Last February, Taps owner Joe Manzella took a meeting with Randy Teffeteller, a local management consultant with expertise in the restaurant and hospitality business.
The two expected it to be a run-of-the-mill meeting about bringing Teffeteller on as an adviser for the company’s financing and expansion.
Since Manzella and Teffeteller first sat down with the Business Journal in late February, the landscape has changed dramatically as social distancing measures were put into place, followed by stay-at-home orders in California and other parts of the country that wiped out the dine-in business of restaurateurs.
The Manzella Restaurant Group—owner of three Taps Fish House & Brewery locations, along with the Taps Brewery & Barrel Room in Tustin and The Catch in Anaheim—has shuttered its restaurants temporarily amid the outbreak.
This was to be the year the business planned for more growth than it has in its history, and plans still call for that, Manzella said. While opening timelines will be delayed and subject to however long the crisis lasts, Manzella is confident the business will “land with both feet on the ground.”
This all follows a 2019 reworking that included the hiring of CEO Teffeteller, going in with Providence Capital Funding of Brea on a future Anaheim Hills project, unnamed private equity support for a new Yorba Linda concept and partnering with Shamrock Foods out of Phoenix on a possible acquisition.
The result of the 2019 efforts has been what Manzella called a “stunning” turn: Debt’s down, (pre-coronavirus) sales and profits are up, and a breakfast offering has been launched.
What’s more, two new Taps concepts are in the works:
• The mid-priced Taps Great American Brewery, backed by Providence Capital in Brea; and
• The quick serve Taps Brewery + Kitchen, backed by undisclosed private equity investors.
Other new additions waiting in the wings include the first airport location at John Wayne Airport, slated for a fall opening.
There’s even a consulting business brewing along with more technology coursing from the kitchen to the consumer smartphone app.
$30M (Pre-COVID-19) Goal
Company officials said a litany of improvements made across social media channels, a text marketing campaign and changes made to the in-dining experience helped drive a 15% increase in sales last year.
The company was originally projecting $30 million in sales this year prior to the coronavirus outbreak.
Execs told the Business Journal on Feb. 28, a few weeks before COVID-19 government orders began shutting down restaurant operations across the county in earnest, that the company projected $30 million in sales this year.
“Smiles are up. Toe Taps are up and because of all that, we’re in growth mode,” Manzella said during last month’s interview.
Growth petered out in more recent years for Taps. Rising labor costs in California led to a pullback in many of the facets that helped define its brand—everything from tableside service to real candlelight.
“We were static and in mild decline. Concerning. Not critical. Not DEFCON 5, but we definitely looked at the brand and said ‘nothing’s happening,’” Teffeteller said.
“The brand’s not tired; it’s wonderful. It’s sitting here, but it’s starting to tip. It’s starting to decline because it’s boring. There’s nothing that’s been done in a long time and you’ve taken a lot of things away, which every restaurateur has done to compensate, and I don’t believe in that. That’s not my philosophy.
“I’m about, give it my all and if it doesn’t work, leave. Just close up. But don’t just tread water because all you’re going to do is hurt the brand.”
Back to Basics, Candles
Facing that reality was a big turning point for Manzella.
“That was the biggest deal point, bullet item, gut check of my entire life,” Manzella said. “In this business, when I see what it costs in labor and to insure and the rents—this ball that you have to carry around with you as a California operator of a business and [Teffeteller’s] saying ‘Don’t do that; do this.’ I mean, I almost fell out of my chair. I’m like, ‘You’re kidding. That is so risky.’ And I was in risk aversion mode.”
Teffeteller, sitting at a table in a private dining room at the Taps Fish House in Irvine motioned to a candle—a real one, no batteries—set in a bed of malt at the base of the holder as an example of an expense that had been cut in more recent years, slowly chipping away at the brand.
New Funding
New financing is a big deal considering the past 20 years of the business were financed by Manzella and his family.
“Joe wanted to go 100 mph and when I met him, I said ‘Listen, I can help you, but you’ve got to slow down. You could potentially trip and it could affect [the] Brea [location],’” Teffeteller said. We just got ourselves together and said let’s retool the company, put it in a position to grow. There were lots of things we had to do internally in the last nine months to position ourselves to do what we’re doing now.”
Next Up
What’s next includes a new restaurant concept set to be deployed and tested as early as this summer.
The quick-serve Brewery + Kitchen concept in Yorba Linda’s Bryant Ranch Center will be co-branded with Los Angeles artisan pizza and wing concept Alondra’s—think pastrami sandwich pizzas and Korean barbeque wings.
