Smashburger, the US better-burger chain, hopes to have its first UK site open by the end of this year, as it announced that Tim Lowther, who led the launch of Shake Shack here, would be its UK managing director.
As previously flagged up by M&C Report, the company, which operates more than 310 corporate and franchise restaurants in 34 states and seven international countries, has signed a partnership with AL Ventures Ltd, part of the MSG Group, to open more than 35 restaurants across the UK in the next few years.
MSG Group, which is one of the largest Domino’s Pizza franchisees in the UK with an annual turnover of c£100m, has acquired the UK franchise licence for the better burger brand.
Lowther, who helped introduce Five Guys into the North of England last year, said: “The fast casual dining market is yet to reach its potential and there is most definitely an exciting long term future ahead with huge potential for brands such as Smashburger. We are extremely looking forward to propelling Smashburger to lead the better burgers in the UK. Due to its laser focus on quality and taste, we are certain Smashburger will appeal to the UK’s tastes and more importantly satisfy the burger feeding frenzy for the next 30 years and beyond.”
“The better burger category is growing, especially in international markets like the UK,” said Tom Ryan, founder of Smashburger. “We are excited to be part of London’s booming food culture and look forward to introducing a new way to eat burgers with our new franchise partner who we’re confident will continue the brand’s status as a leader in the fast-casual industry across the pond.”
Lowther, who has over 30 years’ experience in the sector, told M&C Report that he hoped to have one or two sites open before Christmas. He said: “Certainly our discussions in terms of property are in line to do that.” He stressed that the first opening would not necessarily be in London.
He said: “We are looking across the UK, if the right site comes up at the right time in London, then we would open that as a flagship and that would be fantastic, but as you know the property market in the UK is a drawn out process and you don’t usually find a site you can move in tomorrow.
“What we won’t do wait while we look for that flagship site. The brand is flexible and the company that we have formed is flexible enough so we can open anywhere in the UK. If that is in London great, equally if that is outside the capital then that is great.”
In turns of timing of the brand’s launch here, Lowther said it was “a case of the stars aligning”. He told M&C Report: “The brand wanted to come to the UK in a market that was growing and ready for new players, but also wanted to do that in an environment financially that was going to work, where there was growth, which there is now in the UK; and finally finding the right partner. Those three things have come together at the same time.
“Of course the quality of product will help us standout and the way that is produced in terms of the ‘smashing’. That is one part. There is also the depth we go into in terms of flavour profile and food quality and you would expect all the top players to say that. What we do is wrap it up in a great environment, which is comfortable and fun to be in. We have a great urban design that the brand is rolling out now. We also have great side products in terms of the marinated chickens and haystack fries etc, while in terms of service style you order at the counter and the food gets delivered at your table, so that is also an enhanced part of the offer.”
Known for its fresh never frozen, 100% Certified Angus Beef burgers, Smashburger is celebrated for using a unique method of cooking – “smashing” the beef onto a hot buttered grill.
The brand’s menu features better burger combinations, as well as chicken and other main course options. It said that UK customers will be able to pair main courses with irresistible side dishes, including sweet potato fries, fries with rosemary, haystack onions or even indulge in a wide variety of additions including fresh salads, premium “handspun” shakes and craft beer.
Smashburgers is set to join US rivals Five Guys and Shake Shack in entering the UK market. Further US better burger chain Fatburger will make its debut here this June after securing the YO! Sushi site in Camden Town and hopes to expand to 20 eateries over the next five to seven years.
The 25-strong Five Guys hopes to add 22 units in total across the country this year. The group, which launched in the UK in the summer 2013, hopes to eventually operate 175 to 200 “high volume sites” in the UK and plans to launch in Continental Europe over the next 18 months.
Shake Shack will open its second UK site later this month in the high street by Westfield Stratford shopping centre, which is set to be a springboard for further growth here.
In July 2013, the Smashburger chief executive Dave Prokupek told M&C Report that the brand’s UK strategy would see it look to open two to three sites here over its first two years in the country through a joint venture with an experienced sector operator. Prokupek, who stepped down later that year and replaced by Crane., said that the group would take a “Chipotle approach” in terms of the speed of its roll out here and that it would initially look to do a number of JV sites in London, including in villages such as Wimbledon and Richmond.
