Monday, July 12, 2010

Burger news from the AP

Appetite for "better burgers" shows no satiety

By MATTHEW BARAKAT (AP) – 20 hours ago

FALLS CHURCH, Va. — With a drive-through seemingly on every corner, you might think the market for burgers long ago reached saturation. But the fastest-growing restaurant chain in America last year was Five Guys, which specializes in double-pattied behemoths the size of a softball.
And that's just the tip of the arugula. So-called "better burger" joints are one of the fastest-growing parts the restaurant industry. Celebrity chef Bobby Flay launched Bobby's Burger Palace in the Northeast. Elevation Burger is expanding into Kuwait. Mooyah Burgers & Fries, Meatheads and the Shake Shack are looking to expand.
Higher-grade beef, fresher or more creative toppings, and better buns are bringing customers in the door.
The Washington, D.C., area has emerged as fertile ground for ground chuck. Five Guys, the earliest success story, is based in Lorton, Va., Elevation Burger in Arlington, BGR-The Burger Joint in Lansdowne.
Ray's Hell Burger, also in Arlington, is not a chain, but the restaurant run by iconoclastic chef Michael Landrum earned a national profile with President Barack Obama taking Vice President Joe Biden and Russian President Dmitry Medvedev there last month. (Medvedev's review: "Not quite healthy, but it's very tasty.")
It's a market that has room to grow. Such chains represent only about 2 percent of the $65 billion burger market, said Darren Tristano, executive vice president of Chicago-based restaurant consultant Technomic.
"The traditional players — McDonald's, Burger King and Wendy's — have really shifted their focus away from burgers to breakfast, chicken and beverages," said Tristano. He predicts better burger chains will continue to have double-digit sales growth for at least the next few years.
The founder of Denver-based Smashburger, fast-food industry veteran Tom Ryan, was keenly aware that Americans were hungry for higher-quality fast-food burgers.
The company did extensive research with fast-food customers who reported that the burgers they ate were mostly a matter of convenience. "'It's not the burger I crave; it's the burger I use,'" Ryan said. Smashburger has expanded to 70 stores in 15 states in just three years.
Customers are willing to pay to ease that craving. A Five Guys burger runs anywhere from $4 to $6, and some charge more.
Five Guys, like others, sells the fact that its burgers are never frozen — the stores don't even have freezers, only coolers. Elevation Burger uses organic, grass-fed beef and sells fries cooked in olive oil. BGR uses a mix of dry-aged beef.
Despite recent success of better burgers, one of the oldest names in the business has fallen on hard times. Fuddrucker's filed for bankruptcy protection in April. Tristano said he thinks Fuddrucker's problems resulted from large restaurants with high real estate costs.
By contrast, most of the successful better-burger operators locate in low-cost strip malls. It can cost less than $500,000 to open most better-burger franchises, a third of a McDonald's or Burger King.
Mark Bucher, the founder and vice chairman of BGR The Burger Joint, said he sees room to expand slowly. He plans to keep BGR in the Mid-Atlantic region for now. Bucher says he's been through this before, as a major player in the bagel boom of the '90s, which eventually lost steam.
"The gourmet burger industry will be survival of the fittest," Bucher said. "Those companies that are getting into the business now are five years too late."
Five Guys' sizzling expansion had a long prep time.
"It isn't anything we wanted to do. We just kind of got pulled that way" after would-be franchisees continually pitched the concept, founder Jerry Murrell said. He opened his first store in 1986, and through 2001, the company expanded to just five locations — one for each of Murrell's five sons.
Murrell didn't think Five Guys' cooking lent itself to easy replication. The potatoes were flown in fresh but often had slightly different starch contents that required tweaks in cooking times. Burger patties are always hand-formed.
After expanding regionally for a few years, the company began a national expansion two years ago. In 2009, Sales jumped 50 percent to $453 million, making it the fastest-growing restaurant with sales over $200 million, according to Technomic.
Murrell relishes the competition.
"If I were choose between opening in a town with 100 burger places and one with none, I'd go to the place with 100 burger places. People eat burgers in that town," Murrell said. "I like being next to McDonald's."
A glance at a few of the burger chains in the D.C. area and across the nation that have expanded in recent years, and their plans for future expansion:
Elevation Burger: First location opened in 2005 in Falls Church strip mall. Opened eighth location in Potomac, Md., last month. Expects to have 15 to 20 locations open by the end of the year, with up to 100 in the next few years. Also opening five stores in Kuwait.
Five Guys: Opened first store in Arlington in 1986. Operated five northern Virginia locations through 2001. Expanded with franchise agreements through Mid-Atlantic region beginning in 2002. Expanded on a national scale beginning in 2008 and now has more than 600 locations.
Smashburger: Opened first store in 2007 in Colorado and expanded quickly, with 70 current locations. Expects to have 100 by the end of 2010, and add 100 to 150 stores annually for the next two or three years.
BGR — The Burger Joint: Opened first store in Bethesda, Md., in 2008. Now has four locations in the metro D.C. area. Founder Mark Bucher has plans to expand slowly in the greater D.C. region.
Mooyah: Opened first location in Plano, Tex., in 2007. Now has more than a dozen locations in Texas. Company is expecting to double number of stores in 2010 and has plans to expand outside the state.
Meatheads Burgers and Fries: Opened first store in Bloomington, Ill., in 2007. Now has four locations in Illinois. Plans to expand to roughly 25 locations in the Chicago area in the next two to three years.
Shake Shack: Began in 2002 as a New York City hot dog cart and opened its first burger restaurant in 2004. Now has four locations in New York City and Miami Beach and expects to have seven by the end of the year.
Bobby's Burger Palace: Opened first restaurant in 2008 on Long Island. Five locations in New Jersey, Pennsylvania, Connecticut and New York. Recently announced plans to expand into the Washington, D.C. market.

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