This week’s Burger Friday continues my conversation with Tom Ryan, co-founder and chief brand officer of Smashburger. (Find the first installment here).
The chain is growing like gangbusters. Smashburger started in Denver in 2006 — and first appeared in the Twin Cities three years later. It now operates 365 outlets in nine countries — including 15 in the Twin Cities metro area — so it’s obviously struck a chord among burger-loving consumers. Present company included.
We chatted at Smashburger’s busy Southdale outlet, at a table covered in burgers, fries and shakes.
Q: What was your reaction when you heard the news about Chipotle and its well-publicized E. coli and novovirus issues?
A: It’s sad. To be honest, I have the utmost respect for Chipotle, they really pioneered for most Americans the fast-casual aspect of our category. But it reminds you that you can never let your guard down about maintaining high levels of quality, high levels of inspection and high levels of integrity at your vendor base.
The employee thing is problematic, that’s active management. Those are things where you need to be telling people who don’t feel good to stay home, no matter what it does to your work schedule. That’s an active management thing. But the other outbreaks, driven more by ingredient integrity? Those are always scary things. That’s why it’s worthwhile to spend your time getting people certified. I’m a big fan of certification.
It’s not really related, but mad cow was scary back in the 90s, and it would be hugely scary if it that showed up again. So those outside threats that we can’t manage? Those are the real scary ones.
As for employees, that’s a two-sided thing. You want your employees who aren’t feeling good to stay home, that’s just on the humanity side of things. But also it’s just not fair to customers to have infectious people in your restaurant. That’s active management, and we’re modern enough to get that.
The other thing that really hurts is their [Chipotle’s] issues went right against their core principle, which is food with integrity. Those are always the worst things to happen to companies. It’s sad.
Do I think they’ll come back? Yes. But you lose it a lot faster than you get it back. I think they have a lot of work to do to regain the trust of their customers, but they’ll do it. I know Steve Ells [Chipotle founder and chairman], and he’s a great guy, and the management team is solid. I just think that they got a wake-up call that they didn’t pay closer attention to some things.
Q: Your company operates a couple of other restaurant concepts. Will we ever see them here in the Twin Cities?
A: Um, maybe. The big one is Tom’s Urban, which is our big, modern version of a sports and entertainment venue. We reserve that for high-density places, it’s designed to be a part of something bigger. So it’s really not a street concept. If you look at where we are — we’re on the strip in Vegas, we’re at L.A. Live, across the street from Staples Center, we’re going into Denver International Airport into a Westin, and we’re also building one in a big casino in Connecticut. So we’ve looked at opportunities here — without naming names — where we think we would fit, but we haven’t found the right prospects, yet.
But would we do one here? Absolutely, we’re always on the hunt for the right opportunity. Something where we’re close to the Twins and the Timberwolves. Football games are a little tough, because it’s such a limited number of games. But we like the frequency of basketball, and we like the frequency of baseball, so if the right opportunity and space opens up, we’d like to do it.
Q: One reason why I have Smashburger on my dining-out radar is because I can get a beer with my burger. That doesn't happen at a lot of quick-service chains. How important was that combination to your original business plan?
A: Aside from putting burgers back into people’s lives — instead of just looking at it from a product point of view — we also wanted to look at it from an occasion point of view. As we were putting the concept together, I said to myself that I want to not just compete with burgers in the way that people are eating burgers, but I want to compete for occasions that people haven’t thought about with burgers.
Here’s the deal: We’re reinventing burgers, arguably America’s favorite food. And look what’s going on in beer, which is arguably America’s favorite adult beverage. It’s exploding on the craft beer side, right? So I knew when were building the concept in 2006 that there was going to be this classic beer-and-burger occasion that we needed to get.
I think beer-and-burger occasions are sacred to a lot of people. If a mom and dad with small kids are making a decision to go out on a Wednesday night, and they can go to some burger place that doesn’t have beer, or they can go to a place where Dad can have a beer on a Wednesday night while the kids are having shakes and fries, well, I think that’s magic.
Even though our beer sales are, generally speaking, 3 to 5 percent of sales, if you look at our total revenue that’s associated with beer, it’s somewhere between 15 to 20 percent of sales. That’s looking at how beer helps build other parts of the check. I always tell people in our business that the mix will lie to you, it won’t tell you the whole story. It’s really how the mix works; mix meaning percent of sales.
I’m really happy with our beer program. Over the past three or four years, we’ve gone to our 15 largest markets -- including this one -- and we’ve done six-month pairing programs with local craft brewers. We pick one brewer who has multiple lines of beers. We do mostly bottles because of the volume we do. And we do pairings with our core menu items, and it has been hugely successful for us.
Q: Which local brewer have you tapped here in the Twin Cities?
A: I love Summit, I think those guys are great. In California we do some wine, where we can get decent wine in small bottles; splits, mostly. But our beer program has been fantastic and, I think, it has been a real differentiator for us.
Q: Can it be difficult to obtain beer and wine licensing? Isn’t Minnesota a bit of a challenge in that regard?
A: Minnesota is not as weird as others.
