New York

Who’s winning the burger wars?

With a new Shake Shack in Grand Central, Five Guys all over Midtown and BareBurger in Park Slope and Astoria, the city’s ongoing burger boom is showing no signs of slowing down. But New York only has room for so many burger joints. So which of the many new options are winning over New Yorkers’ stomachs?

Volume-wise, the clear winner is Five Guys Burgers and Fries, which has spread like wildfire over the past few years. Founded in Virginia in 1986, Five Guys was the fastest-growing restaurant chain nationally in 2010, according to Technomic, a market research firm. It currently has nine locations in Manhattan and Brooklyn, and is expected to open 12 to 20 new locations in the area over the next year, according to Andrew Moger, the CEO of Branded Concept Development, a design and construction firm that has worked with Five Guys.

Known for its made-to-order hamburgers, 11 free toppings and hand-cut fries, Five Guys developed a cult following in Virginia before founder Jerry Murrell started franchising in 2002. The chain is successful, Moger said, because it sticks to what it does best — serving only burgers, hot dogs, grilled cheese sandwiches and fries — at a reasonable price point.

Shake Shack is another big winner, but it has a far different model from Five Guys. Founded by celebrity restaurateur Danny Meyer in 2004, it started with an outdoor location in Madison Square Park. Now, it has eight locations, including a seasonal concession at Citi Field. But the chain is far more focused on high-profile locations than opening a large number of restaurants, according to Randy Garutti, COO of Shake Shack.

Garutti noted that the company looked for years before settling on its new Downtown Brooklyn location, at the Fulton Street Mall. Garutti said that spot was attractive because of its growth potential, particularly with the construction of nearby Atlantic Yards.

If Shake Shack decided to expand, it could give Five Guys a run for its money, according to Marc Frankel, a senior managing director at Newmark Knight Frank Retail, who has worked with McDonald’s and Chipotle.

“Danny Meyer has not been very focused on rapid growth,” he said. But if Meyer were to franchise or change his tune, “I think [Shake Shack] could be a force to be reckoned with.”

Comfort food

Hamburger chains don’t need as much space as other food purveyors, said Faye Fisher, the vice president of Advanced Restaurant Finance, a lender specializing in restaurants.

As a result, real estate is cheaper for them. While it costs about $1 million to open the average restaurant, Fisher said, “you can open a burger joint for $400,000, if you have a certain type of property.”

But New Yorkers these days are picky about their burgers. The fast-food favorites of yesteryear — McDonald’s, Wendy’s and Burger King — no longer satisfy Manhattan’s patty-philes.

“I think people now have more sophisticated tastes,” Frankel said.

Still, the potential for new burger places is limited, even in New York. The chains cropping up now can’t all flourish. Some will close locations, or simply stop expanding, according to Fisher.

“There’s a limit to how many burger chains you can have,” she said.

Doug Branigan, senior vice president of franchise operations at the four-year-old, Colorado-based chain Smashburger, predicted that the number of New York City burger restaurants will dwindle over the next three or four years.

Branigan’s company is actually planning to expand beyond its one New York location in Fort Greene into Manhattan. Still, he predicted that only two or three New York-based chains will likely be successful, alongside two to four strong national chains.

So who will be left standing?

Cracking the code

Burger joints may seem recession-proof, but just throwing patties on the grill is not enough to guarantee success, Fisher said.

Meyer, for example, chooses locations “extraordinarily wisely,” Fisher said. “If you don’t have a lot of foot traffic, you’re not going to be successful.”

That’s also clearly on the radar for Five Guys, which mostly sticks to locations in high-density areas.

One chain that may be struggling is brgr, which launched in Chelsea in 2006. After opening a second location on the Upper East Side in 2010, brgr announced plans for new storefronts on the Upper West Side, Union Square, Hell’s Kitchen, Flatiron, Midtown East, Soho and parts of Chelsea. But so far, no additional stores have opened.

