Fatburger Fizzles While Smashburger Sizzles
Ah, the better burger wars. There are some losers and some winners. Franchisor Fatburger continues to go through bankruptcy turmoil. This is the chain that has targeted celebrities as franchisees to get into the news. Kanye West, Queen Latifah and Montel Williams are but a few of the owners of its hamburger havens.
Another distressed restaurant chain seems to be having management problems as well. The famous Fatburger chain is still under bankruptcy court protection, six months after its filing. Included in the most recent retail Chapter 11 updates, Fatburger has recently announced the closing of eight company-owned restaurants that were collectively losing $1 million. The company also recently stated its intention to file its reorganization plans with the bankruptcy court before mid-November, which it hopes will include renegotiated leases and restructured debt.
... Since buying out the chain in 2003, CEO Andrew Wiederhorn has been on trial, in and out of jail, and fighting foreclosure on his personal residence. That may not be the cause of Fatburger's struggles, but it's at least got to be a little bit distracting. - Barbara's retail blog, About.com
But About.com's retail industry blogger also reports that while the house of Fatburger may be burning, the Smashburger chain is sizzling. The chain is owned by Consumer Capital Partners, the private investment arm of troubled Quiznos sub franchise chain and its founder Rick Schaden.
In addition to approximately 60 openings that rival Smashburger added to the 2009 store opening list, the company has also confirmed that seven new airport locations will be among the 18 new locations it has contributed to the 2010 store openings tally.
... Last month, avid Smashburger fans in Minneapolis saw the Spicy Baja Smashburger on Texas menus and decided that the southwest concoction would also be a smash hit in the great white north. So the Twin City smashies started campaigning via blog posts and Twitter tweets until the company agreed to add its jalapeno-chipotle-pepper-jack concoction to Minnesota menus. Smashburger issued plenty of press releases about the whole affair, saying that it was glad to make the menu change for Twin City fans, which it did with plenty of fan-fare. Who needs celebrity endorsements when you've got food that creates its own burger buzz?
Rick Schaden's Consumer Capital Partners recently saw the emergency sale of its collapsing franchise chain, 123 Fit, a franchise chain that it conceived and started.
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I hope any new potential Smashburger Franchise Owner does some research on the tragic Quiznos Story. They are both operated by the same theif (Rick Shaden) and he and his so called team, will rape the Smashburger FO's just like he did the Quiznos FO's. Just a matter of time..
It is too much work. I have been working out on the circuit and it kicks butt. I am on my third month and it is getting harder to keep it up. People want an easy fix. No such thing. It does work but so does jogging, dvd's and anything that gets you moving.
Food has a better chance than a fitness business. Unless you are a Quiznos zee.
Finally, this may be the big break the franchisee's need in the franchising industry. With wealthy, celebrity names involved as franchisees in the dubious franchising industry, the problems in franchising might get their fifteen minutes of fame. Perhaps fair trade practices now have a chance.
I would not be a bad thing to see some negative media around celebrity franchisees. I can imagine franchisors doing some serious dealing to avoid just that. It would seem a pity that everyone that signs a contract would not get such a consideration if that is how it pans out. Or fizzles out.
Fatburger "BURNS" while Smashburger Sizzles?
Please!
Fatburger "FIZZLES" !
Hey, I meant BURNS, like in Rome burning down. Having to sell eight company-owned units as the franchisor goes through bankruptcy proceedings sounds more like Fatuburger is burning down than fizzling. No?
"FIZZLE" is not a bad suggestion though. It rhymes with Sizzles, and it starts with "F" too.
On second thought, I like it! I see that I can still edit the article so I'll change the title now.
I am not surpized that Smashburger is doing good NOW. Wait a few years.
