How to Get Foodies to Pay Top Dollar for Fast Food
Updated on April 2 to include the total number of BurgerFi restaurants.
Bareburger, BurgerFi, Back Yard Burger, b.good. Burgers are back in a big way--especially when they're made to order with local ingredients and served in a hip, fast-casual setting.
The trend is a spin-off of one that appeared in the mid-1990s, when consumers, turned off by fast food, sought meals with more value. A crop of fast-casual restaurants sprang up in response, offering $10 burritos with locally-sourced and organic ingredients (Chipotle) and customizable burgers with all the fixings, from fresh sliced red onions to melted Swiss cheese (Five Guys and Smashburger).
"They grew under the premise and the selling point that what they provided was a better burger, which meant it was made fresh, just for me," says Warren Solocheck, a restaurant analyst with the NPD marketing group.
And since the burgers were arguably made with better ingredients, it was fair to charge top dollar for them (and add-ons like craft beer and fries). But entrepreneurs are taking the trend further--this is fast food for foodies.
The Rise of BurgerFi
These days, the "it" food item is a burger with an eco-friendly twist, and BurgerFi, a family-focused chain out of Delray, Florida, is leading the pack. According to a Technomic study released last week, BurgerFi is the fastest growing restaurant chain in the country (in the category of less than $200 million in annual U.S. sales), and grew its sales by 178 percent from 2012 to 2013.
The chain has succeeded because it caters to foodies--consumers who prefer all-natural meat, locally-sourced foods, and the humane treatment of animals, says Solochek. "Primarily millennials are concerned with where their food is sourced from," he says, and now that many of them have found viable work (not to mention their own apartments), they've got money to burn on fancy burgers. What's more, the chain offers a classy ambiance that's anything but dingy.
BurgerFi launched in January 2011 as an offshoot to The Office, a gastropub in Palm Beach County owned by auto magnate John Rosatti. After realizing most of that restaurants' sales were coming from beer and its dry-aged burger, explains Steve Lieber, BurgerFi's brand ambassador, Rosatti agreed to open (and privately fund) the first BurgerFi devoted to a better burger.
Rosatti conceived it as a "family-gathering spot with natural milkshakes and quick-serve prices," says Lieber. Today, the restaurant looks more like an upscale dining establishment than a low-key burger joint. The interior is decked out with chairs made from recycled Coke bottles, fans that use 66 percent less electricity, and tables made out of compressed recycled wood. Even the hanging halogen lights have an eco-chic vibe.
But it's the food, Lieber says, that sets BurgerFi apart. "Our burgers simply taste great," he says, noting that the meat comes from cows that never receive "steroids or growth hormones, either by feed or injection" and are "grass-fed and finished with corn." Burgers start at $4.97, but customers seem willing to pay a premium for the quality beef--and for knowing where the food comes from.
"The better burger segment grew very quickly and John [Rosatti] recognized that if we didn't capitalize on it quickly, there would be so many copycats that the segment would get very diluted," Lieber says. To stay ahead, "we're constantly looking at our sourcing."
This year, the chain plans to open another franchise in Mesa, Arizona, as well as its first company store in Napa, California. To date, there is a total of 45 stores (38 of them franchise), with approximately 20 more set to open this year.
Going Beyond Burgers
The upscale burger trend will continue, say experts, if for no other reason than there's a lot of interest in it. So BurgerFi's founders are wise to keep thinking of how to set their chain apart.
"The next step is, 'How do we differentiate ourselves from that batch,'" says Mary Chapman, director of product innovation for Technomic. "There's only so much local and organically raised beef out there and so it's never going to be on a wide scale."
If the present is any indicator of the future, entrepreneurs will help the trend evolve. They're building relationships and working with local farmers, Chapman says, and finding ways to tell their brand stories with authenticity.
One small business doing just that is b.good, a Boston-based fast-casual spot founded on the premise that "fast food wasn't real anymore," says co-owner Jon Olinto. B.good has the gourmet burgers but it also offers a variety of menu options that challenge the traditional ideas of fast food.
"We notice more and more that we're selling fewer beef burgers," says Olinto, whose b.good menu also features quinoa bowls and hippie-approved salads. "Over time, as we defined the business we want to be, it's led us down this other path." Still, he says "burgers symbolize what we believe in: getting locally-raised beef, grinding it in our restaurant, and serving it up."
Twelve years ago, Olinto and longtime pal Anthony Ackil raised $300,000 to start the restaurant. "We were differentiated from the beginning," says Olinto. "Our most popular beverage is a kale crush with pineapple and apple; our second leading seller is the Three Greens with hemp seed, spinach, and milk. Those products define that we are really different and the customers we serve (mostly younger females) are really different."
For him, the biggest challenge is how to grow the business but stay true to the original idea. Olinto's solution to that problem is to grow with some help of franchises. B.good has 10 stores, half of which are franchise and the other half of which are company-owned. The company has plans to expand to Raleigh, Toronto, and Cranston, Rhode Island.
"As long as we can find the right partners and people to produce the food, then the culture will remain the same," Olinto says. "If you make it about people and the stories about the people, then that is scalable."
JILL KRASNY | Staff Writer
Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.