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A $17 Burger? You Got a Problem With That?

Filed under Fast Casual, Marketing, Pricing, Upscale Burgers

Zach Conine doesn’t. And he’s cool with charging $5 for fries, too. The VP-development for LEV Restaurant Group says the menu for its i♥burgers restaurant that it opened in December 2010 in the ultra toney The Shoppes at The Palazzo hotel/casino is not just fairly priced, it’s the least-expensive dining option in the  complex. LEV wants to expand the burger concept, but it knows it won’t happen with Vegas Strip pricing, and that’s OK. Conine says potential franchisees are lining up. talked to him about premium pricing and i♥burgers (“I love burgers”). I have to start by telling you that I asked the CEO of a Southern burger chain what the highest price he’d consider charging for a burger is and he said $8.99. The i♥bacon burger at your concept is almost double that. After he’s revived from fainting, how would you explain i♥burgers’ pricing to him?
Zach Conine:
Well, there are a lot of factors that go into it, of course. One of our beliefs is that a burger can be whatever we want it to be. One of the things that’s really great about burgers is that it’s truly an American classic. That standard burger with American cheese, lettuce, tomato, onion, a little bit of ketchup, a little bit of mustard on a great bun? That’s just as American as it gets.

We think that’s a great, iconic food. It’s one of the first things people learn how to cook. It’s very good, and American and real. But we also think the burger can be insane. It can be shredded filet mignon. We have the i♥bacon burger that is 70% top flap brisket and 30% applewood-smoked bacon. That’s just a higher level of ingredient. If you’re making a burger with truffles or an organic poached egg or Asian slaw, the burger no longer is an “I can make this myself at home” experience. I love burgers is trying to provide both those experiences: That classic burger and the gourmet burger.

So different ingredients, different pricing?
Sure. The pricing’s going to change. But there are other factors as well [in the pricing model]. We use Certified Angus Beef. We provide a good-size meal and we’re located on the Las Vegas Strip. If that other burger exec and I could discuss rents, I’m sure we could agree that if I could get his rent at my location, I might charge no more than $8.99.

LEV Restaurant Group isn’t a fine-dining operator, though. You have Coffee Bean & Tea Leaf and Jamba Juice units and others. Why do a high-price burger concept instead of a fast-casual concept like everyone else? What was the opportunity you saw?
We’re an opportunistic company. We do the things we do very well and we like to work with partners to fit what we think are holes in the marketplace. We’re not a company that says “We do Italian really well. We don’t do anything else, so we’ll just wait for the perfect Italian restaurant to come along.” We say that we do retail food really well. We understand purchasing, systems, menu control, consistency and pricing.

When we were thinking about the i♥burgers concept, the space opportunity that opened up in The Shoppes at the Palazzo was 7,400 square feet. Much bigger than any fast-casual-model restaurant could be, obviously. So it became a full-service concept. It’s still the least-expensive full-service dining opportunity in that property. Someone can come in and get a burger [The Standard burger is $10] and fries for $15 or $16, and if they want a beer, they’re in the $20 range. At that’s still really cheap for the Strip.

But it’s not a concept you can take off the Strip, is it?

Town Square location

No. We realized most of our growth is going to come through fast casual because the Strip is a one-of-a-kind [market]. We know that. But we’ve taken the i♥burgers concept to a second location we opened in November 2011 in Town Square [an upscale lifestyle mall in Las Vegas].

No $17 burgers?
It has burgers priced from $5.99 [for The Standard] to $8.99 [for the moreto♥bacon burger]. It’s the same meat, and recipes, same great bun, which we went through an elaborate process to source. It’s the same menu but just in a fast-casual format. There’s still a full bar, but instead of a wait staff, you place your order and the food is brought to your table. We think that as a model this works better.

Again, working from an opportunistic standpoint, we saw that at this mall there weren’t a lot of dining opportunities for families. There’s a Yard House and a Miller’s Ale House, which are great concepts but not really family focused, so we opened a burger restaurant with really good food for kids and a great selection of salads and burgers. We tried to fill a void, which was that you couldn’t get in and out for lunch [at Town Square] for less than $15 or $20. We don’t think that has to be the case.

Our shtick in the restaurant is that every flat-wall surface that’s reachable is chalkboard paint. So the restaurant is a massive chalkboard. I think parents appreciate that they have a place to bring children. And there’s food they and their children will enjoy. The kids can draw on the wall and not inconvenience anyone. The parents can talk and enjoy a great meal.

So if you expand, the Town Square unit is the model?
We’re exploring both full service and fast casual. It will depend on where the opportunities lie. But certainly there are more opportunities for fast-casual restaurants than full service. With the direction Red Robin is going [with its lower-price, fast-casual Burger Works concept], and Umami is going [with UMAMIcatessen], it’s clear that it’s easier to find a 1,500- to 2,000-square-foot space for a fast casual restaurant than a 5,000- to 7,000-square-foot full-service space.

I’m also aware that I can’t charge $17 for an i♥bacon burger, as good as it is, off the Strip.

Are you worried that that fast-casual “better burger” segment already is too crowded?
It’s a fair question, but I think there is a lot of opportunity out there. Certainly i♥burgers is at the higher end of fast casual, because we think a full bar is important to customers and is a differentiator. I don’t want to keep someone from savoring the flavors of smoked Gouda with a good whisky.

And, you know, we’re pretty high in quality. Certified Angus Beef. I think if you look at the better burger segment, you have your McDonald’s as the base and then your Carl’ Jr. level and then maybe up again to Five Guys or Shake Shack, and then the Umami gourmet-burger level. I see our position up there in the gourmet segment with Umami.

Are you already planning expansion?
Oh sure. We have active discussions ongoing with potential partners for domestic and international expansion. I’d say we’ve already had 30 to 40 international inquiries alone. Being on the Las Vegas Strip has its benefits, and visibility is one of them. Most of all, we’re looking for good partners.

LEV’s experience as a franchisee must help.
Absolutely. We understand partnerships from that side. We’re franchisees for The Coffee Bean & Tea Leaf and Jamba Juice in Las Vegas. Between those two we have about 25 franchised locations. But we’ve all seen restaurant concepts that grew too fast, that sold rights to anyone and lost control and never made it. We’re looking for the right partners to grow with.