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Shopping Centers Today -> December 2005
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WORTH REPEATING
Cheeburger Cheeburger chain to get beefier to the tune of 30 units annually
By Karen M. Kroll
The name Cheeburger Cheeburger Restaurants is eccentric, all right, but the spelling is intentional. Contrary to what some might assume, however, the 51-unit chain based in Fort Myers, Fla., did not take its name from a Saturday Night Live television skit in which immigrant short-order cooks serve up only “chee-burgers.”
The first restaurant, which opened on Sanibel Island, Fla., in 1986, was originally called Faces of Sanibel, says Sam Lundy, the company’s president and COO. Sales were lackluster; the vague name did little to communicate exactly what sort of establishment the business was, and eventually it closed.
What was needed was a name that more accurately conveyed the menu. “Cheeseburger, Cheeseburger” was one idea that founder and majority owner Bruce Zicari came up with. But given the difficulties of obtaining an enforceable trademark on such a widely used word, Zicari went with Cheeburger Cheeburger, says Lundy.
Under the new name, sales took off. The company added restaurants at a rate of about four per year until 2002, Lundy says. Since then, the company has grown by roughly 50 percent annually in unit terms, with 18 restaurants opening in the fiscal year ended in August. Most of the units are located on the East Coast.
The decor is a throwback to the 1950s, with its prominent use of pink and teal, and with a glass block for a counter. The menu, too, takes its cues from ’50s-era soda shops — featuring, of course, cheeseburgers that start at a quarter pound and 70-plus flavors of shakes and malts.
Management says it plans to open about 30 stores annually over the next several years, says Michael Santel, the Phoenix-based director of franchising and development. The corporation is actively searching for sites and welcomes suggestions from potential franchisees. All units, save the restaurant on Sanibel Island, are franchises; officials say the expansion will rely on franchisees.
The ideal sites are upper-middle-class suburbs with populations of at least 85,000 within a five-mile radius. Cheeburger looks for areas where single-family homes predominate, and also where there are office buildings nearby, for the added benefit of the lunchtime crowds, Santel says.
Cheeburger prefers lifestyle and mixed-use centers, where rents are lower and business hours more flexible, Santel says. The restaurants typically measure between 2,400 and 3,000 square feet; the bigger units tend to have larger lunchtime crowds, and need the additional space to serve patrons who need to get back to work. Cheeburger is planning to add a few airport units, says Santel. It already has a restaurant in the Fort Lauderdale airport and is negotiating to open one in New York City’s Kennedy airport.
Until recently, the company had not been on the radar screen of many landlords and developers, but success is changing that. “After we get our first location in an area, it’s easier to find sites,” said Santel.
Continuing to find appropriate locations at reasonable cost will be important, because competition is fierce, says Dean McSherry, president and CEO of Dallas-based Preferred Restaurant Services, a consulting firm, which has no business relationship with Cheeburger. “They need to find good real estate where they can stand out, and not be in a situation where the rents are killing them.”
Competitors include Johnny Rockets and Red Robin, says McSherry. And because people tend to patronize only one or two burger joints, a new arrival needs something extra to give them reason to break their habits. Cheeburger relies on the quality of the ingredients it uses, says Sam Wright, director of marketing.
Burgers are made from 100 percent beef chuck, while the shakes use Edy’s ice cream. The meals are prepared fresh and made to order. Cheeseburgers feature any combination of 30-plus toppings. The burgers start out larger than advertised, too, with the quarter pound patty starting at 5.5 ounces, so that even when cooked, the burger usually weighs in at more than a quarter pound.
Cheeburger prices are higher than at most fast-food restaurants. Quarter pound burgers run about $4.50, dinner salads cost between $7 and $10, and shakes and malts go for $3 to $4.
Nearly all the company’s growth will come from franchising, Santel says, because mixing corporate-ownership and franchise models does not work. Corporate stores involve a high degree of control, while franchising requires the company to lead by communicating a vision and then motivating others to work toward it. “They’re a totally different mentality,” said Santel.
The ability to attract strong franchisees who possess both the financial resources to open a restaurant and solid management skills is critical, McSherry says, because a failed restaurant can hurt the brand in a particular community.
Jan Norman, author of a book to be published in March, What No One Ever Tells You About Franchising, says so too. Drawing top-notch franchisees means the company needs “to have the infrastructure to serve the franchisee, and not have them getting disgruntled because they’re not getting support,” she said. The key is to be able to provide franchisees with expertise, especially in such crucial decisions as site selection, while giving them room to be creative in the way they run their restaurants.
Cheeburger gets about 50 inquiries a month about franchising. Of those, maybe three will end up joining the company. Some are unable to pull together the initial investment, typically about $350,000.
The restaurants are fairly straightforward operations, Lundy says. They don’t serve breakfast, and the menu is small. Entrées, for instance, consist of cheeseburgers and a half dozen sandwiches and salads. More would be less, Lundy says. “If you execute one thing right, people will come back,” he said.
“This concept is a lot of fun for customers and employees, and profitable,” said Harold Autry, owner of three Cheeburger restaurants in the Washington, D.C., area.
Another franchisee, Robert Miller, in Parker, Colo., says he came to the company with no restaurant experience, having spent most of his professional career in the pulp and paper industry. Nevertheless, in his old job Miller learned management skills he applies to handling his youthful staff (they are of high school and college age) at the Cheeburger he opened this past summer. Miller says he plans to open several more in the Denver metro area.
“The reception has been phenomenal,” said Miller. On weekends, some 500 customers per day come through the doors, he says. (Takeouts number about 60.) Weekday traffic is roughly half of that, but the restaurants only hold about 80 diners at a time.
Many of the restaurant owners work with local groups to help raise the latter’s profiles — and their own. Autry, for one, teams up with schools and sports clubs and will donate a portion of sales for a given evening to a group. “We help the cause and also get the word out [about Cheeburger].”
Cheeburger is betting, though, that the best way to get the word out is to keep expanding. And who knows: It might not hurt if Saturday Night Live went into reruns on some local TV stations.
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