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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.

    Culver’s corporate office has worked to strengthen its relationship with front-line employees, especially teens and young adults, through its VIP (Very Important Partners) Scholarship Program. Founded in 1993, the VIP program helps team members pursue higher education and has awarded more than $2 million to more than 1,800 team members to date.

    “We know, without a doubt, that people are central to our success, so we’re going to invest in them over and over,” Keiser says.

    Pushing points of differentiation

    Culver’s has increasingly pushed its premier points of differentiation, particularly on the menu front.

    While better-burger players continue flooding the quick-serve and fast-casual arena, Culver’s has stayed true to its core: serving its fresh, never frozen, and made-to-order Midwest-sourced burgers on a lightly buttered toasted bun. (Culver’s even hosts an annual National Grill Master Competition in which team members throughout the system compete for ButterBurger preparation supremacy.)

    Keiser does not view the still-escalating emergence of better-burger concepts as an impediment. Rather, he considers the competition a benefit to Culver’s, saying it heightens awareness of the category and spotlights burgers as America’s food.

    “A number of these players have raised the bar on what people think is a good burger, and we like competition because it makes us stronger,” Keiser says. “Our approach is, ‘Welcome to the neighborhood. Game on.’”

    Those same competitors, Keiser adds, have also pushed Culver’s to up its game in other areas, to become more disciplined operationally, and to better articulate and identify its success factors. For example, a guest feedback program, now in its fourth year, has helped Culver’s leadership identify a number of strategic priorities, including improving the accuracy and hospitality of the drive-thru experience, finding ways to better welcome first-time guests, and improving business on nights and weekends.

    “Our operators buy in, and it’s helped improve our operations,” Bonner says.

    After its signature ButterBurgers, Culver’s touts its frozen custard as another key differentiator. A thicker, creamier, less airy version of ice cream, Culver’s frozen custard is crafted from real Wisconsin dairy pulled from 5,400 local cows and made fresh within the restaurant each day.

    The chain’s popular “Flavor of the Day” program, meanwhile, features more than 80 rotating flavors, including favorites like Cookie Dough Craving, Turtle, and Mint Chip. Each Culver’s store creates its own “Flavor of the Day” calendar, which customers can see daily on the store marquee, in a five-day forecast within the chain’s mobile app, or on the company website.

    The chain has consistently worked to broaden its menu as well, finding inspiration in Wisconsin’s supper clubs with items such as hand-battered North Atlantic cod, genuine Wisconsin cheese curds, beef pot roast, fried chicken, and butterfly jumbo shrimp.

    “This kind of menu diversity eliminates the veto vote for parties coming and going, but also gives Culver’s more opportunity to drive frequency and reach into the dinner daypart,” Lombardi says.

    It’s a message Craig Culver, who continues to provide leadership as chairman of the board, champions in the company’s “Welcome to Delicious” marketing campaign.

    “It’s very effective when the founder can get out and tell a story that people appreciate,” Keiser says of the television spots featuring his longtime boss.

    While escalating food costs continue to challenge Culver’s, as they do eateries across the country, Keiser says his team leverages its company-wide POS system to assess hits and misses to ensure stores remain at competitive price points, protect margins, and achieve balanced results.

    “We do quite a bit of reflection here,” Keiser says, adding that Culver’s maintains its eyes on consumer desires related to nutrition and ingredients as well, a reality that sparked the release of a gluten-free bun last March.

    The earnest reflection extends into Culver’s dining rooms, where an ongoing restaurant reimaging program has delivered contemporary and inviting dining rooms that seat 98–118 guests. Today, Bonner reports that more than half of the Culver’s system meets brand standards as the chain’s franchise partners consistently reinvest in their units.

    It’s that perpetual, diligent focus on improvement that has fueled Culver’s remarkably steady and substantial growth. The chain, Keiser says, does not make changes for change’s sake, nor overreact to market conditions.

    “We try to avoid the real highs and the real lows,” Keiser says.

    Nothing will change moving forward, Keiser assures, as Culver’s plans to continue its disciplined approach to operations and, in particular, development. The company, which has historically concentrated store development in concentric circles from its Wisconsin base, isn’t rushing to all corners of the country, but rather seeking critical mass in existing trade areas such as Chicago, Indianapolis, St. Louis, and Kansas City.

    “Once you make a commitment to market, you have to grow it,” Keiser says. “We’re not interested in opening the most restaurants. We’re interested in opening successful restaurants.”

    So long as Culver’s continues to secure strong unit economics, Lombardi sees no slowdown to its steady pace.

    “If they can continue what they’re doing, Culver’s has a lot more room to grow and many more milestones to hit,” Lombardi says.

    On the heels of opening 33 new restaurants and hitting significant financial benchmarks in 2014, Culver’s looks to continue that momentum in 2015 and launch as many as 40 new eateries by year’s end.

    “We don’t feel we need to go out and do things differently,” Keiser says. “We trust the plan and believe good things will come.”