Denver-based fast-casual “better burger” chain Smashburger has grown into more than 140 restaurants since launching four years ago, the result of significant corporate investment and fast-growing franchising that includes about 40 established multi-unit operators. This year, the chain also began signing overseas partners. In September, the company announced a plan to open its first units in the Middle East, followed by November’s announcement of a plan to debut in Canada next year.
I spoke with Chairman and CEO Dave Prokupek to learn more about Smashburger’s international plans.
Is global expansion necessary for a restaurant chain to grow?
In the long run, I would say, over the next 10 to 15 years, from our point of view, it’s very important. Our goal is to be the No. 1 brand around the globe in our space. Right now, there are a couple [similar concepts] in the States and a few emerging brands around the world, but there’s no one who has clearly planted their flag a la McDonald’s. Whether we do it this year or next year is less important, but in the long run, it’s very important.
Is Smashburger growing domestically at the same time?
We are. We’ll end this year at about 145 restaurants, and we’ll be 200 to 220 by the end of 2012, so we’ll add roughly 75 to 100 in the U.S. We have about 400 to 500 committed to be built by current franchise partners here in the U.S., and I’m building 15 or 20.
Why did you choose the Middle East as your first international market?
We went fishing in three or four areas around the world. I would say Canada and the Middle East are neck and neck; we’ll open both in the second quarter, but it came down to finding the right partners. We actually have three different deals in the Middle East; we were able to find partners a little quicker there.
From a demand perspective, we’re looking to go where growth is high and there’s a good perception of Western brands, an emerging middle and upper-middle class and people have an interest in eating beef. We’re not looking to change or expand our concept away from that at the moment. Lots of markets fit those targets, so that’s what we’re looking for. Then we’re looking at markets where there are well-established operators and a supply chain to be able to execute well.
How much do you depend on partners to understand the culture and types of tweaks you need to make in international markets?
I would say a fair bit. I think every country will be different. We had our partners from Kuwait here, who have lived there a long time and operated other brands there and in London. They met extensively with our brand team, helping design the menu and food in terms of what they believe would work. They helped in designing the local burger and the shake and helped us understand things such as the fact that we have to find alternative sources for bacon and other things there. At the same time, they wanted the American feel of the restaurant, although with slightly bigger spaces and some different table configurations because of larger party sizes. And we’ll have menus in Arabic and English.
When we switch over to Canada, we’ll rely on our consumer team and some consulting help and research we’ve done to help fine-tune what the menu offerings and the pricing and the sizes and those kinds of things should be. My partner, Tom Ryan, is out of McDonald’s, and others on the team have had experience designing and tweaking, so we have some of that in our DNA already.
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