When it comes to the restaurant business, Pat Phelan and Leap Hospitality do pretty much everything except cook the food.
28B Westwoods Drive
Liberty, MO 64068
TYPE OF BUSINESS
Restaurant and hospitality consultants
KEYS TO SUCCESS
Some of the best busines advice Pat Phelan ever received was from his in-laws: Don’t give up too soon.
The Liberty company offers a full suite of services to hospitality businesses that are opening or expanding. Leap will help develop a restaurant’s concept, recruit the staff to run it and even track down the perfect tables and booths.
Those are all essential elements to a restaurant’s success—or failure, if they aren’t executed correctly.
“We’re really working with them to problem-solve before the problem happens in the restaurant,” Phelan said.
As the U.S. economy has picked up, so has Leap Hospitality’s revenues. In 2017, Phelan saw his company’s best year in business, with Leap earning more than $6 million, up from $3 million just a few years ago.
Customers Make the Leap
The Cordish Cos., the developer of Kansas City’s Power & Light District, has tapped the company for a range of high-profile entertainment projects, not just in Kansas City, but across the country. First Watch has relied on Leap Hospitality as part of its national expansion, too.
Locally, Q39, KC Hopps and Jax Fish House are all Leap customers.
Wonder why so many restaurateurs seek out Leap Hospitality? You don’t have to look any farther than the stack of binders and folders on Phelan’s desk.
They’re filled with floor plans for clients’ upcoming restaurants. It’s Phelan’s job to put each one under the microscope, develop a budget and—most importantly—prevent potential headaches.
Which size and style of table or booth is right for that space? Are there any columns or other potential obstructions in the floor plan or restaurant layout? Will staff be able to clean the space easily? Will any of the pieces need to be custom-made? (About a quarter of the furnishings that Leap sources are produced at Elite Booth, a Raytown manufacturer and longtime Leap partner.)
The typical clients are up-and-coming restaurant chains. They’re big enough to need Leap Hospitality’s services, but not so big that they already have enough staff in-house who know to ask those important questions.
Leap Hospitality’s experience was acquired over a dozen years and too many projects to count. And it didn’t come easy. To reach $6 million, Phelan had to survive a series of setbacks.
“I’ve really had to transition two or three times in the 12 years I’ve been involved in doing this,” he said. “Something inside of me said keep going.”
A Completely Different Business
When Phelan bought the company in 2006, it wasn’t even called Leap at the time. Fast Food Equipment Systems Inc. only distributed ice makers,
margarita machines and other restaurant equipment.
Applebee’s was a big client. In fact, Applebee’s was almost too big of a client. The distributor depended on that one client, and it stuck out as a red flag to Phelan when he made the purchase.
But he had wanted to strike out on his own for a long time. Phelan—a former Sprint financial analyst who became an executive for a Grandview manufacturer—was in constant contact with local business brokers as he searched for a company to buy.
So he did—and quickly ran into a brick wall.
Applebee’s growth slowed, so it stopped ordering equipment. Then the entire restaurant industry slowed down. Within a year of the purchase, the company went from $1.5 million in annual revenue to around $600,000.
‘I’ve Got to Be Able to Do Something’
To bring in business, Phelan started branching out. Whatever clients needed, he would deliver.
“You know, I went to business school, got my MBA,” he said. “I’ve known that you can’t be all things to everybody.”
Sometimes that “anything you need” approach really was a recipe for disaster, like the time Phelan rebranded Leap as a restaurant operations company.
Investors put up the funding for a restaurant project. Then Phelan and his team provided sweat equity in the form of day-to-day management. It ran him ragged, and the projects weren’t as successful as he would’ve liked. (One exception: The Jacobson, which he still has an interest in.)
But trying new things led Phelan to get into recruitment, which is now one of Leap Hospitality’s fastest-growing services. The company performs searches for every position from CEOs to pastry chefs. Leap placed more than $3 million in salaries in just a few short years for brands such as Wendy’s, Qdoba, GiGi’s Cupcakes and Slim Chickens.
Being willing to do anything also helped him land one of his biggest clients.
“They’re building this big entertainment district downtown called Power & Light,” he recalled. “Literally, I’m just calling people that are in the restaurant business. I saw there were going to be a lot of restaurants there. I’ve got to be able to do something.”
He eventually connected with someone at the Baltimore offices of Cordish, the developer behind Power & Light. Cordish asked if he could source restaurant furniture.
Of course! he said.
Great, the Cordish rep replied, two of our guys are going to be in Kansas City tomorrow. Let’s get something scheduled.
“I didn’t have anything to give them,” Phelan said. “So literally that night I’m making up brochures in (Microsoft) Publisher and going to Kinko’s.”
He aced the presentation and, two days later, heard back. They had to pass—he was too professional and thus, they assumed, too expensive. They wanted a small, local guy for the job.
After assuring Cordish that he was small, local and affordable, Phelan was able to win a furnishings contract on McFadden’s Sports Saloon in Power & Light.
“Lost my butt on it,” he said, but Leap performed so well that more work followed on Mosaic, PBR Big Sky, Angels Rock Bar, the Midland and others. He learned to make money on those projects.
“And then they came back to me and said, ‘Pat, you really did a great job, you’re a good project manager, let’s change the business model.’” Cordish needed a go-to partner for a wave of projects on the horizon, so they signed Leap to a cost-plus contract.
That growth has occurred across the country. On the horizon is Cordish’s newest venue, Texas Live!, a 200,000-square-foot establishment opening this summer in Arlington, where Leap will furnish nine establishments. More than half of that furniture will be made here in Kansas City.
‘It Changed the Company’
Every year at Leap Hospitality, Phelan asks each team member to come up with one word that will guide them for the next 12 months, almost like a mantra.
It’s an idea that he got from the book “One Word That Will Change Your Life” by Jon Gordon, Jimmy Page and Dan Britton.
The word for 2018 is “push,” as Leap Hospitality intends to keep pushing forward and achieving new growth.
A few years ago, when he was feeling burned out, Phelan read “One Word” and chose “commitment” as his guiding word for that year. It gave him the spark to make significant changes.
“I finally said, ‘You know what, either I’m going to make this work and actually start making real money doing this, or I’m done,’” he said.
Step One was branding. Phelan hired Whiskey Design, and owner Matt Wegerer distilled all of Leap’s many service offerings into an easily communicated message, backed up by a new website and other creative.
“It changed the company,” Phelan said. “Finally, I had some confidence of this is what we are. When we go in and talk to somebody, we’re either doing furnishings, we’re doing executive search, or we’re working on development projects. It’s one of the three.”
He also started hiring team members who could help develop the different lines of business and execute at different levels. He’s extremely proud of his team’s ability to bring in new clients.
“I knew I can’t do it all, especially if the company’s going to grow,” he said.
Those changes set the stage for Leap’s record-setting 2017. Still, he admits to being blown away when the company generated $6 million in revenue.
“I just woke up one day in November, and I went, ‘Holy cow, we did pretty well this year,’” he said.
Phelan believes the company is capable of even more. He wants to hit annual revenues of $10 million to $15 million in three years. Leap is starting to target the hotel and casino industry. And Phelan has an idea for another entirely new service.
“There’s so much opportunity out there, and we are half a percent of everything that’s going on,” Phelan said. “So there’s still a lot of room to grow.”