Brgr did not respond to requests for comment. But Frankel noted that brgr locations are larger than other burger spots, with more seating and slightly higher prices. (Brgr’s Beautiful Day Burger costs $7.55; a Shack Burger, by contrast, is $4.50.)

“They’re a little bit more expensive, and I think they’re trying to position themselves as a little higher-quality offering,” Frankel said. “They require more business to be successful because of their size. They have a harder time competing in the strictly lunch areas.”

A decidedly more upscale option is 5 Napkin Burger, an outgrowth of Upper West Side restaurant Nice Matin. The burger was consistently the most popular item on Nice Matin’s menu, and in 2008, owners Andy D’Amico, Simon Oren and Robert Guarino gave it top billing with their new Chelsea eatery.

A sit-down restaurant with a full bar and varied menu, 5 Napkin is in a decidedly different niche than Shake Shack, Five Guys or brgr. Customers seem to be responding to the formula: The restaurant now has three New York locations and has expanded to Boston, Miami and Atlanta. Another location is slated for Union Square.

Guarino told The Real Deal that 5 Napkin should have “nice coverage” of the city once the 14th Street location opens.

Another fast-growing homegrown chain is BareBurger, which first opened in Astoria in 2009. Serving all-natural, free-range, grass-fed meats, BareBurger already has four locations in the city, and is planning to open three more this fall in Astoria and Chelsea, and on the Upper East Side.

And, New York City will soon see other new burger chains in the mix. Florida chain Cheeburger Cheeburger recently opened its first city locations in Park Slope and Forest Hills. Meanwhile, Smashburger is currently focused on Long Island and Westchester, but with an expansion of 400 restaurants planned nationwide over the next five years, Branigan said he expects it to enter the Manhattan market within the next year.

“We like to find spaces between 1,600 and 2,400 square feet with foot traffic in front of them, that are highly visible,” he said. “We like to be around other fast-casual restaurants.”

Still, he acknowledged the stiff competition in Manhattan.

“There will be a shakeout eventually,” he said.

COMPANIES AND PEOPLE

Tags
New York

Who’s winning the burger wars?

With a new Shake Shack in Grand Central, Five Guys all over Midtown and BareBurger in Park Slope and Astoria, the city’s ongoing burger boom is showing no signs of slowing down. But New York only has room for so many burger joints. So which of the many new options are winning over New Yorkers’ stomachs?

Volume-wise, the clear winner is Five Guys Burgers and Fries, which has spread like wildfire over the past few years. Founded in Virginia in 1986, Five Guys was the fastest-growing restaurant chain nationally in 2010, according to Technomic, a market research firm. It currently has nine locations in Manhattan and Brooklyn, and is expected to open 12 to 20 new locations in the area over the next year, according to Andrew Moger, the CEO of Branded Concept Development, a design and construction firm that has worked with Five Guys.

Known for its made-to-order hamburgers, 11 free toppings and hand-cut fries, Five Guys developed a cult following in Virginia before founder Jerry Murrell started franchising in 2002. The chain is successful, Moger said, because it sticks to what it does best — serving only burgers, hot dogs, grilled cheese sandwiches and fries — at a reasonable price point.

Shake Shack is another big winner, but it has a far different model from Five Guys. Founded by celebrity restaurateur Danny Meyer in 2004, it started with an outdoor location in Madison Square Park. Now, it has eight locations, including a seasonal concession at Citi Field. But the chain is far more focused on high-profile locations than opening a large number of restaurants, according to Randy Garutti, COO of Shake Shack.

Garutti noted that the company looked for years before settling on its new Downtown Brooklyn location, at the Fulton Street Mall. Garutti said that spot was attractive because of its growth potential, particularly with the construction of nearby Atlantic Yards.

If Shake Shack decided to expand, it could give Five Guys a run for its money, according to Marc Frankel, a senior managing director at Newmark Knight Frank Retail, who has worked with McDonald’s and Chipotle.

“Danny Meyer has not been very focused on rapid growth,” he said. But if Meyer were to franchise or change his tune, “I think [Shake Shack] could be a force to be reckoned with.”

