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jCarbonara
Joe Carbonara

Labor Lessons

Real growth continues to be hard to come by for the foodservice industry. In fact, overall customer traffic was flat through the first quarter of 2016, according to The NPD Group, a market research firm covering the foodservice industry. Revenues and customer traffic may be inching along, but one area growing at breakneck speed is labor costs.

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jMartinez
Juan Martinez

Post NRA Thoughts: My Labor Costs are Killing Me! What Can I do About It?

The National Restaurant Association’s annual trade show has come and gone to much fanfare. From what I saw and read, the participation was phenomenal. We were able to bring our full consulting team from all of our offices and even made time to break some bread together.  This year, I also participated in a panel discussion that explored unit economics  and was moderated by Steve Romaniello, managing director of Roark Capital.

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jStiegler
Jerry Stiegler

Food Delivery Up, Meal Kit Potential and More

What’s up with meal kits? More consumers are having restaurant meals delivered but there’s a catch. Dunkin’ Donuts cuts a major deal with BJ’s Wholesale club. These stories and a whole lot more This Week In Foodservice

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Highlights

Chain Innovators: Fatburger

If growing in a recession is tough, growing in a recession while emerging from bankruptcy is tougher still. Fatburger has done both, executing a turnaround strategy since it filed for bankruptcy protection in April 2009. Last year, the company landed squarely in positive territory, achieving double-digit unit growth and systemwide revenue gains of 4 percent. In its primary markets of California and Nevada, same-store sales rose more than 11 percent for the year, says Don Berchtold, president.

FatburgerAs Fatburger worked to come out of bankruptcy, underperforming units were closed as were some in high-rent real estate. The store's footprint, which had inched up from 1,200 sq. ft. to almost 2,500 sq. ft. was brought back down. Old equipment was replaced and, working with suppliers, changes were made to the grill, the burger grind and format to improve speed of service. A veggie burger was added as was a Fat Salad Wedge. Interiors were spruced up and localized, with photos of XXXL (King Burger) Challenge winners adorning the walls. Menu boards were updated and burger options renamed and simplified.

All but three company-owned stores were sold to franchisees, with the ideal being "conversions" — local independents who buy into the brand and convert their operations to Fatburgers. That profile jives with a new management strategy that encourages franchisees and managers to take ownership, participate in their local communities and operate like entrepreneurs. "We don't just tell them what to do, we teach them how to do it and why it's important," Berchtold says. "We didn't chase trends and make big menu changes. We tightened everything up and focused in hard on our attitude, our people and our service."

Fast Facts

  • Year founded: 1952
  • Headquarters: Beverly Hills, Calif.
  • Menu specialties: Beef burgers custom made to guests' tastes
  • Service Model: Quick service, fast-casual
  • Units: 105
  • 2010 Sales: $78 million
  • 2010 Growth: Revenue grew by 4 percent, units grew by 18 percent
  • Projected 2011 growth: 25 units to open in 2011
  • Key expansion markets: South Korea, Dubai, Lebanon, Saudi Arabia
  • Typical location: Freestanding, mall, food court, drive-through
  • Average unit size: 1,600–2,200 sq. ft.; 45–50 seats
  • Average kitchen space: 35 percent to 40 percent of total square footage
  • Average covers per day per unit: 250
  • Average check: $11.26
  • Total equipment investment per unit: $125,000
  • Total unit cost: $450,000

Key Players

  • Chairman: Andrew Wiederhorn
  • President: Don Berchtold
  • Vice President, Construction & Facilities: Bentley Hetrick
  • Smallwares & Equipment: TriMark SS Kemp, TriMark RobertClark, Concept Services
  • Food Distributors: Sysco Corp. and U.S. Foodservice
  • Design: Robert Lee
  • Purchasing: Procurement Plus
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