5059 Northeast 18th Avenue
Flanigan's has become a South Florida legend due to the almost insatiable urge of our customers to consume our juicy, tender "meat falls off the bone" baby back ribs. These flame broiled, hickory smoked beauties outnumber the sales of the rest of our menu items by about three to one, and we currently sell approximately one million pounds of ribs a year! When it comes to food (or anything else), Joe Flanigan thinks big, and all of our portions are generous, like Flanigan's full rack of baby back ribs, which weighs in at a whopping 13/4 pounds! We take pride in having "something for everyone" and maintain a wide assortment of items like unique pasta dishes, enormous salads, gargantuan ten ounce burgers, U.S.D.A. choice steaks, and a variety of fresh seafood!
Flanigan's Enterprises, Inc. operates a chain of retail liquor stores under the banner "Big Daddy's Liquors" and a chain of full-service restaurants under the name "Flanigan's Seafood Bar and Grill." Flanigan's Enterprises' properties are located in South Florida except for an entertainment club located in Atlanta, Georgia, that is operated by another company under a management agreement. The company owns two restaurants, four retail liquor stores, and four units that house both restaurants and liquor stores. Flanigan's Enterprises, through joint venture investments, also maintains interests in six franchised units.
In a March 1988 article in Florida Trend, reporter Bradley Sterz wrote: "Students by the hundreds of thousands have flocked to Florida's beaches from the North, and for two decades Joe "Big Daddy" Flanigan stood as their toastmaster." Joseph G. Flanigan played a colorful role as one of the chief suppliers of alcohol to the annual gatherings of students spending their spring-break vacations in Florida. Known for his ability to drink more than a case and a half of beer in a 12-hour span, Flanigan reveled in his role: "I was the king," he said in Sterz's article. "I had it all. We were big time. We were nationwide. I would go out to dinner, and people wouldn't leave me alone. I was in the spotlight, famous or infamous."
The success of Flanigan represented the success of his company, Flanigan's Enterprises, but the early professional career of the entrepreneur did not suggest either fame or infamy as a bar owner. Flanigan attended the University of Pennsylvania's Wharton School of Business, where he helped pay his expenses by working as a campus bar manager. In his interview with Sterz, Flanigan explained the genesis of his professional career: "Right after I got married I walked into an Eastman Dillon, Union Securities & Co. office to sell $1,400 worth of stocks so I could go on a honeymoon. Just before I left, the broker asked me if I wanted a job with his firm. Well, I looked around and saw that everybody working there was 70 to 80 years old and thought I'd be able to move up quickly. Sure enough, within a year-and-a-half I'd become sales manager."
Flanigan excelled at Eastman Dillon. He became involved in brokering increasingly bigger deals, earning the esteem of the firm's clientele. Flanigan's reputation was sufficient to earn the business of a prominent Philadelphia family named McManus. During the late 1950s, the McManus family sold Crown Cork & Seal Co., a firm that produced bottle caps, and turned to Flanigan to invest the proceeds from the sale. Flanigan chose to invest in bars in Florida, one of the few states that allowed the ownership of multiple liquor licenses. The investments served as the foundation for "Big Daddy's," a chain of small cocktail lounges and package liquor stores that was founded in 1959.
As they evolved, Flanigan's Big Daddy's liquor lounges became the most popular gathering spots for legions of students on spring-break in South Florida. Bikini contests and drinking competitions were seductive draws, as was the availability of 38-cent drinks at Big Daddy's lounges. Flanigan, who stood six-feet tall and weighed more than 230 pounds, held sway over the annual festivities, embodying the drunken rowdiness that made South Florida famous as a spring-break Mecca. Within ten years, Flanigan's Enterprises was generating $15 million in annual revenue, with the lack of capital representing virtually the only impediment to further growth. In 1969, Flanigan sought to resolve the company's financial shortcomings by taking it public, but he was able to do so only after convincing the American Stock Exchange that his business had no ties to organized crime. Once he dispelled this suspicion, and the company completed its initial public offering of stock, the proceeds were used to finance expansion. During the next several years, he opened Big Daddy's lounges throughout Florida and related lounges in Los Angeles, Philadelphia, Atlanta, Nashville, Tennessee, and Mobile, Alabama. By 1972, four years after registering $15 million in sales, Flanigan's Enterprises generated $38 million.