In what way is Smashburger doing well? Opening units? Wouldn't that be a typical Schaden strategy? Are the units doing well, or only the Zor by selling lots of franchises for fat fees? I'd like to see some reports of same-store sales into the 3rd year - but are there any? (At least not many.) Remember Krispy Kreme? Expanded like crazy, people lined up at 2AM to get in. They still exist but lots of units have closed and I think there was some financial scandal involved?
I am not the least bit surprised by Fatburger cratering. I expressed skepticism many months ago. Last year's hot concept is this year's burst bubble. In addition to the dumb name (howsabout a sandwich chain called Lard Sandwich?) it is a slim niche. The restaurant operator thinks they are selling a gourmet product that should command a premium price. But the customer thinks it is little more than expensive fast food. (Can you say QUIZNOS ??)
Meanwhile the big QSR burger chains will chew away at them from below with "better" (not "gourmet") burgers at lower prices. And the table service fast casuals will squeeze them from above. The hot concept gourmet burger chain finds themselves with a narrow product niche. Not everyone wants a big burger. If a group of customers goes to EITHER a full product line QSR or a Fast Casual, the other folks in the party who don't want a big burger can get chicken or fish or a salad. Hitching your star to one product, a specialty burger, also limits you to a niche.
when you can buy a premuim burger at any tom, dick, and harry burger joint? McDonalds, Hardies, BK, Jack all sell top grade burgers now. Ask Starbucks what happened when McD's and the rest got into the premium coffee business. It's death by a thousand cuts. They don't take all your business...but they don't have to. And with all of them selling "premium" burgers where is the long-term sizzle?.
Speaking of fizzle. Smashburgers is owned by (p)Rick Schaden. Ask the falling number of Q franchisees how things are going now that tough times have hit the economy and the chain.
order to sell one hamburger and fries.
A McDonald franchisee has to invest about a buck twenty to do the same thing.
Only idiots buy these bozo franchises. They will be ground up and fed to their creditors.
Smashburger and Five Guys are both FranWhacks
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
"A McDonald franchisee has to invest about a buck twenty to do the same thing. "
Personally, I have never seen or heard of a McD going that cheap. Putting a full McCafe cell with smoothie/frappe into an existing restaurant costs that much. The FF&E package for a new McD is north of $500k nowadays. However, in the US most current Zee deals are for acquisition of existing units.
Quiznos are closing at a rate of about two stores a day. Why would Smashburger be any different than Quiznos or 123 Fit?
Soon Q will be nothing but a memory and the Smashburger franchisees will get some real experience on how Schaden runs a restaurant operation. These "smart" franchisees have made the same mistake that Q franchisees made - no recognized, independant franchisee association, no ad fund co-op, no food co-op, no counterweight to the corporate office. I can give a lot of the Q franchisees a pass; Schaden perfected his franchisee rip-off business model over the past five years and it
is now a business model that will maximize Schaden's earnings while killing off what was the #2 sub chain. To see what Schaden has done at Q and still invest in Smashburger is idiocy at its worst.
If only I knew how to post a picture here. The site of the local former Quiznos would make a great photo. See, there is a FOR LEASE banner tied up over the old Quiznos sign (above the vacant storefront), except that the banner isn't big enough to cover the whole sign, so the "Q" is sticking out.
It was knda sad. The Zee who pulled out was the 2nd owner. A family member explained their Due Dil was pretty much driving to another Q in the next state over, and asking the Zee there how the store was. When that guy said "okay I guess", they bought theirs.
The owner ended up working a factory job 30 miles away to pay the bills, his wife apparently was sick of the place and went back to college instead of working it, and they left teenage help in charge while they tried to sell it. IIRC in the end the handwritten (black marker on cardboard) sign on the door said something like "Asking $25,000,Make Offer" but there were no offers.
As a customer, I liked their sandwiches but felt they were pricey for what I regarded as merely another brand of Fast Food. I could get a toasted sub at Subway for 40% less money. Of course Q Corp. sticks their nose in the air and says their product is better, but they are not able to convince enough customers that it is better enough to justify spending that much more.