Thinking of Buying a Fast-Casual Franchise? Read this report first.
Special Report
Death of the Gourmet Burger?
The decade-long boom of the gourmet-burger segment has some analysts speculating that it may be reaching its zenith, but a recent study suggests it may have only just begun.
Upscale premium burgers have room to grow

In 2001 famed French chef Daniel Boulud rocked the restaurant world—and he did it with the most unlikely of dishes: the hamburger.

Before it became a global phenomenon, the db Burger—a sirloin stuffed with braised short ribs and foie gras on a Parmesan bun that sells for a cool $32—was unlike any burger creation that had come before it. Not since the advent of Dijonaise had there been such brazen creative liberty taken with an American classic known more for its unadorned reliability than its culinary eccentricity. It was indeed one giant leap.

The db Burger lit a fuse that touched off a gourmet-burger trend in both full- and quick-service restaurants that swept across the U.S. over the last decade. But the ever-expanding ubiquity of the “better burger” concept—combined with a recently damaged economy—has caused some analysts to question whether the fad has reached its plateau.

“I think there is some saturation going on, but people have always loved burgers, and I think they will continue to love burgers, so this strikes me as a lasting trend,” says Kathy Casey, a Seattle-based multiunit-concept and menu consultant, as well author of nine cookbooks. “I think there is still a huge opportunity in the better-burger niche that is not going to slow down any time soon.”

If a recent Technomic report is any indication, Casey’s assessment may be spot on.

According to the foodservice industry consultancy, consumers are relying now more than ever on restaurants to provide value in hamburgers through what it calls “premiumization.”

The report—which was based on more than 2,250 online surveys of U.S. and Canadian consumers—claims, “burgers are one of the hottest trends on today’s dining scene.” Of those surveyed, 91 percent said they eat a burger at least once a month and 44 percent said they consume burgers at least once a week.

“American consumers take their burgers seriously. It may be one area of foodservice where they are less willing to cut back, despite the current economic environment,” says Darren Tristano, executive vice president at Technomic. “They expect to pay more for a higher-quality, better burger and are willing to do so because the value proposition is heightened.”

The study points out that 27 percent of restaurant customers said they prefer to purchase burgers made with Angus beef, compared to 20 percent in 2007, while 19 percent of consumers reported they would prefer to purchase sirloin burgers, up from 13 percent in 2007; and nearly half of consumers said they think restaurants should offer a variety of burger sizes, ranging from mini burgers to half-pound burgers.

Tom Ryan is encouraged by the study and says the Technomic data only serves to confirm what he and his business partners suspected back in 2005 when they decided to launch the Denver-based quick-service concept Smashburger, a build-your-own burger joint that serves 100 percent Angus beef in either one-third or half-pound patties.

“When we started researching this it was clear that a lot of people had burger needs that the big suppliers weren’t catering to,” says Ryan, whose fledgling chain has already grown to 30 locations in six states and is projected to top 40 by year’s end. “The big quick-service guys hadn’t had a burger innovation in almost a decade, which meant there was a space to be filled.”

Dave Prokupek, Smashburger chairman and seasoned market analyst, says that what is emerging right now is a new batch of quick-service burger leaders who are able to cater to consumers who are looking for a more sophisticated burger than the big chains offer but who also wants to stay within the quick-service price point.

But Prokupek says the landscape is crowded with some outlandish burger concepts. Consider, for example, the Tacoma, Washington–based Burgers International and Pizzeria, which offers everything from antelope to alligator burgers on a bun. While it may feel like an untamed wild west of innovation, Prokupek says a core group of the most successful chains will rise to the top, eventually capturing between 20 and 30 percent of the $100 billion annual burger market share (70 percent of which is controlled by just four major players).

“We think that over the next two or three years you will see three to four players emerge to become the dominant forces in the so-called ‘better burger’ market,” Prokupek says. “A few are already on the field and there will probably be a few more who have yet to make an entrance on the market.”

Michael Schaefer is a foodservice research analyst with Euromonitor International, which conducts research on the global foodservice market. He also believes that the better-burger trend will continue to thrive in the coming decade, even amongst the larger, national quick-service chains.

“I think this is a fairly durable trend,” Schaefer says. “I think we’re already seeing mainstream burger chains liked Carl’s Jr. and Burger King attempting to approximate the same kind of experience you’d get from, say, a Five Guys or The Counter. Over time we’ll probably see some kind of shakeout, and some of the new chains won’t be around five years from now, but I’d be very surprised to see them all disappear.”

Ironically, some analysts believe the state of the economy is also helping to propel the better-burger trend into the next decade. In general, the quick-service industry endured a love-hate relationship with the recession, as the economy has forced consumers to trade down on their dining options (the love) while also curbing people’s desire to spend money on eating out (the hate). But when it comes to the burger, it may be the best of both worlds.

“I think the most obvious point is that this sector has benefitted greatly from the recession with consumers trading down from full-service dining,” says Greg Hodge, research director with foodservice and retail industry analyst Planet Retail. “This of course will not last forever, so I think restaurant players have looked to introduce gourmet burgers or high-end products that go beyond their regular meal offerings.”

Moreover, Hodge says burgers allow consumers to feel more in control of what they are ordering, as they can create their own combination of condiments, cheeses, toppings, and even buns.

“It removes the feeling that the menu has been imposed on you,” he says. “I think this is a natural step and a necessary one if there is to be a future for some fast-food burger chains.”

But while the American consumer is still very much on board with the burger, some caution that the paradigm may eventually shift because of burger fatigue.

Mark Godward is president of WD SRE, an operations consulting firm that works with restaurants and retailers. Godward has worked with several famous burger brands, including Whataburger, Carl’s Jr., McDonalds’s, Wendy’s, and Burger King. He says there are no immediate signs that the trend is slowing, but cautions against owners and operators becoming too complacent in people’s seemingly limitless love for the American classic.

“The challenge these concepts will face over the next few years is that this is a one-product show right now, and there may be a time when people might get tired of it,” Godward says.

“For sure, it’s a staple right now, so we’re looking at decades before it might go away. But will a place like Five Guys wake up one day and say, ‘Hey guys. We need to start doing salads and chicken sandwiches.’ I don’t know.”

We think that over the next two or three years you will see three to four players emerge to become the dominant forces in the so-called ‘better burger’ market.”

Perhaps not, so long as the quality of the meat remains just as important as the eccentricity of the sandwich itself. According to the Technomic study, consumers overwhelmingly (75 percent) ranked quality of meat as the first or second most important attribute in choosing a burger. And this makes Carrie Oliver very happy.

Oliver is the founder and CEO of The Oliver Ranch Company & The Artisan Beef Institute. She says the better-burger trend gave consumers better insight into something she has known for a long time—that the flavor of meat is as diverse and nuanced as fine wine.

“I think we will see more people looking for meat from sources that are not conventional, grain-fed cattle,” Oliver says.

“That makes a significant difference in taste, and I hope this gets people to realize and celebrate that there is so much variety in the flavor of a burger.”

In Rebecca Bent’s 2004 cookbook, Burgers, the author writes, “Burgers are the blue jeans of comfort food.” It’s an apt analogy. Through a myriad of economic climates, the ebb and flow of popular trends, and the passing of several generations, both have continued to evolve while enduring as American culture staples.

“I think different burger trends will come and go,” Ryan says. “But the universal popularity of burgers will pursue through that, as they always have for Americans.”