Q: I’m shocked to hear that, given the state’s legislature's glacial approach to changing the state's stubborn liquor laws. Really?
A: There are places where it’s pre-emptive. For instance, we do not sell beer in New Jersey, because the cost of a liquor license — even if you’re selling beer — is half a million dollars, plus or minus. In certain trade areas of Utah we do, but in certain trade areas we don’t, because it tends to be a barrier for frequency for our Mormon population customers.
But we sell a ton of beer in California; coastal California stores do 10 percent alcohol sales. Phoenix does that, Houston does that.
Q: Why did you start your burger-beer pairings program?
A: That’s an interesting story. I’m going to be 60 next year. When I was a kid at Michigan State, I’d walk into a bar and say, “I’d like a burger and a beer,” and guess what I got? I got the burger they made, and whatever beer they had on tap, and life was easy and good.
But look at it now. If you’re a hophead, a triple IPA person, and you walk in here and you order a truffle mushroom Swiss burger, and an IPA, you’re gonna like it. But man, if you knew to order an amber, or a porter, or something with those big, deep, caramel-ey flavors, it could change your world. It’s interesting how sophisticated the recipes of burgers have become, and the sophistication of beer flavor profiles, and the diversity of beers. We felt compelled to say, "We need to re-educate people on the art and science of beer and burgers all over again." We’ve had a lot of fun with that.
Q: The shakes are another reason why I'm drawn to Smashburger. Was it always your plan to go the hand-mix route, vs. using the ready-mix fast-food model?
A: It was my strong opinion that real shakes were a lost art, that everyone had moved to direct-draw and had moved away from hand-spun shakes. We have this operating principle that, if we can do it, then let’s do a consumer-based, highly differentiated approach to everything that people think is common. I’ve built a lifetime career out of taking very familiar things and moving them just this much, so that the noun is familiar but the adjective that makes you go, "Oh, that’s kind of a fun thing."
With shakes, I wanted the presentation to be old-school, because we actually do spindle these to order, and you get the tin; that’s the Malt Shop-stuff if you’re from Minneapolis. But Haagen-Dazs was really the difference. I wanted to do something national, to build some national equity, for promotion, which is why we didn’t go with a Sebastian Joe’s, or Izzy’s, or whatever.
The bottom line was I wanted a super-premium ice cream with a name, and no one had never made shakes using Haagen-Dazs. Even the Haagen-Dazs shops don’t make shakes. We actually have a food industry exclusive with them, we’re the only ones doing Haagen-Dazs shakes under the same marketing approach.
It has been an interesting foray into relearning things. We tried to make shakes the traditional way, and we found that the butterfat content made us have to rethink. Haagen-Dazs runs at 14 percent butterfat, so it’s very dense and very rich, and the ratios of milk to ice cream are really different.
Q: Different in what way?
A: There are nine full ounces of Haagen-Dazs in every shake, and four ounces of liquid whole milk. The really interesting thing that I learned is that the Haagen-Dazs ice cream is like a flavor sink, so our syrups are like four times the concentration of flavors that it would take to flavor a soft serve ice cream. Every time we do, say, our salted caramel shake, the vendors have to figure out how to do it because you can’t have a lot more liquid. It has to be a fluid ounce, but it has to have the flavor to punch through that matrix.
And because we hand-spindle them, it really is a true milk shake, which is biphasic. It’s got a liquid portion and a solid portion of still-frozen ice cream, and that’s what gives you that tremendous texture. We spindle and decant the shake into a frozen glass, which keeps the texture really great for the meal experience, and really consistent. We use chilled glasses for our beer as well.
True story: Most of the people who do shakes and burgers, for every 100 burgers they sell, they do about six or seven shakes. I knew we would do more with Haagen-Dazs, so I assumed we’d do somewhere between eight and 10 for every 100. We’re actually doing 20.
As you can imagine, that’s a mixed blessing. They’re hugely popular, but we have to figure out how to add more capacity, because it’s become a huge part of our check, and a huge part of our brand equity. One out of every five burgers is going out with a shake, that’s pretty impressive.
Q: I’ll admit that when I’m standing in line at Smashburger, my antsy self hopes that the people in front of me don’t order shakes, because that’ll mean that I’m going to be waiting longer, since the Smashburgerite who takes the order is also the employee making the shakes. Is that something that you and your efficiency experts are examining?
A: That’s the other part of the story. At the beginning, fast casual was taking the best parts of adult casual food, and some of the elements of fast food, and bringing them to this middle ground. Now I’m seeing that, if you continue to push the food agenda back toward the tier above us, and start building infrastructure that’s more common to the tier below us, that’s Nirvana.
That’s why we’re constantly innovating. I’m working on a new platform so that we can move the shakes to the back, so it’s not the person at the register who’s making the shakes.
Value is another important thing in fast casual. When we started, what made a better burger a better burger was the fact that they were bigger than standard burgers. That was one of our key differentiators. Now we’re learning, that, as the market has matured, that we’re always going to have a large burger and a regular burger, but one of the newest things we’re testing here in Minneapolis is a smaller burger.
