Emerging Chain Burger Lounge Plans Expansion
A veteran restaurant operator trades on sustainable products and grass-fed beef to compete in the growing "better burger" category.
By David Farkas, Senior Editor -- Chain Leader, 11/25/2008 1:57:00 PM
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| Burger Lounge offers three burgers: grass-fed beef, turkey and quinoa. The sandwiches cost $7.95 and come with onions, cheese and lettuce. |
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Modern--and sustainable--finishes create contemporary surfaces in dining areas. |
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An entire Burger Lounge is only 1,200 square feet and generates a lofty $1,100 per square foot, its owners claim. |
Dean Loring really wants to open his fourth fast-casual eatery in an office building on the outskirts of downtown San Diego. "It's a great neighborhood for restaurants, and it's perfect for us," declares the veteran restaurateur who with business partner Michael Gilligan founded Burger Lounge in La Jolla, Calif.
Loring, who has run restaurants since graduating from college, earned his stripes working for legendary restaurateurs Harry and Marilyn Lewis, founders of Hamburger Hamlet. He and Gilligan also own Cody's, a gourmet restaurant, in La Jolla.
The new unit, should he land it, is larger than the existing three restaurants, which run about 1,200 square feet each. That means it will be able to accommodate more people eager to sample the concept's grass-fed beef and panko-coated onion rings. Burger Lounge, like other burger concepts in the tiny but burgeoning "better burger" category, trades on quality ingredients. The concept also emphasizes "green," using sustainable building materials in finishes, fueling a distribution truck with waste vegetable oil and purchasing organic ingredients.
The Economics
A larger store gives the partners a chance to discover Burger Lounge's "revenue potential." Existing units now average $1,100 per square foot. "Even if the new store starts out at $1,000 per square foot, that's $1.8 million [annually]," Loring boasts.
He believes Burger Lounge is capable of generating such volume given the current crush at lunch. "We've employed every efficiency we can, and during peak times it is still a struggle" to keep customers from leaving, says Loring. "We know we're losing some percentage of business." An online ordering system he's looked at might ease the flow, but he isn't convinced the return on investment justifies the expense.
Not that Burger Lounge is hurting. With current units ringing up $1.3 million annually on a check average of about $11, Loring expects systemwide revenues to climb to $4 million in 2008.
Jonesing for Burgers
Sums like those are proving attractive to operators. While the better-burger category remains small, veteran chain executives and celebrity chefs have been testing the waters. This summer, for example, Food Network star Bobby Flay opened Bobby's Burger Palace on Long Island, N.Y. In June, former Mimis Café CEO Russ Bendel joined 20-unit The Habit, a Santa Barbara, Calif.-based fast-casual restaurant concept.
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Snapshot Concept Burger Lounge Headquarters La Jolla, Calif. 2008 Systemwide Sales $4 million (company estimate) Units 3 Average Unit Volume $1.2 million Check Average $11 to $12 Expansion Plans 2 in San Diego in 2009 |
In May, Phil Roberts, CEO of Minneapolis-based Parasole Restaurant Holdings, plans to open Burger Jones, a full-service restaurant. Roberts, who estimates his burgers will sell for $8 (Burger Lounge charges $7.95), says the category makes it easy for affluent people to spend less money during tough economic times. "It's a safe harbor for customers who want to trade down on transaction size," he says.
Tough indeed. "Access to capital is a bitch right now," sighs Loring, who's is currently creating an advisory board in an effort to attract investors. Should all go well, Loring and Gilligan plan to open two more Burger Lounges in San Diego before expanding (company stores only) into Los Angeles County by the end of 2009.
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