Hopdoddy Burger Bar had carved out a nice niche for itself before the COVID-19 pandemic. Featuring big footprints with scratch-made food and a full bar — yet with a fast-casual service structure — Hopdoddy was able to straddle the line between convenience and quality, offering quicker service than most sit-down joints but with the same level of food.
Of course, the pandemic briefly made that advantage obsolete. And once the Austin, Tex.-based Hopdoddy started adapting with new digital tools and expanded off-premises service, it never looked back.
The company reset its priorities, focusing on what resonated with the consumer. That included redesigned kitchens, an improved digital experience and updated packaging to better accommodate off-premises sales. CEO Jeff Chandler said Hopdoddy viewed this pandemic strategy as “racing in the rain.”
“Necessity is the mother of all inventions, and that is so true for us,” he said. “Learning how to be efficient and effective at off-premises, learning where to stage food, how to time food, how to coordinate with drivers, how to communicate with guests, doing it in such a way where we're not just getting by, we're not just going through the motions, but we're actually doing it and having a great guest experience while we're in the process.”
This renewed focus on the experience and efficiencies has pushed Hopdoddy into a brighter future. Chandler said it now takes half of the amount of sales as pre-pandemic to hit the company’s financial targets with store-level EBITDA (earnings before interest, taxes, depreciation and amortization) and cash-on-cash returns. And Chandler said that even while dine-in business has returned, off-premises has hung around 30% of sales; that figure was 12% before the pandemic. Check averages are up, even regardless of inflationary price increases. Sales climbed 18% in 2021 to over $58 million, according to NRN’s Top 500.
The Hopdoddy team is also rethinking their growth strategy. For one, the company inherited real estate in Austin that it converted into a Lil’ Doddy, a smaller-footprint format that boasts a mobile-order pickup window. Chandler said it’s one of the system’s best-performing restaurants, and it’s providing valuable lessons in how to be more convenient and how to expand into suburbs.
But even with all of that momentum, expansion was proving tricky.
“Like everybody else, we're all looking for the same locations. Real estate prices are going through the roof now. Construction prices are going through the roof,” Chandler said. “And we thought, ‘Gosh, let's take another look at this. What if we found a like-minded brand in the burger space that we could join forces with?’”
That brand turned out to be in Hopdoddy’s back yard. In January the company announced the acquisition of Grub Burger Bar, which was founded in College Station, Tex., and had grown to 19 locations in five Southeast states. The two brands will operate as HiBar Hospitality Group, with Chandler as CEO. He said that while some Grub locations will remain, the goal is to convert Grub units to Hopdoddy, starting with all Texas locations besides the original.
Chandler said that while Hopdoddy sees opportunity to grow organically at about 12-14 stores per year, he believes the acquisition model is the perfect opportunity to take Hopdoddy to the next level.
“We're going to continue to look for regional, best-in-class, better-burger players,” he said. “We may be able to grow faster and more effectively and more efficiently through a merger or an acquisition than we can brick and mortar with everything going on at the macro level within the environment right now.”
Contact Sam Oches at [email protected].
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