Mangan keeps an eye on how the intricate but hopefully almost invisible operation is unfolding.

"It's a tough business and if the partners can't communicate and work well it makes it very difficult."
Luke Mangan, Australian chef and entrpreneur

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Running a seven day a week, three service a day flagship restaurant in a marquee hotel is a marvel of moving parts.

Now try multiplying that task more than ten-fold, and doing it in multiple countries in multiple languages with multiple ways of doing business.

Glass aside, Mangan owns and runs 11 restaurants including another in Sydney (mojo by Luke Mangan), Salt in Tokyo and Salt grills in SingaporeSurfers ParadiseJakarta and on P&O cruise ships. In Tokyo he also has World Wine Bar.

Two new Salt grills on P&O Cruise ships are slated for this year as well as a Salt in Niseko in Japan's ski fields. In the Maldives Mangan's group will be overseeing food and beverage for two new island resorts Amilla Fushi and Finolhu from December. “One is called Lonu, our top end one, which is Maldivian for salt," Mangan says. “And a few more casual ones."

And he's also been consulting chef for Virgin Australia business class for five years.

In an Asian century, the 44 year old Mangan has been one of most aggressive Australian business people in seizing the opportunity. Yet his experience, for all its complexity, has been positive and – relatively – straightforward.

“Ten years ago we opened in Tokyo," he says. “You've got to adapt to their ways of business. Having a partner on the ground (is the key). I've got a partner on the ground in the Maldives, and he is also the GM (general manager) of the hotel. I know the infrastructure behind it, the funds, all that.

“Problems always arise, but as long as we deal with them in the right way. At the end of the day we're out for the same end goal."

The Mangan business empire now employs 650 people and turns over $A75 million gross per year. Mangan grew up one of seven boys in Melbourne and started his career working at Herman Schneider's Melbourne restaurant Two Faces after dropping out of school aged 15. He worked as a chef until 35 when he decided to branch out into business.

As he takes his “Salt' signature brand worldwide, Mangan says expansion into Asia is a compelling business strategy. Part of the attraction is profit margins in Asia are higher because of lower labor costs. “We've got a lot on our plate now," he says. “Asia is a lot easier market to have a successful restaurant than Australia due to labor costs and rents, I believe. Asia is probably our growth strategy."

There are also other attractions. “The chefs and the quality of the restaurants is quite incredible," he says of Bali. “Its exciting. You've got to be good at what you do. You can't just open a restaurant anywhere and expect it to fill."

With the international opportunity expanding, Mangan recently rationalised his operations in Sydney. “It was a business-related decision," he says. “We had a head office here in the city where we have 10 or 12 people working. I had a warehouse out near Homebush for the product division, oils, spices, which would go to retail markets then to restaurants around the world. I was paying two ridiculous rents -$200,000 a year, $100,000 for the office and $100,000 for the warehouse. I thought 'stuff this'. I looked for six months to put everything under one roof.

“I took 1000 square metres and put an office in it, built a test kitchen where we test all our recipes for Virgin Business Class and all the dishes for our restaurants around the world. We have a couple of airline ovens in there and a full commercial kitchen."

Not unexpectedly for someone whose empire has grown so rapidly and with such diversity, Mangan has no shortage of ideas and an ability to seize a chance.

“One day I'd had a few of glasses of wine when we were finishing up the building and I said there's room for a wine bar so why don't we put a wine bar in?' So we have a 40-seat wine bar and a function area that seats 80-100 people as well."

Critically, ideas always have a business edge: “I leased a 1000 square metre warehouse, sub-let a third of it and my rents are considerably cheaper."

Mangan's business philosophy centres around the importance of solid partnerships. It's something he's learned from experience and something which is international.

“We've had a couple of restaurants that haven't worked, for whatever reasons," he says. “It's not that they didn't work for financial reasons, it's probably bad partnerships we went into. One we went in with some investors and there were some issues there. Business was great but we had some financial partner issues.

“We had another, a pub. We had a majority but sold out. We were having some partnership issues... Let's say I could read the play."

There are no hard and fast rules about partnerships – just that trust is essential.

“You've got to have a lot of trust in partners. We have a great partnership with Hilton. This has been going for 10 years. They're a stable company and it's a stable partnership. We get a lot of offers, 'Come and put a restaurant here, come and do this, come and do that'. A lot we'll turn down because of my bad experiences with infrastructures of other partnerships."

Size is not the issue.

“We have partnerships with P&O. You can't get a bigger company than that. And Virgin," Mangan says. “We want it to be secure. There are a lot of people out there who talk the talk. It's a tough business and if the partners can't communicate and work well it makes it very difficult."

Like an elaborate recipe, running a growing, international business empire requires the right ingredients, a very carefully mapped out game plan and the right talent.

“There are a lot of hard-working people behind me," Mangan says. “I get daily reports from each of the restaurants on the night before. What happened in the restaurant that night – maybe a glass of wine was spilled on a customer, or whatever, so it's down to that detail. I like to know what's going on but I know that they're handling it as well.

“All my head chefs and restaurant managers have been with me for a long time and have motored up through the ranks, and that's kind of like how I like to do it."

Notably, Mangan agrees his business is about expanding the brand, attracting different audiences to those who might eat in a particular restaurant, even if he is not a “celebrity chef" in the more familiar mould.

He has written five cookbooks and an autobiography ('The Making of a Chef'). In 2009 he launched Luke Mangan Providore, his own range of spices, condiments and gourmet products. In the media he makes regular TV appearances including a stint doing a weekly spot on Nine's 'Today' show and was recently host on Sydney radio 2GB's Sunday morning program, about food and wine; Fresh!

And he travels regularly to visit his overseas operations. “I do Sydney, Bali four or five days, Jakarta for five days, Singapore, Tokyo then back home."

To keep all the balls in the air, Mangan relies on trusted managers. “Good people, hopefully," he says. “I don't see it as work because I enjoy what I do. Sure you get stressed and p—off at things that happen but things go wrong whether I'm here or not. I've accepted that. Probably 10 years ago I was a different person."

Peter Wilmoth is a former Sunday Age journalist of the year with three decades of journalism experience in Australia, Europe and Africa. As well as business, he covers sport, the media, politics, health, film, theatre, art, books, music and food.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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