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Don Sniegowski's picture

Smashburger named America's most promising company

This company is gaining a lot of media steam. On November 30, 2011, Forbes named Smashburger as its #1 most promising company in all of America. Wow! Forbes likes franchisors that aggressive leap to put franchises anywhere it can in the world. That's quite an eye for selling franchises for this new-comer that has been franchising since 2008.

America’s most promising company has global ambitions. In September Smashburger announced plans to launch six locations in Kuwait, three in Bahrain and eight in Saudi Arabia, all franchised. Middle Eastern consumers—whatever their opinion of America—have an affinity for premium Western brands, says Prokupek. Not by accident, all the Saudi stores will be at airports, giving global travelers a taste of what’s to come. Ryan and Prokupek also have their eyes on Canada, the United Kingdom, East Asia and South America. Says Prokupek, ever restless: “I don’t see the need to wait to bring this brand to the world.” - Forbes

The company's major investor is Consumer Capital Partners. Its board of advisors is comprised of some of the same people involved in Quiznos.

  • David Prokupek, CEO & chairman of Smashburgers. Managing director of Consumer Capital Partners
  • Rick Schaden, CEO and developer of Quiznos and founder of Consumer Capital Partners
  • Father and attorney Richard F. Schaden, founding partner of Consumer Capital Partners
  • Sales Cartoon #6021 by Andertoons

    Pat Meyers, chief legal officer, managing director, and partner of Consumer Capital Partners

  • David Robertson, CEO and chief investment officer at FrontRange Property Partners, a real estate investment firm
  • Others

This road has been traveled before. Not long ago, Quiznos had a lot of buzz about how good a concept it was. In 2001, franchisor Quiznos, now an imploding franchise network that has just avoided a filing of bankruptcy, saw fabulous press. Here's just a few points that a buyer could read.

  • Restaurant Business names Quiznos the "Leader in the Pack" of traditional QSR in its Top 50 Growth Chains Issue.
  • Nation's Restaurant News ranks Quiznos #1 in growth in estimated sales per unit in its Second 100 issue.
  • Entrepreneur lists Quiznos #6 in the Top 10 Franchises of 2001.

What's Going On With Five Guys?

We're currently studying a site to position our brand. It's a great high energy market with a good mix of casual dining and fast casual concepts. Some of the fast casual brands include Panda Express, Baja Fresh, Panera Bread, and Five Guys.

As we study each of the brands. Five Guys just doesn't seem to have the traffic count the other brands are generating. The demographic profile of the market is very diverse and noticable in the foot traffic.

There is no Smashburger in the market. However, the top 3 QSR burger players are visible and seem to generate decent traffic.

Why is Five Guys the brand that seems to be the one struggling? The restaurant is clean and level of customer service is satisfactory to good.

Five Guys Is Not Struggling

While every location is different, Five Guys is not struggling, in fact, its had much faster unit growth than anyone else. All new units have a 1-2 year maturity factor. But better burger is filling up.

Baja Fresh is shrinking and is up for sale.

Five Guys and Baja Fresh

The Five Guys has been in the market for nearly 1.5 years. Baja Fresh has been in trade area for nearly 7 years.

I agree all new businesses have the best year over year sales in their 1st 3 years. However, being that the Five Guys franchise is growing and the Baja Fresh franchise is stagnant doesn't explain why this Baja Fresh is more vibrant than the Five Guys in the trade area.

Others mention price point, burger competition, and system wide same store sales as key drivers to understanding the different levels of energy between the brands in the market.

Unit count growth is a good economic indicator for the franchisor's sales team not the franchisee operator. The Five Guys franchisee operator is clearly struggling in this trade area. There is a lot of QSR burger competitors in the market and Five Guys is selling the same product but differentiating its brand on price.

The Five Guys in-store consumer experience is nothing special. At the end of the day, why should I pay more for a greasy burger at Five Guys versus a greasy Angus burger at McDonalds or Wendy's?

This is a paid political advertisement.....

I know this is a political ad, but....you have your answer. If Five Guys doesn't draw the customers, it doesn't...Don't invest in Five Guys then !

Best tasting burger is...

back yard burger.

Five Guys unit growth not relevant

Unit growth is meaningless. Quizno's and Coldstone both had phenomenal unit growth in the early days.

Look for same-store sales numbers.

pricepoint for one.

I ate at one and for the money I was not impressed and will never go back. I like Wendy's for their value and taste. This is a very competitive market.

RichardSolomon's picture

There is a niche market out there for higher price points for

generic products like burgers and fries, but the quality has to be perceptibly better for anyone to see the point in going there.

When you add to that the last names of the people involved, you get a concept that ought to scare the lving daylights our of any competent investment advisor. I for one wouldn't kiss their daughters or eat their food, much less think about their franchise opportunity.

RichardSolomon's picture

Total Bull Crap

Lets talk about this again in June. Make a note.