Business & Real Estate

Can ‘fast-casual’ burger chains overcome the merely fast?

Brigido Morales cooks burgers during lunch hour at a Sacramento Krush Burger. The fast-casual restaurant, like others such as Smashburger, In-N-Out Burger and Five Guys Burgers and Fries, aims to serve more healthful food with fresher ingredients, a growing trend in the industry.
Brigido Morales cooks burgers during lunch hour at a Sacramento Krush Burger. The fast-casual restaurant, like others such as Smashburger, In-N-Out Burger and Five Guys Burgers and Fries, aims to serve more healthful food with fresher ingredients, a growing trend in the industry.

On a recent Tuesday lunch hour, the Krush Burger restaurant near downtown Sacramento had a steady stream of customers chowing down on the chain’s signature mini-burgers and sweet potato tots.

As one of the region’s growing “better burger” chains, Krush Burger is on a roll. Part of a national trend, it’s biting into the traditional burger market long dominated by big chains like McDonald’s, Wendy’s and Burger King. In the last few years, America’s relish for the basic burger has shifted from the fast, low-priced products touted by the golden arches to higher-quality meals produced quickly, the so-called fast-casual better burger.

For Davin Vculek, “Chief Burger Flipper” and co-owner of Krush Burger, building a business on burgers was a sure bet.

“It wasn’t a fad,” he said. “It’s never not been a popular thing in America.”

Without doubt, the burger is the classic American meal. In 2013, 95 percent of Americans said they eat burgers at least once a month, according to Technomic Inc., a Chicago-based food industry analysis company. That’s up from 91 percent in 2011.

But while America’s appetite for burgers isn’t waning, the U.S. burger market – $77 billion a year – isn’t growing, according to Darren Tristano, a Technomic executive vice president. Fast-casual franchises like Smashburger, Krush Burger, and Five Guys Burgers and Fries, he said, are eating into the market share long enjoyed by traditional companies such as McDonald’s. Last year, McDonald’s global revenue and sales dropped 2.4 percent and 1 percent, respectively.

“Better burger” or “fast casual” refers to restaurants that are a step up from fast food, both in higher quality and higher prices.

Although they currently gobble up only a sliver of overall U.S. burger sales – roughly $3 billion in 2014 – the newer “better burger” chains’ chance for success is good because they steal market share, Tristano said. “The more traditional burger is going away.”

In Sacramento, at least eight fast-casual burger chains have opened in the past two to five years, according to the California Restaurant Association. The CRA estimates that about 268 such burger places statewide opened in the past five years, compared with 56 fast-food openings in the same period.

One of the newer entrants is Mooyah Burgers, Fries & Shakes, a Texas-based franchise, which opened in Rocklin last month. Co-owner Albert Romo said the family-friendly atmosphere of the restaurant, which he opened with his wife, Shadia, has contributed to its initial success.

“There’s been a great response from the community,” Romo said. “It’s far exceeded our expectations.”

Romo, who plans to open six more Mooyah franchises in the Sacramento area, said the Rocklin restaurant had about 17,000 customers in February, its opening month.

Chains like Smashburger, which has five locations in the Sacramento region, have been rated among the country’s fastest-growing by National Restaurant News.

What’s driving consumers to so-called “better burgers”?

Partly it’s a desire for higher quality, healthier options when a burger craving hits. In a 2013 survey, Technomic reported that 62 percent of consumers cited the quality and taste of the meat as a primary factor in their burger-buying decision, 6 percent more than in 2011. And 51 percent said it’s important that the meat was never frozen, up from 43 percent in 2011.

Tristano said he thinks the younger generation is looking for higher-quality beef because they have less trust in traditional burger chains.

In a 2014 reader survey by Consumer Reports magazine, traditional burger brands such as McDonald’s and Wendy’s scored particularly low overall when rated for cleanliness, value, freshness, food quality and other attributes. The Habit Burger Grill and In-N-Out Burger, both California-based, took the top two spots, earning especially high scores for food quality and freshness. In that latter category, McDonald’s, Burger King and Checkers Drive-In earned the worst scores.

Technomic’s burger survey found that more than half of Americans said they think it’s important that their meat is free of steroids, hormones or antibiotics.

“I think people are more health conscious these days, aware of the product they’re putting into their body or that they want to consume,” said Krush Burger’s Vculek.

Vculek, who worked as a corporate chef for restaurant owner and Food Network celebrity chef Guy Fieri, said Krush Burger uses never-frozen meat and gets its brioche buns from a local vendor.

The company’s been riding the burger train since 2011, when it started from a single food truck – then called Miniburgers – on the streets of Sacramento. Today, the company has two food trucks and four locations – including one in Dubai – with a fifth under construction in Rocklin. The company also plans to expand into Elk Grove.

Charging a little more for quality is a cornerstone of Krush Burger’s business model. “People are willing to pay $9 or almost $10 for a combo (two burgers, fries and a drink), instead of going to McDonald’s,” where they might pay $4 for that same combination, Vculek said.

A comparable Mooyah combo – a cheeseburger, fries and a drink – costs $10.47.

On their first-time visit to the Krush Burger in Davis last week, Louie and Aubrey Hurtado tried to remember the last time they’d eaten at a McDonald’s or other fast-food outlet.

“I’ll eat at Carl’s Jr.,” Louie said. “But she won’t.”

As for Aubrey’s preference: “I’ll have a burger at In-N-Out once in a while,” she said.

Traditional chains have recognized the public’s appetite for healthier fare. Carl’s Jr. is now advertising what it calls “fast food’s first All-Natural Burger,” a grass-fed, free-range patty with no hormones, steroids or antibiotics. And McDonald’s recently announced that it’s moving to offer antibiotic-free milk and chicken meat.

Rodney Blackwell, who writes the Sacramento burger review blog “Burger Junkies,” has noticed that consumers are more willing to pay for what they perceive as higher-quality, more healthful burgers.

“I think people are becoming more conscious about what they’re eating when they’re eating burgers,” he said.

Since starting his blog in 2011, Blackwell said, he’s also seen restaurant burger menus shift away from tons of toppings to simpler burgers with high-quality ingredients like aged steak or rib-eye instead of ground chuck.

“Whether they’re choosing only ingredients that are seasonal, or local or fresh, or ... instead of choosing beef that’s been corn-fed with GMO corn, they’ll use locally sourced beef that’s been grass fed.”

Blackwell rates fast-casual burger joints and fancier-menu burgers differently, but appreciates both ends of the burger scale.

“I actually like the full gamut of burgers,” Blackwell said. “Whether it’s like a 99-cent roadside burger ... or if it’s a $25 restaurant burger, I can see the beauty of them all.”

Call The Bee’s Ellen Garrison at (916) 321-1006.

Better burgers: How they stack up

In a July 2014 survey, Consumer Reports asked readers to rank 21 burger chains on a 1-to-10 scale for taste. Here are the results:

Top Five Best in Taste:

The Habit Burger Grill – 8.8

In-N-Out Burger – 8.0

Five Guys Burgers and Fries – 7.9

Smashburger – 7.9

Fuddruckers – 7.8

Bottom Five in Taste:

A&W – 6.7

Krystal – 6.6

Burger King – 6.6

Jack in the Box – 6.6

McDonald’s – 5.8

Source: Consumer Reports