It’s projected the Alondra’s side of the restaurant will do about 40% of the revenue with about 20% of that takeout.
Manzella and Teffeteller are also now offering consulting services to the four-location Alondra’s chain, and have the option to potentially acquire the business, which would add another roughly 200 employees to the Taps portfolio.
“We went there and had the food for the first time and it kind of graduated to ‘OK these are three (fifth-generation Armenian) brothers. They’ve been around 16 years and they probably need some help,’ to ‘How much would they sell it to us for?’” Manzella recalled.
“As we’re eating pizza and wings going ‘Well, you got a calculator?’ and it became an acquisition target very quickly.”
An Alondra’s deal could also mean the Taps brand gets folded into Alondra’s existing locations’ bars and, if Alondra’s does well in Orange County, could mean it continues to be rolled out in conjunction with the Brewery + Kitchen concept.
Best of Taps
Jumping up slightly from the Brewery + Kitchen is the mid-tier, family-focused Taps Great American Brewery, which will pull the most popular menu items from the original Fish House.
“The [Fish House] menu can get daunting in many, many ways. So how do we take the brand that’s been 20 years of success in both craft beer and culinary, bring it down in size, simplify it and share it,” Manzella said. “And that’s what Great American is and it’s going to be a big, big, big deal.”
Management would like to see at least three good quarters behind them before they begin entertaining scale. They’re clearly banking on success.
Manzella, an Arizona State University graduate, relocated last June to Arizona as part of the new growth model in preparation for expansion there.
He said he commutes weekly to Orange County for three- or four-day trips.
Other Western state expansion could also be in the cards, with a handful of preliminary talks in Nevada.
Teffeteller stressed there’s a moat around the Taps brand and they’ll guard it carefully. Licensing agreements may happen, but the CEO said that’s not the future of the company. Instead, it’s focused on company-owned restaurants.
New markets will see the Fish House or Great American concepts enter first to lay the branding groundwork, with the QSR Kitchen concept later following.
Roots
The shot of energy, all in less than a year, is another milestone for the business.
Manzella, a product of Rancho Palos Verdes and the son of a former Northrop Grumman vice president of operations, was in sales for Xerox when he decided to switch career paths and in 1999 opened Taps Fish House & Brewery in Brea, along with his late father Fred Manzella and sister Michele Manzella.
“I lived in [Coto de Caza]. I worked in Century City,” he said. “While I was down in South County and sort of tiring of corporate America and selling software and 400 meetings a day, I was like ‘What am I going to do?’ And growing up in a large, Italian-Latin family where hospitality is the rule of the day, that becomes the fabric of who you are and I loved it. I love entertaining. I love cooking with my mother. So I go, ‘I’ll open a restaurant.’”
It was really that simple.
When the city of Brea came knocking, looking for independent brands to build out its downtown redevelopment, Manzella bought the land—a move he said prompted cartwheels from his father—broke ground in 1998 and opened the restaurant the following year.
Manzella saw the city as taking a chance on an unknown as part of a larger vision for the reimaging of the North County city’s downtown. Taps remains an anchor there, and is also one of its longest-standing faces.
Corona came online in October 2007 just as the Great Recession reared its head.
Manzella and team bunkered down, reduced the wine list and took other measures to stay afloat.
The business remains in the Dos Lagos lifestyle center.
Irvine came in 2014 and the Brewery & Barrel Room in Tustin in 2018.
“Boy, what a great turn of events,” Manzella said, reflecting on the first location. “That really launched the brand. It did. It became iconic very quick. It was very ambitious. It’s a funny story of success: the founder having never done it before, his mom had really good meatballs and his dad made good chicken cacciatore. It’s a funny story and a sweet story.
“Fast forward 20 years and we’re ready for chapter two.”
Development Pipeline
Taps Brewery + Kitchen
WHERE: 23741 La Palma Ave., Yorba Linda
WHAT: 4,200-square-foot quick-serve style concept to be co-branded with Los Angeles pizza and wings spot Alondra’s
OPENING: Summer 2020*
Taps Great American Brewery
WHERE: 5665 E. La Palma Ave., Anaheim Hills
WHAT: 4,600-square-foot restaurant and 2,800-square-foot patio in the location of the first-ever Knowlwood. Menu pulls best sellers from Taps Fish House & Brewery and Taps Brewery and Barrel Room, while boasting live taco bar.
OPENING: Summer 2020*
Taps Fish House & Brewery
WHERE: John Wayne Airport Terminal C, Santa Ana
WHAT: 2,500-square-foot restaurant featuring popular menu items, full bar and grab-and-go options
OPENING: Fall 2020*
* openings are now delayed due to COVID-19