We’re doing that for a couple of reasons. We decided to test a smaller burger and open up Smashburger occasions to people who may not have as much money, or who don’t want to spend as much money. Now we have an entry level price point around $3.69.
We see a high index of women and seniors wanting to modify what they eat. That’s just a growing part of our innovations, making sure we broaden our relevance. I think we have a portion for every appetite, and a price for every budget, whether it’s a caloric budget or a monetary budget. We picked Minneapolis because this tends to be a very progressive town around portion relevance.
Q: Where did you get the idea of deep-fried green beans and carrots?
A: Back in 2007 when we started, there was still a lot of a residual low-carb element going on, so I wanted to have something that was as enjoyable — from a tactile perspective — as French fries, but not highly carbohydrate-driven.
I borrow things from other people’s cuisines. Smash fries are really steak frites fries, we just switched our parsley and Parmesan for garlic and rosemary. My inspiration for this was Szechuan green beans, which are just wok-fried, with a bit of seasoning. I wanted to keep it non-ethnic, and I wanted some color besides the green, so we picked carrots. We fry them with no batter and no breading in our fryers for 30 seconds, just a really quick break. That changes the texture and develops a little bit of flavor and gives people the ability to share, and all that stuff.
The other thing we stole is the way we do our chicken. When we started the concept, our chicken was a five-ounce chicken breast. And you’ve cooked chicken at home, so you know that it’s mounded in the middle, so by the time the insides are cooked to everyone’s satisfaction, the outsides are usually jerky. Our guys were cheating that, they were cooking it advance and holding it, and I wasn’t happy with the quality, and I don’t think that I ever would have been. So we just said, “Who does chicken a different way?” And we landed on piccata-style, we marinate the chicken, and pound it out. That’s our cooking philosophy: find culinary processes to cook things fast and evenly, so you can get in and out of it quickly, and leave all the juiciness in.
Q: The kitchens at Smashburger are surprisingly compact. That’s by design, right?
A: The design piece of this business has become very sophisticated. The kitchen is very modular. While almost everyone can make decent money during peak revenue periods, not many people can make money when your business is ramping up or ramping down. This design lets us staff a kitchen with one person during those ramping-up or ramping-down periods, they can float up and down the line.
The most we can fit in a kitchen is five, and that’s at our really high-volume stores, where we do $3 to $5 million bucks [in annual revenue].
Today [at the Southdale Smashburger, over lunch], we’ll do $2,000 to $3,000 an hour with two guys in the kitchen to handle it, it’s pretty crazy. These guys prep in the morning, so that all they have to think about is converting raw food to finished food during the times when customers are here.
Q: On the subject of design, I’m sure it’s deliberate that Smashburger’s dining rooms don’t look like your average McDonald’s. Correct?
A: There’s a big idea, and a more targeted idea. Let’s start with the broad one. I think there’s something magic about 32 year-olds. Thirty-two year-olds tend to be the tone-setting, opinion and culture leaders for people who are younger than 32. And for all of us who aren’t 32 anymore, we want to feel like we are, and act like we are. We want to look like we are, we want to have the biology that we are.
Thirty-two has this vortex of being aspirational from below, and aspirational from above. And when you talk to 32 year-olds, they’re highly experiential. What they want is a place with a story, and that story has to make them feel good about where they are, and what they’re eating.
They want a place that’s comfortable, that’s one of the reasons why I have beer, because it’s more social. They want something highly differentiated, and kind of modern, and lounge-ey. I don’t know how noticeable this is to you, but this space is bright and vibrant by day, but by night we can turn the rheostats down and these red bordello lights become a little more tonal. From the outside looking in, it’s a comfortable, cool space. It has this kind of bug-light effect which makes it really attractive. That’s the big story.
The more focused story is that we’re a burger place. You’ll notice that, from wherever you look, there’s a dominance of red. I wanted some impact boldness, I wanted some meat-compatible color schemes. So you can see that, when you look around, we have these bold reds, we have a lot of these tonal browns. It’s very warm and inviting.
We talked earlier about wanting to satisfy specific occasions. I want Girls Night Out in here, I want Boys Night Out in here. I want couples before and after the movie to say, “Hey, I want a burger and beer and let’s go to Smashburger, because not only is the food good and I can get a beer, but it’s not a bad place to sit and hang out.”
We don’t have a model footprint, so we can go into a lot of spatial configurations. But you’ll notice in all of our stores that, up front, we have high and low seating, we have boothing, we have a patio. Believe it or not, our patio business in Minneapolis is great, even when the weather is marginal. So we strive to get a patio in most every place we go.
Every two or three years, we go back and find out what resonates for our next generation of design and decor materials, color schemes and lighting. We're on our third version.
We started in 2007, and 32 year-olds in 2007 are 41 now. I don’t want to resonate with 41 year-olds, to be honest with you. That speaks to a brand commitment to be forever young, in a 32-year-old relevant way. Otherwise you get to looking like Five Guys, or somebody like Five Guys, which has got this retro look. I don’t want to be the last generation’s place.