August 20, 2013
Will Smashburger Become the Starbucks of the Burger Business?
The better burger trend is not a new concept. For several years, a wide variety of operators both big and small have been trying to convince consumers to patronize their establishments rather than Chipotle, Panera Bread or other quick service restaurants. But Smashburger has loftier goals. Management has its sights set on taking down the king of fast feeders, McDonald’s, by convincing consumers they should opt for the affordable luxury that it delivers.
Smashburger CEO David Prokupek told USA Today that he believes the chain, which has opened 200 stores over the past five years, can become a 1,000-unit business over the next five. In essence, Mr. Prokupek believes that Smashburger can achieve its goals by doing for burgers what Starbucks did for coffee.
The chain offers what it believes is better food and charges for it. The typical meal at a Smashburger, according to USA Today, is between $2 and $4 higher than at McDonald’s. Unlike McD’s and other fast food rivals, consumers get real cutlery when they eat at Smashburger, and staff bring meals to tables so patrons don’t have to wait around the counter for their food.
Similar to Starbucks in the early days, Smashburger has a small advertising budget so it relies on social media buzz and press to help it reach influential consumers when it enters a new market. Despite its relatively large size, the chain develops menu options based on local tastes. For example, visitors to the Smashburger in Brooklyn, NY can get a burger with grilled pastrami and yellow mustard on a pretzel bun.
Will Smashburger reach the heights envisioned by its CEO?
Analysts, including some on RetailWire’s BrainTrust, have been warning for a few years that the better burger bubble is bound to pop. If that occurs, which it almost certainly will at some point, Smashburger will need to have achieved a Starbucks-like position to weather the downturn.
Discussion Questions
What would Smashburger have to do to become the Starbucks of the burger world? Do you think the chain is taking the right approach to achieving that level of dominance?
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To become the Starbucks of the burger world, make better burgers at a lower price.
I’m looking forward to my first Smashburger. Here are the three things that I believe will help them achieve their world supremacy goal:
1. The secret is always in the bun. Nothing distinguishes a food place like the quality of their bread.
2. Diameter is better than height. There seems to be a competition to see who can build the tallest burger. That looks good on posters but it’s not customer friendly. With a teetering overstuffed burger you feel like a pig and when you try to eat it you look like one. Make a burger that fits the human mouth but widen the circumference.
3. Make a real chocolate shake—the kind in the metal container and where you get the container as well as your shake.
No one minds paying a little more for a lot more quality. I wish them well.
Nice dream and nice goals, but a different concept and a different world. Not going to happen. Wrong time, wrong product.
It’s not easy to scale like SBX did. But if you’re going to have a chance at it, you’d need someone as brilliant as Arthur Rubinfeld, Schultz’s childhood buddy. Aurthur brought amazing discipline AND flexibility to store design and construction, which enabled them to build zillions of stores in a very short period of time around the globe.
Add to that the fact that you need a kitchen, and you take the chances of a Starbucks-like expansion down substantially. Not going to happen.
I do think the ‘Third Wave’ of burgers is important though, but IMO, it’s going to come from locals and smaller chains, not from one HUGE chain.
“Better” is a highly subjective idea.
Look at Five Guys. It started with a single store and now has over 900 locations. Customers have warmed to hand-shaped patties, abundant free toppings, and fresh french fries from farms in Idaho. Kudos to Smashburger!…but they’ve got some formidable competition.
And all this time I thought our local (Davis, CA) Murder Burger was destined for great things. Alas, both it and Texas’s Whopper Burger are no more.
I didn’t notice a drive-through in the Smashburger articles I read, and I didn’t notice any appeal for kids. That’s adhering to the Starbucks model, but definitely is not a McDonald’s-beater. CEO Dave Prokupek seems unfocused while claiming to be focused. Does he expect to eclipse Mickey D’s with a Starbucks approach? And what about his statement that “The burger business is the most competitive business in food; It’s also the biggest.” In truth, there are more pizza restaurants in the U.S. than any other type, and as a single brand there are more Subway Shops than any other. (Oh, and a special note for Dave regarding his video: Eek! There’s a “d” in my sanwish!)
