In the Zone with MWEB Entrepreneur: Mugg & Bean, more than a coffee shop

The Famous Brands group acquired them in 2009 for R104 million, and they currently have over 130 restaurants in South Africa and Africa. But where does the Mugg & Bean story start, and how did they grow from one initial offering to the multi-million rand success story they are today, in the ever-competitive food industry?

Beginnings

Ben Filmalter started Mugg & Bean in 1996. He was already a seasoned hand in the restaurant world, having started in the industry as an 18 year old cook's apprentice, and working his way up from there until he made it out of the kitchen and into management. He was involved with various restaurants, including Linger Longer, an upmarket Johannesburg restaurant he purchased in 1979 with his older brother John. Ben Filmalter subsequently sold his share of the Linger Longer restaurant to chef and restaurateur Walter Ulz and his business partner Carlos de Freitas in 2005.

Filmalter and his wife were inspired by the idea of creating Mugg & Bean after a visit to a small boutique coffee shop in Chicago, which offered a unique combination of great food, good coffee and outstanding service. The Chicago coffee shop experience made a lasting impression on them, and they felt that this type of restaurant concept was an offering that would do well in the South African market. And based on these initial inspiring ideas, the Mugg & Bean story was born.

Filmalter's preceding career in the food industry meant that he was able to add his knowledgeable marketing and commercial skills to this new business too. The result was a coffee and restaurant concept new to South Africans, which filled a niche in the popular fast casual dining sector by offering a mix of high quality fast food within a restaurant setting.

Franchising

The first Mugg & Bean restaurant opened in 1996 at the V&A Waterfront in Cape Town, and as Filmalter had predicted, their unique model proved popular. Generous portions, fast food made from good quality ingredients, the value for money appeal of bottomless cups of coffee as well as being served by friendly staff made their first restaurant a hit with customers.

Two years after the establishment of the first outlet, and based on the success and popularity of the original Mugg & Bean restaurant, development of the concept as a franchise opportunity started to take shape. Franchising would permit rapid expansion of the business, while allowing Filmalter to retain control over the development and marketing of the brand, and the subsequent years saw many more franchised Mugg & Bean restaurants opening up all over South Africa.

Over the years, Filmalter maintained that the company's continued success was as a result of their objective to remain innovative, and this was a concept he was committed to achieving. "We had a very clear vision about how we wanted to operate our business from the very start, and that developed the culture in terms of how the brand was going forward. We knew we wanted to be the best," he said.

Location, location, location!

Another factor in Mugg & Bean's success was that by locating their restaurants in shopping malls, they had easy access to a wide variety of customers. Through clever store positioning they could attract an extensive range of people, as they catered to shoppers and business people during the week, as well as to families over the weekends.

While Mugg & Bean is often regarded as a coffee shop, food orders make up the majority of sales and dining is the cornerstone of the business, accounting for the majority of turnover. And in keeping up with a market that needs to stay innovative as well as maintain a feeling of being an up to date and trendy brand, they often revamp their menu content and look at introducing new food items to their menus to broaden their appeal and attract new customers.

Favouring a different marketing approach to telling the history of the brand, and embracing the enjoyable notion of storytelling, Mugg & Bean created an invented history of how they came to be, based on a fictitious San Francisco legend of Clement Mugg and Joshua Fenomah Bean, who, it was said ... "lifted their bourbon glasses in San Francisco in 1868 and toasted to bringing Mugg & Bean General Merchants to life. In five short years, their business flourished and became a place where everyone was welcome."

Filmalter's vision was to stay true to the core elements that set Mugg & Bean apart in the marketplace, saying "The reason for the brand's world-class success is because of the cut-above quality and extraordinary value for money. We are always more generous with our portions, offer high quality food and have outstanding signature dishes and baked items."

Successful brand

Not surprisingly, their success attracted great acclaim within the restaurant sector and in 2009, Famous Brands, who own a portfolio of premium brands including Steers, Wimpy, Debonairs Pizza, FishAways, House of Coffees, announced the acquisition of Mugg & Bean for R104m.

Commenting on the deal at the time, Kevin Hedderwick, Famous Brands' then chief operating officer said: "The Group's stated strategic intent has always been to acquire and grow best-in-class franchised brands and the Mugg & Bean brand fits perfectly into this strategy. This is a brand which, since its inception, has been sought after by potential franchise partners, landlords and consumers alike."

Filmalter went on to say: "Since its inception we have nurtured the Mugg & Bean concept and steered the business to the leading position it enjoys today. We are delighted to pass the torch to Famous Brands, whom we are confident will ensure that the concept is further developed and its success continued into the future."

'On The Move

In keeping with their aim to stay innovative and receptive to consumer demand, Mugg & Bean recently introduced a new concept to the brand, with their 'On The Move' outlets. These offer a takeaway selection to customers who are in a hurry and in need of the convenience of getting something quick to eat, or a coffee 'to go'. They chose to name this 'On The Move' to differentiate it from other already well-established takeaway outlets in the marketplace.

Seeing an opportunity to introduce something unique and appealing to the casual dining sector at a time when there were few other competitors is part of the founding success of Mugg & Bean. But it takes more than opportunity to build a successful brand, and that's where Filmalter's enthusiasm, passion for providing generous portions of good food, as well as creative marketing put his brand above the rest.

In an interview with www.succeed.co.za, when asked if he had any advice for budding entrepreneurs, Filmalter said, "The most important factor is that they have to have a vision. If you do not have a vision, what are you shooting for? Are you just going to be dragged along? Or are you going to make your dreams come true?"