Simon Stenning, executive director at M&C Allegra Foodservice, said: “We see that there is still lots of scope for a better quality burger operator, and that Smashburger and other brands entering the UK market will be able to steal market share from mainstream fast food and from independent restaurants. Consumer demand for burgers is still high, and expected to remain high, as burgers are such an appealing product. Concerns over healthier eating may dampen enthusiasm, however we have not seen this happen yet.
“Whilst stating the obvious, any brand launching in the UK will need to choose locations very carefully, as property costs may have a dramatic effect on profit and loss levels, especially if the equation of pricing and customer numbers are slightly out of kilter.
“London is fast becoming one of the most competitive burger markets in the world. London offers a large, youthful and aspirational marketplace in which well located and suitably differentiated burger brands can prosper – the strong trading figures from Five Guys are testament to this, as is the rise of assorted artisanal operators.
“Whilst the market is becoming more cosmopolitan and enriched with globally-influenced cuisines, we expect enduring appeal for quality burgers will sustain more premiumised operators – and increasingly raise proposition development questions at the mainstream global giants.”
Comment by M&C Report editor Mark Wingett
From Shake Shack to Five Guys and briefly Steak ‘n’ Shake, Tim Lowther has been the go to man over the last two years for US better burger brands looking for expertise in launching in the UK. I would wager that every time he has also heard that each new entrant pushes the market closer to saturation point. Not so according to the man himself, who is now set to guide Smashburger’s entry into the UK market.
Lowther took to the pages of M&C Report last October to argue why there was still plenty of room for more entrants to the UK’s burger market. He said: “People keep telling me that the UK burger market is massively overheating. According to them, it will burst at any moment; it has is no long term future; it’s too late; ‘last year’s big thing’ - done and dusted.
“I remember hearing the same thing in 1986 as I began my working life as a nervous new crewmember in a sparkling new burger restaurant called McDonald’s, it was the 171st store to open (Bognor Regis) and the national papers were saying that there were too many of these new restaurants in the country, that the market could not sustain this growth and that there was no long term future in the market and that it was all last years fad.”
Fast forward nearly three decades and there are now more than 1,200 McDonald’s outlets, 500 Burger King stores, and more than 900 KFCs, not to mention almost 300 premium burger operations that have popped up in the past few years, including Shake Shack, Five Guys, Byron, GBK, Handmade Burger Co., Meat Liquor, Honest Burger, Patty & Bun and Almost Famous. And that is only the tip of the iceberg.
According to Mintel, even in the hard financial times, the UK burger bar market was worth £2.79bn in 2012 with more than a quarter of adults claiming to visit a burger or a chicken bar at least once a fortnight or more.
Lowther believes that the market will consolidate over the next five to 10 years, and that many operators are already grouping into segments: The original fast foodies- McDonald’s - Burger King; the fast casual premium - Shake Shack - Five Guys; the sit down and savour- Gourmet Burger Kitchen - Byron ; and the Cool and Edgy- Meat Liquor - Almost Famous – Patty & Bun.
I expect Smashburger will look to pitch its tent across the last three segments mentioned above. It will have the considerably backing of MSG, one of the largest UK franchisees, in terms of funding, but also when it comes to site selection, fit out and sorting the right supply chain, to make sure its launch in the UK is a robust one.
The group has not cemented its price point as yet, but plans to be competitive and is thought pitch itself more toward the Byron, GBK and Five Guys end of the market. And how do the established UK operators feel about another US brand parking its tank on their home patch?
Alasdair Murdoch, chief executive at GBK, told M&C Report: “Largely we welcome competition as it does a couple of things - firstly helping further promote and grow the burger category and secondly, encouraging the whole sector to up their game so that consumers continue to receive an evolving and improved offer. We’re confident that customers continue to visit GBK for our unique variety, fresh, high quality burgers and innovative specials like the current Duck Confit burger. We’re seeing continued growth in customer numbers and believe that the category growth is having a positive impact among other factors.”
All still to play for then.
