If you haven’t heard of Freddy’s Frozen Custard and Steakburgers, be patient.
“You will soon,” said CEO Chris Dull.
The 20-year-old, Wichita-Kansas-based brand currently has about 460 restaurants across 36 states and Dull believes over 3,000 units is possible. In a recent interview, Dull, who came on board two years ago, talked about all the ways Freddy’s is expanding, and doing so with no end in sight.
“When I came on, we had less than 50 operating groups with 380 restaurants and today we have a little over 60 for 460 units. All of this – our product, passion and culture – starts with them,” he said in a recent interview. “Close behind is the excellence of the product – made-to-order burgers, customized for each guest.”
The better burger space may seem somewhat saturated, but plenty of opportunity remains. The market size of the burger category, for instance, has increased by 5.1% per year on average since 2018, according to IBISWorld data, with more growth expected this year. Dull said Freddy’s competitive advantage comes from its operational execution – speed, accuracy, cleanliness. Further, Freddy’s ranks No. 1 in the fast casual category for customer service, according to a Newsweek and Statista survey.
“Behind our product is the ability to be really fast in the space,” he said. “We have an intense focus on three pillars – high quality products, genuine hospitality and very clean facilities. Our hospitality scores rank high. But I think our secret sauce comes in our speed.”
Freddy’s drive-thru orders average about 4 minutes, which puts the brand on par with quick-service players like McDonald’s. The average drive-thru order takes just over 6 minutes.
He calls this pace a “huge disruptor” in the made-to-order burger category, adding that the ability to create more throughput has also created better unit economics. Average unit volumes are around $2 million without breakfast or late-night dayparts, Dull said, and ground-up construction investments are usually between $1.6 million to $2 million.
“We are packing a lot of volume in a relatively short window of operation and we’re doing so efficiently,” he said. “I’m a stickler for ROI because that’s the strength of any franchise system. Adding to our ROI is a lot of our franchisees are their own landlord who own their own dirt and buildings. It’s a meaningful investment and our model is very strong.”
But how does Freddy’s get that speed, particularly when most made-to-order concepts take anywhere from 6 to 10 minutes at the drive-thru? Dull said it comes down to a Henry Ford model makeline, where burgers are built down the line and then fries are dropped before the order goes out the door. Since Covid, Freddy’s has also adopted new equipment and technologies to make building burgers and bags more efficient.
“It’s a simple process and we try to keep it simple. We have been innovating in our kitchens to de-skill what is difficult, and we really had to make those changes during Covid when our business model flip-flopped to mostly drive-thru. That gave us an opportunity to really execute faster and made the entire experience better,” Dull said.
The centerpiece of these innovations is the grill. Freddy’s burgers are pressed, which requires some strength and skill. When the company was assessing efficiencies, it developed a proprietary grill that clamps and does the pressing automatically. It’s also not as deep, so it’s safer.
“Now you don’t have to be super strong or have long arms, you just bring the press down. The grill also creates a more consistent burger,” Dull said. It also reduces cooking time by up to 40 seconds, which adds up during peak hours. Two-thirds of the system will have the new grills installed by the end of this year.
Freddy’s also adopted a pictogram system, which shows employees what is on a custom burger through pictures on a device, versus them having to read a ticket. This shift trims time as well. And, the chain added a designated bagging area, also with pictograms showing employees what is included in each order.
“This has been a significantly better experience for our employees who don’t have to learn each build or read what needs to be added or taken away. Now it’s just a picture, and the build is significantly faster while our orders are bagged more accurately,” Dull said.
Freddy’s will continue to explore and adopt new ways to make the business more efficient, or “profit smart,” as Dull calls it. That includes automation, a new point-of-sale system, a new loyalty program and a new mobile ordering platform. All of these pieces fit a bigger puzzle that Dull believes will future-proof the brand as it continues on its growth trajectory.
That trajectory, by the way, is pretty ambitious. Over the last two years, Freddy’s has awarded 240 new commitments, 150 of which have already purchased land. That means 600 operating locations will be in the system in the near term. Dull expects 800 by 2026 with an extensive runway beyond then.
“We’re still in the first quarter of the life cycle of Freddy’s,” he said. “It’s a young brand – only 20 years old – and to have 240 commitments in the last two years shows the tremendous demand we have to grow.”
Contact Alicia Kelso at [email protected]
