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    A Better (Butter) Burger

  • How Culver’s matured from regional player to national brand and captured $1 billion in sales.

    Culver’s, long known for its customer service and family environment, crossed $1 billion in U.S. sales in 2014.

    Sitting along the winding Wisconsin River in southern Wisconsin, the town of Sauk City was originally the site of an ambitious Indian village, one that an 18th century visitor called “the largest and best built Indian town [he] ever saw.”

    “It contains about 90 houses, each large enough for several families. The streets are regular and spacious,” adventurer Jonathan Carver wrote to friends on October 9, 1766. Nearly a century later, Sauk City was incorporated, making it the Badger State’s oldest incorporated village and one with a passion for daring and zeal engrained in its civic DNA.

    Today, Sauk City, located about 25 miles northwest of Wisconsin’s capital, Madison, calls itself “a true Midwestern village,” a 3,000-resident community where people value a good day’s work, look out for neighbors, and cherish the American Dream.

    Sauk City’s history and heart make it a fitting birthplace for Culver’s, the ButterBurger and frozen custard shop that Craig Culver founded with his wife, Lea, and parents, George and Ruth, on July 18, 1984. From that converted A&W restaurant on U.S. Route 12, Culver’s has matured into a national quick-service power player.

    In 2014, Culver’s 30th on the American entrepreneurial map, the quick-service chain celebrated a year of milestones. It opened its 500th store, saw its average unit volume (AUV) climb over the $2 million mark, and topped $1 billion in systemwide sales for the first time in company history.

    “A lot of people through the years said, ‘When you get to 100 restaurants, things will be so much different,’ but we’ve just kept doing what we do and, lo and behold, we’ve become a $1 billion company,” says Culver’s CEO Phil Keiser, a 19-year Culver’s employee who entered the company’s corner office in June following the quasi-retirement of 65-year-old cofounder Craig Culver.

    Indeed, Culver’s ascent has been consistent and calculated. One decade ago, Culver’s sat in the 40th position in this magazine’s annual QSR 50 report, with 272 units and systemwide sales of $423 million. Today, those numbers have more than doubled, as the ButterBurger-peddling chain found in 22 states continues to climb the ranks of the quick-service elite. In this year’s list of industry giants, Culver’s now sits in the 27th position.

    “They’re in the big leagues now,” longtime industry observer and WD Partners foodservice strategist Dennis Lombardi says of Culver’s.

    Whereas some quick-service concepts push the value button, Lombardi says, Culver’s found a sweet spot on the premium end of quick service, scoring high marks with consumers on food quality, cleanliness, service, and menu variety.

    “When you hit on some of those key factors time and again, it makes customers more likely to return and to recommend the restaurant to others as well,” Lombardi says. “It’s a solid winning formula.”

    People: The core of Culver’s rise

    Without hesitation, Keiser calls people the primary reason Culver’s has grown from a regional chain into an emerging national name.

    In this day and age, it seems a trite, hackneyed statement. But in Culver’s case, it’s undeniably true.

    The Culver Franchising System, the company’s formal franchising entity established some 28 years ago, continues placing its bets on the owner-operator model, preferring to award its franchises—the system is about 99 percent franchised—to entrepreneurs committed to being in their restaurants every day. Franchising conglomerates, sound as some surely are, need not apply.

    Keiser says the owner-operator model delivers a long-term view, heightened attention to detail, and results that have propelled the concept’s ascent.

    “We enjoy some of the best franchise partners in the restaurant industry,” Keiser says. “They are present and engaged in our business, and they are working toward execution and looking for things that they can do better within their four walls each and every day.”

    The groundwork for that relationship and the culture it breeds begins early in the franchising process. Before any entrepreneur is considered for a Culver’s franchise, the prospect must complete a discovery week, which includes working six 10-hour days in the restaurant. Though this step often slows Culver’s ability to award and, subsequently, open new stores, Keiser is convinced it’s the right move for the brand and its future.

    “We’re good at teaching people how to cook the burgers and clean the restaurants, but we want people with the right life skills and core values, partners who view people, product, and the community in a way that aligns with us,” Keiser says. “That’s an absolutely critical first step.”

    If selected, franchise partners attend a comprehensive 16-week training program—ButterBurger University—before heading to their restaurant for full-time duty. This same training program extends to store managers, which not only increases the number of people with a stake in each unit’s success, but also spurs expansion opportunities for store owners already within the chain’s franchisee pool.

    Last year, about 1,500 people attended ButterBurger University in Prairie du Sac, Wisconsin, says Culver’s senior vice president of operations and training, Jeff Bonner. In addition to the comprehensive training for new franchisees and managers, the company also offers ongoing workshops addressing issues such as equipment and profitability to ensure that franchise growth coincides with proper training, education, and professional growth.

    “This is key to maintaining our culture here at Culver’s,” Bonner says, noting that Culver’s opened a new 47,000-square-foot support facility in Prairie du Sac in 2009.

    As Culver’s has moved from 100 stores to more than 500, the formal onboarding of new franchisees and existing managers, combined with the company’s field consultants—each of whom oversees 20–25 stores and visits restaurants daily—has helped the chain solidify its culture and fuel its success. Since beginning franchising in 1990, in fact, only two Culver’s units have closed.

    “That’s a difficult thing to do, but Culver’s has done it because Craig Culver had a drive to have the customer experience be what it is and the team around him shared that same purpose,” Lombardi says, adding that Culver’s owner-operator model concentrates each owner attention to one, two, or maybe three units.

    “There’s a lot more need, desire, and awareness to have the store running just as it needs to run when you have such high personal stakes in the business,” Lombardi says.

    Those same operators, then, translate Culver’s culture of hospitality down to crewmembers. Each Culver’s restaurant employs 30–75 team members throughout the year, with about 10 summertime positions added to satisfy peak demand.

    “Culver’s crew people are helpful and look like they’re proud and enthusiastic to be there, which helps customers enjoy a more personal touch,” Lombardi says.