Comfort food

Hamburger chains don’t need as much space as other food purveyors, said Faye Fisher, the vice president of Advanced Restaurant Finance, a lender specializing in restaurants.

As a result, real estate is cheaper for them. While it costs about $1 million to open the average restaurant, Fisher said, “you can open a burger joint for $400,000, if you have a certain type of property.”

But New Yorkers these days are picky about their burgers. The fast-food favorites of yesteryear — McDonald’s, Wendy’s and Burger King — no longer satisfy Manhattan’s patty-philes.

“I think people now have more sophisticated tastes,” Frankel said.

Still, the potential for new burger places is limited, even in New York. The chains cropping up now can’t all flourish. Some will close locations, or simply stop expanding, according to Fisher.

“There’s a limit to how many burger chains you can have,” she said.

Doug Branigan, senior vice president of franchise operations at the four-year-old, Colorado-based chain Smashburger, predicted that the number of New York City burger restaurants will dwindle over the next three or four years.

Branigan’s company is actually planning to expand beyond its one New York location in Fort Greene into Manhattan. Still, he predicted that only two or three New York-based chains will likely be successful, alongside two to four strong national chains.

So who will be left standing?

Cracking the code

Burger joints may seem recession-proof, but just throwing patties on the grill is not enough to guarantee success, Fisher said.

Meyer, for example, chooses locations “extraordinarily wisely,” Fisher said. “If you don’t have a lot of foot traffic, you’re not going to be successful.”

That’s also clearly on the radar for Five Guys, which mostly sticks to locations in high-density areas.

One chain that may be struggling is brgr, which launched in Chelsea in 2006. After opening a second location on the Upper East Side in 2010, brgr announced plans for new storefronts on the Upper West Side, Union Square, Hell’s Kitchen, Flatiron, Midtown East, Soho and parts of Chelsea. But so far, no additional stores have opened.

Brgr did not respond to requests for comment. But Frankel noted that brgr locations are larger than other burger spots, with more seating and slightly higher prices. (Brgr’s Beautiful Day Burger costs $7.55; a Shack Burger, by contrast, is $4.50.)

“They’re a little bit more expensive, and I think they’re trying to position themselves as a little higher-quality offering,” Frankel said. “They require more business to be successful because of their size. They have a harder time competing in the strictly lunch areas.”

A decidedly more upscale option is 5 Napkin Burger, an outgrowth of Upper West Side restaurant Nice Matin. The burger was consistently the most popular item on Nice Matin’s menu, and in 2008, owners Andy D’Amico, Simon Oren and Robert Guarino gave it top billing with their new Chelsea eatery.

A sit-down restaurant with a full bar and varied menu, 5 Napkin is in a decidedly different niche than Shake Shack, Five Guys or brgr. Customers seem to be responding to the formula: The restaurant now has three New York locations and has expanded to Boston, Miami and Atlanta. Another location is slated for Union Square.

Guarino told The Real Deal that 5 Napkin should have “nice coverage” of the city once the 14th Street location opens.

Another fast-growing homegrown chain is BareBurger, which first opened in Astoria in 2009. Serving all-natural, free-range, grass-fed meats, BareBurger already has four locations in the city, and is planning to open three more this fall in Astoria and Chelsea, and on the Upper East Side.

And, New York City will soon see other new burger chains in the mix. Florida chain Cheeburger Cheeburger recently opened its first city locations in Park Slope and Forest Hills. Meanwhile, Smashburger is currently focused on Long Island and Westchester, but with an expansion of 400 restaurants planned nationwide over the next five years, Branigan said he expects it to enter the Manhattan market within the next year.

“We like to find spaces between 1,600 and 2,400 square feet with foot traffic in front of them, that are highly visible,” he said. “We like to be around other fast-casual restaurants.”

Still, he acknowledged the stiff competition in Manhattan.

“There will be a shakeout eventually,” he said.

COMPANIES AND PEOPLE

Tags