For my buddies and me, we’ll take In-N-Out for drive-through and Red Robin for quality (with real cutlery!). The nearby Smashburger isn’t even on our radar. The company seems conflicted regarding its approach, and I don’t see it meeting its lofty goals.
I fried quality burgers during college at King’s Food Host in Lawrence, Kansas. No drive-through, real cutlery. It was the finest burger I’ve ever made or consumed. Like Smashburger, we started with “meatballs”—which were really ice cream scoops of fresh ground beef from a container—and then smashed them on the grill using spatulas in both hands for better “smashforce.” The key to flavor in a restaurant burger is never to wash the grill. Instead, each night we scraped it down with cinder blocks. I wonder if Smashburger does that.
Smashburger has not made it to my GPS locator yet. Maybe when it does, I will sample it even though I am far from a fast food junkie. I am not sure why I would want to pay $4.00 more for fast food just to get real cutlery. But then, I have no idea why a sane banker would lend anyone millions to build a coffee chain (Starbucks) either?
I do like Red Robin and Five Guys. My grandchildren make me go there. And I don’t think I have paid that much more to get a knife and fork. But then I am not Starbucks banker either.
The Haystack onion rings are the best. I love the pretzel bun, but Culver’s and Steak N Shake have better burgers.
Their burgers are big, wide and flash seared like the master’s above but they need to flip the burger earlier to keep them juicy.
They have the right atmosphere inside for their young target audience, but they will have to add a drive thru for the rest of us.
Can’t remember the last time I was at McD’s, BK or Wendy’s. It has to be 15 years or more. Why? Simple: the food isn’t any good.
Tried Smashburger. Will be back. Why? Simple: they make good food with a good experience at a reasonable price.
They are not going to be SBX, but they could hit 1,000 stores.
Smashburger has created an experience that its customers see as better and for which these customers are willing to pay a premium price. No giant breakthroughs or mysteries solved here, just a combination of services that create a unique experience.
The simple concept of delighting customers should be an element of every retail endeavor. Now does it have the legs of Starbucks? Starbucks turned a commodity that was inexpensive into a daily, premium-priced necessary luxury for millions of people. We can better critique the comparison once Smashburger has have opened its 12,000th store.
Three numbers: 30,000, 12,000, 6,000. Everyone is entitled to dream, but there’s dreaming and then’s there’s just pipe-dreaming…this is firmly in the latter category. The analogy to SBX overlooks the fact that there was no nationwide coffee-shop chain—save perhaps for someone like Dunkin’ Donuts—whereas there are many large burger chains. Oh, yes, those other chains, and the numbers I cited: they’re (roughly) the number of McD’s, Burger King’s and Wendy’s (respectively), although in the case of the former it’s rounded to the nearest 10,000…which says a lot right there, namely that Smash can reach 1,000 outlets—or several times that—and they will (still) have meals to go before they dominate.
SBX was a new concept without a lot of direct competition when they grew. There’s a lot of burgers out there of every kind and scheme. Still, quality at a price often works.
I’ve been to this chain in Utah, Arizona, and California. Always very low customer counts and low staffing of two or three employees. They are about like Five Guys in price, but less focused.
Also they are franchise based. Starbucks is not and that really makes a difference.
Good product, but there is a lot of competition…too much.
A lofty goal for Smashburger, and I hope they can achieve it. More than coffee, Starbucks offers up an experience. They create an environment where people meet, hang out, etc. Meeting for coffee can happen at anytime during the day. Will Smashburger create the social environment of a Starbucks? Will customers pop in for a quick burger at off-times (not meal times)?
If the comparison between Smashburger and Starbucks is just about the higher price of their food, then they have a chance at succeeding. People will pay for quality and great service, but there is a limit.
I like a good Smashburger!
Interesting that Smashburger has overtaken Shake Shack as the growth monster in this category. I wonder where the limitation for selling a premium hamburger meal exists?
My wry observation is that while many people poke fun at Whole Foods as “whole paycheck,” the growth of Smashburger and its competitors makes it appear that it is even more expensive to eat “poorly” than to eat “healthy.”
If I were the CEO, I would limit expectations and be satisfied to be tops in the category. I’m not sure that attempting to grow from 200 – 1,000 stores will yield the desired result. The middle class is under pressure in the US and relying on the affluent to eat enough burgers to sustain a growing chain is a questionable strategy.