Bad Decisions in the 1970s
As Flanigan expanded his chain, the need for further capital became a persistent problem. The proceeds from the public offering provided enough funds for the company's initial growth spurt, but more was needed. Consequently, Flanigan began to borrow heavily, using bank loans to build a financial operating base for national expansion. Bankers were reluctant to lend Flanigan as much as he wanted, however, so he was forced to search for other ways to raise cash. The solution to the problem ended up being the worst business decision Flanigan ever made.
To raise cash, Flanigan turned into a real estate broker of sorts. He decided to use his own real estate assets to provide a source of capital. During the 1970s, he sold the properties that housed his bars and liquor stores, then leased back the buildings from the properties' owners. His failure stemmed from the type of arrangement he brokered with the acquirers of the real estate assets. Flanigan pegged his long-term leases not to the amount of revenue each location generated but to the inflation rate. In his March 1988 interview with Florida Trend, Flanigan explained the nature of his error: "We were getting crushed because I didn't foresee the big rise in inflation." As the inflation rate skyrocketed during the mid-1970s, Flanigan's lease-back scheme backfired. "Our rents doubled in a five-year period," he said. "We figured the bad leases were costing us $5,000 a day."
Flanigan's once-burgeoning business empire began to fall to pieces. The escalating lease payments drained the company's cash flow, delivering the exact opposite effect as intended. To make matters worse, Flanigan's Enterprises suffered from other mistakes during the period as well. In the late 1970s, the company tried to capitalize on the pervasive discotheque trend. Flanigan ordered the construction of giant, three-story nightclubs that featured delicatessens, dancing, and packaged liquor for carry-out. The business failed primarily because the discotheque fad faded just as Flanigan's three-story nightclubs were opening their doors. Flanigan also tried to capitalize on another trend: he built an expensive racquet club in Atlanta, hoping to reap rewards from the popularity of the fitness movement. The foray failed in 1979 when a patron at the Atlanta club was electrocuted as he sat in an improperly grounded Jacuzzi.
By the end of the 1970s, the effect of the lease-back scheme was evident on Flanigan's Enterprises' balance sheet. After losing $1.5 million in 1979, the company recovered slightly the following year by posting a negligible profit, but by then Flanigan and his management team were aware that the inflated lease payments they were paying represented a ticking bomb. Back in 1975, Flanigan ordered the closure of the company's package liquor store operations except for those in four counties in southern Florida: Dade, Broward, Palm Beach, and Monroe. The divestitures were not enough to alleviate the financial weight of the bad lease arrangement, however. By 1982, the development of new nightclubs was restricted to joint ventures through limited partnership entities. In March 1985, financial constraints led the company to begin franchising up to 26 of its package liquor stores and lounges in South Florida. Under the terms of the franchise agreement, a franchisee acquired the liquor license, furniture, fixtures, and equipment of a particular unit and entered into a sublease for the business premises, which gave the franchisee a license to use the "Big Daddy's Liquors" and "Big Daddy's Lounges" servicemarks in the operation of the business. The cost-saving measures were not enough to save the company from another financial loss for the year. Flanigan's Enterprises lost a record $1.9 million in 1985, by which time the company already had taken a major step to cure its financial ills.
Flanigan faced the collapse of his business in 1985. Through a franchisee, he learned of a possible escape route from his financial problems, and in November 1985 his company filed to reorganize under Chapter 11 of the Federal Bankruptcy Code. Declaring bankruptcy offered salvation to Flanigan for his mistake in devising the lease-back scheme, but many of his friends and business associates--the majority of the individuals who had participated in the lease-back arrangement--were angry. Under federal bankruptcy laws, a debtor was able to cancel lease agreements by paying 15 percent of the lease value during a period of one to three years. By using the provisions in the federal bankruptcy code, Flanigan was able to nullify nearly 50 lease agreements, which netted his company nearly $3 million.
A Transition to Restaurants in the 1990s and Beyond
Flanigan's Enterprises was officially discharged from bankruptcy in late December 1987, and its strategic orientation had changed as a result of its financial problems. Flanigan emerged as different person as well, replacing his garish attire of the previous decade with more conservative wear. Instead of driving a shamrock-green Excalibur that matched his green jackets and slacks, Flanigan wore oxford shirts and drove a black minivan. In his late 50s when his company emerged from bankruptcy,