Growth Chains: LarkburgerGrowth Chains: Larkburger


Fine-dining roots will help Larkburger build restaurants and sales in a better-burger segment already crowded by the 1,000-plus-unit Five Guys Burgers and Fries, according to officials of the burgeoning fast-casual chain.


Larkburger has a menu of one-third-pound, charbroiled Black Angus beef and ground turkey burgers, and sandwiches made with adobo-marinated chicken breast and wasabi-ginger-sauced tuna steak. The concept also serves hand-cut russet fries — with the option of adding truffle oil, Parmesan cheese and parsley — as well as house-squeezed lemonade, milk shakes and craft beers.


At the end of August, Larkburger, which is owned by Larkburger Inc., operated eight restaurants, with plans to open three more in 2012 and operate 20 units by the close of 2013, said Adam Baker, president and chief executive. 


HEADQUARTERS: 
Arvada, Colo.
MARKET SEGMENT: 
fast casual, better burger

NO. OF UNITS: 8

AVERAGE CHECK: $9

LEADERSHIP: Adam Baker, president and chief executive; Thomas Salamunovich, executive chef; Tony Friel, director of culinary operations

YEAR FOUNDED: 2006

METHOD OF GROWTH: 
company-operated 
restaurants funded with cash flow and equity capital

COMPETITION: Shake Shack, Bobby’s Burger Palace

TARGET MARKETS: highly visible in-line or endcap spaces in communities with higher-than-average household incomes and young, active families

WEBSITE: 
www.larkburger.com

Baker, who co-founded the company six years ago with chef-restaurateur Thomas Salamunovich and his wife and partner Nancy Sweeney, said Larkburger restaurants that have been open for a year or more have average annual sales of about $1.25 million and a per-person average check of approximately $9. Food sales account for about 90 percent of the total, he added, and approximately 70 percent of all sales come from guests who dine in the restaurant. 


Baker said he, his partners and their investors — including Edward P. “Ned” Grace III, the founder and former chief executive of The Capital Grille and Bugaboo Creek Steak House chains — are confident Larkburger can stand out. 


“We came from fine dining, and my partner Thomas is a classically trained chef, so everything we’ve done from the beginning is about the integrity of the food and how we make it and where we source it from,” Baker said.


In addition to his Larkburger Inc. affiliation, Salamunovich is chef-co-owner of Larkspur in Vail, Colo., where the Larkburger was born, and Baker was once general manager.

Top-sellers include the Larkburger, $5.95; Turkey Burger, $6.50; French fries, $1.95; Truffle & Parmesan fries, $2.95; and chocolate milk shake, $3 to $5, depending on the size.


Grace, who is managing director of Grace Venture Partners LP and Grace Restaurant Partners LP, among other endeavors, began frequenting Larkburger in 2007. Appreciating Baker’s willingness to work hard and fast to achieve goals, Salamunovich’s culinary background, and the chain’s corporate culture and menu offerings, Grace said he decided to put money and time behind Larkburger even though, “I knew there was a wave of better-burger concepts coming.” 


Industry analyst Andy Barish, managing director for equity research at Jefferies & Co. Inc., said he dines at Larkburger when in Colorado. He said there is room for differentiated better-burger players because the segment is seeing stratification around a variety of price points and because burgers remain “the most popular food in the country.”


Upscale better-burger chains, such as Larkburger, The Counter and Umami Burger, can be as viable as any other well-run system, Barish said, noting, however, “The higher up on the price-point scale you go, the fewer the location opportunities.”


Larkburger restaurants traditionally fill 1,600 to 2,300 square feet, with 800 to 1,000 square feet devoted to food preparation and storage. They seat 45 to 70 people in their dining rooms and 16 to 25 patrons on patios, Baker said. Development costs have run from $500,000 to $600,000 per restaurant, but are expected to total about $510,000 using the latest prototype design for a 2,000-square-foot, 50-seat unit.


Larkburger touts its green practices, including buying wind-power credits equal to 100 percent of its electricity usage; using biodegradable and compostable packaging, such as utensils made from potato and corn starches; and recycling canola oil for use in automobiles.


Baker said gas-fired charbroilers, griddles and fryers are the workhorses of the kitchen, and reclaimed Monterey Cypress wall paneling is a signature decor finish for the chain, which averages about 20 employees per restaurant.


Larkburger does little conventional advertising, choosing instead to build community relationships, such as through youth athletic fundraisers, and burnish established relationships through social media. All marketing is aimed at inducing trial because “we know that once you taste our burgers, you’ll be back,” Baker said. 


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Editor's Note: This story has been updated to correct Thomas Salamunovich's title and affiliation.

Contact Alan J. Liddle at [email protected].
Follow him on Twitter: @AJ_NRN.