Smashburger plans to capitalize on its momentum over the past year with several growth strategies in the works for 2015.
The fast-casual chain is testing a new loyalty program in the U.S. It plans to open domestic drive-thru locations for the first time. And it is moving into the United Kingdom this year
The Denver-based chain also recently rolled out mobile ordering, and plans to open 75 to 80 restaurants in 2015, according to CEO Scott Crane.
Crane declined to give specific sales numbers, but said units are averaging between $1 million to $1.1 million in sales.
After closing on a $35 million round of financing from Golub Capital in 2013, the company is talking less about an initial public offering — a possibility company officials said they have been considering for several years — even as fast-casual competitors Shake Shack and Habit Burger Grill went public.
“We never really looked at an IPO as imminent,” Crane said. “We’re in a fairly unique situation in that we don’t have to look for that next exit strategy. But if the right thing came at the right time, we’re certainly willing to take a look at it.”
With about 315 units in 33 states and seven foreign countries, including about 180 company-owned locations, Smashburger is on track to maintain a roughly 20 percent to 30 percent unit growth rate over the next three years and beyond, Crane said.
The fast-casual chain’s largest shareholder is Consumer Capital Partners, founded by Rick and Richard Schaden, and former owners of the Quiznos sandwich chain. CCP’s portfolio also includes Live Basil Pizza and Tom’s Urban.
The Schadens and CCP are embroiled in litigation both with Quiznos shareholders and with former Smashburger CEO Dave Prokupek on separate issues. But that has nothing to do with Smashburger, Crane said. The chain is focused on a busy year ahead.
The move into the United Kingdom, for example, opens up the brand to Europe, where competitors Five Guys Burgers and Fries and Shake Shack have already debuted restaurants.
Crane said Smashburger’s agreement in the United Kingdom, including Great Britain, Scotland and Wales, calls for 35 restaurants to be operated by MSG Group, which is also a Domino’s Pizza franchise operator in England, with about 100 units.
“It’s a huge move for us,” Crane said, noting that the U.K. will be the chain’s eighth international market, with more to come. “It’s one of the largest development agreements we’ve done.”
Meanwhile, in the U.S., the chain is looking to enhance the brand in more “consumer forward” ways, Crane said.
About six months ago, Smashburger launched online ordering, which allowed customers to order and pay ahead. All units now have designated pick-up areas called “Smash and Dash,” so customers can skip the line.
A new mobile website
Last month, Smashburger launched a new mobile website, which Crane described as more user-friendly and interactive. Guests can order ahead, but payment by smartphone is not yet an option.
In four markets, Smashburger is testing a new loyalty program called Smash Rewards. Guests can earn free food after so many dollars spent, and they can be first to know about limited-time offers.
Crane said the program will allow for more targeted marketing, sending calls to action directly to customers based on their preferences by either text or email.
The chain is still evaluating the program to make sure it’s right for rollout, but Crane said, “I think it’s going to be a big move for us.”
Also to come this year is its first drive-thru location. Crane said two to three will open before the end of the year, though he couldn’t reveal the locations.
Smashburger is not giving up its fast-casual positioning, he said. It’s not even borrowing a page from the quick-service world, where drive-thru sales can account for more than half of revenue. But, he said, the possibility of a drive thru opens up options for the brand.
“It’s one more way to use us and one more way to enjoy Smashburger,” he said.
Consumers want high-quality food, but they also want speed, or at least the option of speed, Crane said. That’s a point of differentiation for the brand.
“If you want to linger or bring the kids, you can. If you want to take it to go, you can. Now, if you want to order online, you can,” he said.
Additionally, Smashburger is enhancing its kid’s menu with a new grilled chicken option. A more healthful fruit-based dessert option is in the works, and the chain plans to spotlight its regional burgers as limited-time offers across the system.
In May, the Colorado burger, with grilled green chilies, melted Cheddar and pepper Jack cheeses, lettuce, tomato and mayonnaise on a chipotle bun, will be featured, Crane said.
“We’re thinking about doing kind of a cross-country tour. We could get on a roll with it, where consumers will know what’s coming,” Crane said. “Or we could do a world tour, because international locations have regional burgers as well.”
Crane said the first quarter ended March 29 was one of the best Smashburger has had in a long time.
“Same-store sales were up considerably,” he said. “I don’t want to put a number on it, but it was certainly in line or better than the industry.”
In addition, the chain’s operational execution scores have risen over last year, and restaurant openings are at an “all-time high” in terms of volume, in part because of better real-estate selection efforts, he said.
“Momentum across the board is extremely strong,” Crane said.
Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout
