The Business of Burgers

A while back I wrote a post about different companies in the same field really being in different businesses – actually, having different business models within the same industry. A problem I encountered quite often during my time as a management consultant (and still see from time to time today) is that even people who should know better often fail to grasp that the business model they are using is not the optimal one for their particular part of the field. It does us no good to operate like a high-volume Starbucks when what our customers want is a quiet place to hang out, conduct business, and purchase/consume meals; nor can we prosper selling tiny plates of exquisite (and very expensive) food when what our customers want is a burger and a beer. With that in mind, let’s take a look at another very common type of business: the burger stand.

If you’ve spent any time in any American city, you’ve probably eaten in one or more of these fast-food institutions. Within a half-mile radius of my house there are two chain burger restaurants (a Burger King and a Carl’s Jr.), two local burger restaurants, and a Denny’s (which most certainly sells burgers). If we expand that radius to a mile or so the number of vendors increases exponentially, including 3 Jack in the Box locations, a Fatburger, a Red Robin, a Sizzler, at least a dozen local burger stands, and no fewer than 4 (yes, FOUR) McDonald’s locations. That’s not even counting the various sit-down restaurants in the area that include a burger or two on their menus. And I live in a residential neighborhood!

At first glance, one could easily get the idea that Americans (or the ones who live in North Redondo Beach, anyway) never eat anything else. But when you look a little closer, it becomes obvious that these businesses are not really selling the same thing. The chain operations, for example, are mostly selling convenience. As cheap as some of these restaurants are, you could still produce hamburgers for less at home, especially if you are willing to buy large boxes of frozen meat patties and keep them in your freezer. But a handy McDonald’s, Burger King, Jack in the Box or Carl’s Jr. will sell you a burger, hot and ready to go, exactly when you want one. You don’t even have to get out of your car; just yell your order into the clown’s head and they’ll hand it out the window.

It’s important to note that a local burger stand probably doesn’t have this same emphasis on moving product – and moving you in and out of the store – as quickly as possible. Like any other local service business these operations rely on repeat business, and on having their customers feel as though they belong. A local burger stand may or may not be clean, comfortable, and staffed by people who know your name and make you feel welcome – but if it isn’t, it can’t really compete with the McDonald’s down the street. In addition to food, these businesses are selling community, exclusivity, and comfort.

By contrast, a Sizzler doesn’t have a drive through; they will make an effort at providing you with an actual dining room to eat in, and a server to bring you your food and refill your beverage whenever you like. They’ll even sell you things other than burgers, if you want them, offer you salad bars, a choice of side dishes and desserts to go with your meal, even sell you a really over-priced beer. It’s still not a real restaurant, but it’s not as likely to result in your having to sleep on the couch if you take your wife there, either. It’s hard to consider a Denny’s or a Coco’s “real restaurants” either, but at least they will actually come to the table and take your order, and cook your food to order instead of just taking it out from under the heat lamp. In all of these cases, the restaurant is selling you an experience, not just a meal – specifically, a dining-out experience. It should be relaxing and enjoyable (to whatever extent is possible), or else you could just have caught a burger from the drive-through window and eaten it at home on the couch.

By the time we get all the way up the scale to a Red Robin, a TGI Friday’s or a Chili’s the restaurant is trying to offer us an entire lifestyle, with elaborate drink menus for singles or parties, kid’s menus and crayons/coloring books, “atmosphere” and anything else that can help you get into the spirit of the thing. It’s supposed to be fun; food as entertainment. Certainly, it’s supposed to offer you something you couldn’t get by taking a frozen meat patty out of the fridge and frying it up on your stovetop. Probably the ultimate example of this is Dave and Buster’s, as referenced in a previous post. I’ve been known to drive 40 miles to go to the nearest Dave and Buster’s in Orange County, passing untold hundreds (or thousands!) of burger stands to get there.

So is there room for another place selling hamburgers to open in my neighborhood? Sure! As long as they’re selling something that the people here want to buy – assuming that they know what that is…