In 2007, Tom Ryan and partners purchased a Denver burger joint, rebranding it Smashburger for the way fresh hamburger is smashed on its hot griddle. More than three dozen locations have followed and the company says it has sold franchisee agreements that will open more than 200 over the next five years. Smashburger is the first concept Ryan (right) has developed from scratch but he’s no stranger to restaurants, having been chief marketing officer for Quiznos; U.S. chief marketing officer/SVP-menu management for McDonald’s (he gave the world McGriddles); and SVP-business development for Long John Silver’s after beginning his career in several marketing posts at Pizza Hut. He talked to BurgerBusiness.com about keeping the brand localized while growing nationally.
To read Ryan’s answers to the famous “10 Burger Questions” and of his respect for Waffle House, jump here. But come back, OK?
Burgers are crazy popular, and you’ve had a hand in that—now and in the past. But they may be more popular than ever. Why do you think that is?
I think there are a variety of reasons. The most obvious is that in this economy burgers have tremendous appeal. Burgers have always been Americans’ favorite food. They have tremendous utility, meaning almost everybody likes them. They’re cost effective and at the same time they trigger all the right human responses: They taste good; you feel good when you eat them; they’re communal. But from an economic landscape point, they fit because of the tremendous value they have.
Where’s Smashburger’s place in that taste and price landscape?
We think there has been a growing space that Smashburger was designed to capture. The folks in the tier below us, the true fast-food guys, have a tremendous amount of distribution power, but they really haven’t focused on burgers in a long time. They’ve been focused on diversifying their menus with chicken and salads and breakfast. And coffee. Really, if you think of the last 10 years, there hasn’t been a whole lot of innovation around burgers coming out of that [quick-service] arena.
Conversely, the folks in the tier above us were built on the old-school paradigm of full table service, a $10 to $15 a person average check and a 45-minute-to-an-hour experience. Smashburger was designed to give a great-tasting $5 burger with cool sides and stuff in a 22-minute time experience in a place that’s differentiated from the guys above and below us. An $8 check average and 22 minutes in a cool, modern place: that’s the energy. That’s the space Smashburger was designed to fill.
How much did you have that Smashburger business model in mind when you bought the Icon Burger restaurant and rebranded it?
Buying Icon Burger was just a starting point. We fully intended to morph it into something greater than it was. There’s not much left of Icon except the location.
But how much of the business model you envisioned is what you put in place?
Almost all of it. We’ve made some changes, but we understood the consumer landscape very well before we started. We kept it in mind as we went through designing the size of the restaurant, the dayparts, what the food and service needed to be and what the menu variety needed to be.
We did some overkill as often happens with new concepts. We had a breakfast daypart originally that we quickly jettisoned [because] we didn’t know how strong we would be at dinner. We’re 50/50 lunch and dinner now and we were pleasantly surprised by the level of dinner business that the [Smashburger] concept actually generates.
But breakfast is hot; other concepts are adding it. Have you considered bringing it back?
Most of those doing breakfast have drive-thrus and we don’t. We have a breakfast daypart that fits the brand that we’ll likely apply at nontraditional locations that require three dayparts. But it was the right decision to [drop breakfast and] cater to burger lovers.
So you’ve identified that niche. Is your next step to broaden that niche with chicken and so forth or do you concentrate on doing better within a more narrow focus?
Our focus is to be “Every City’s Favorite Burger Place.” That’s our mantra; that’s our [ad] positioning. You’ll find us continuing to focus on burger lovers and the people who live with them. We’ll have a necessary amount of nonburger foods–chicken sandwiches, entrée salads and kids meals-that you really need to have to make the occasion relevant. I would say that having a chicken salad and kids meals helps us sell more burgers.
I can’t say that down the road we won’t look to those parts of the menu as ways to broaden our sales perspective and broaden our occasions. But right now, when we’re establishing the brand across the country, our focus is going to remain on burgers.
Your “Every City’s Favorite Burger Place” approach has been an interesting marketing strategy because you localize your menu just a little in each market. You’ve got fried pickles in Wichita, and you’ve added fried green chiles in Colorado Springs, Colo. You hire local advertising and pr firms in each state. What’s your thinking on local marketing versus national?
To be every city’s favorite burger place-not it’s only, but its favorite–we believe you have to cater to the broad-based burger market and also to the local element. Doing what the top burger brand in a market does doesn’t get you anywhere.
We take a different spin and study what the local taste landscape looks like. And we dig deeper than burgers. We spend a lot of time looking at restaurants and taverns and mom-and-pop places and seeing what they’re selling. Not just burgers, but appetizers and desserts and local beers. We integrate that knowledge into some cool and unique burger recipes.
The Upper Midwest is the home of the “supper club,” so in Minnesota we use bar cheese, which is scoopable Cheddar cheese, on our signature burger in that marketplace. And Minnesotans love grilled onions, so we have that, and an onion bun. We put beer bratwurst in along with hot dogs because that’s what the folks eat. We have local beers like Summit and Grain Belt.
And we do that in other markets. As you mentioned, we have fried pickles as a topping in Wichita, and we have fried pickles as a side dish in Oklahoma.
Can you keep that level of localization going without losing Smashburger’s national brand identity?Oh sure. If you look at the mix, our local products are 20% to 25% of sales at most and 15% at the low end. We’re using the same burger and most of the same condiments [in all units]. We’re just adding things that are interesting.
So are we losing the brand? Not all. These custom products are part of the brand; they help define the brand. They don’t dilute it.
Do you worry at all about growing too quickly and losing control of the brand, about maintaining the quality of the brand?
[Consumer Capital Partners, which owns Smashburger] is not your average startup. We’ve all been around the block and we’ve watched our peers who grew too fast and made mistakes. We believe in metered growth. And we have the vision to staff our company ahead of our growth curve.
You can say we’re growing very quickly but we’re growing in behind talent and real-estate knowledge. That’s where a lot of concepts fall down. Their talent pool becomes diluted or their real-estate judgment isn’t what it ought to be. We don’t suffer from either one of those. And if you’re asking about quality, I can say that we have only signed franchised agreements with partners who have decades of operating experience and infrastructure. Although you hear about all these markets we’re opening up, we’re partnering with people who are already there.
In your career you’ve worked at Quiznos, McDonald’s, Long John Silver’s and Pizza Hut. Can you say where you learned the most about this business?
I learned the restaurant business from my peers and superiors at Pizza Hut. It was a great training ground. I learned about the need to balance consumer needs and franchise needs and how to be successful there. And I was surrounded by world-class people. McDonald’s is a great place to understand the world landscape and the meaning of exhaustible resources. They were first-class people.
Quiznos was a great entrepreneurial experience and it was an honor for me to work with someone like [Quiznos founder and CEO] Rick Schaden and really focus on driving a business. All those experiences combine for me to help make Smashburger a smarter business all along the way.
You’re a managing partner of Consumer Capital Partners (of which Rick Schaden is a co-founder). Do you see yourself as more of a financier than a restaurateur now?
Absolutely I consider myself to be a restaurateur. We have tremendous people on the rest of our team. Smashburger’s chairman is Dave Prokupek [who also is a CCP managing partner]. He is a brilliant partner and one of the savviest financial guys I’ve ever met. The beauty of the partnership is that it allows me to do what I’m passionate about, which is designing and executing great restaurants, and at the same time to partner with Dave, who takes fully responsibility for both the financial and strategic growth perspective. CCP is a whole other thing.
I think there are corporate restaurateurs and entrepreneurial restaurateurs. I would consider myself to be the latter.