Burger: 
Looking for differentiation

The burger category may be to thank for today’s generation of fast-casual innovation. While Panera Bread and Chipotle firmly established the industry in the ’90s, it was the better-burger boom of the mid-aughts that first invaded suburban endcaps across America and loudly proclaimed to consumers that there was a higher-quality version of the quick-service stalwarts available. Five Guys in particular became the standard-bearer for fast casual, adding more than 750 locations from 2002 through 2010.

In the wake of Five Guys came Shake Shack, BurgerFi, Farm Burger, Twisted Root, and the like. Yum! Brands is so convinced by the ongoing potential of better burgers that it just acquired Southern California–based The Habit Burger.

But while burger patronage may continue apace—data shows 57 percent of people plan to dine at better-burger joints the same amount, while 28 percent plan to do so even more frequently—the category is decidedly busy. And that’s led many burger brands to consider the differentiating factors that help them rise above the pack.

Dog Haus is a Pasadena, California–based fast casual that made a name (and a brand) for itself with creative hot dogs and sausages. But it’s the burgers that are the real workhorse of the menu. “People like to eat a hot dog or a sausage a couple times a month, but there are a lot of people who eat burgers twice a week,” says André Vener, who cofounded the brand with Hagop Giragossian and Quasim Riaz in 2010.

Vener adds that burger competition makes co-tenancy in some developments difficult, but ultimately makes it easier for the brands doing elevated burgers to shine. “I think the more competition is there, the better for the innovative burger offerings,” he says. “We’re not just meat, cheese, tomato, lettuce. We do so many different things. We thrive on the competition, doing something unique or different.”

Dog Haus’ burger offerings include upscale items like the Little Mule with white American cheese, avocado, pickled jalapeños, cotija cheese, fried egg, and chipotle aioli. The burgers are served on King’s Hawaiian slider rolls, and Vener says the four-square rolls are much more recognizable on social media than standard buns from competitors. Dog Haus has also run a Chef Collaboration Series that develops special menu offerings with celebrity chefs to benefit No Kid Hungry.

Beyond the premium burgers (and hot dogs, sausages, and chicken sandwiches), Dog Haus—which has grown to 50-plus locations through franchising—aims to sets itself apart from burger competitors through its booze offerings. It partnered last year with celebrity mixologist Phil Wills to develop signature cocktails, and it also boasts wine selections and craft beer on tap—perfect for someone who wants to watch a game or just have some downtime.

That bar-forward strategy is shared by Hopdoddy Burger Bar. The Austin, Texas–based burger joint serves beer, wine, and cocktails in a laid-back environment, pairing that with a classic menu that features burgers, fries, and shakes.

Hopdoddy CEO Jeff Chandler says the goal at Hopdoddy is to provide an experience similar to casual dining but faster, to “allow our guests to enjoy and experience Hopdoddy at their pace, at their style, at their convenience, at the way that they choose to use us.” That’s a big reason it invests in a bar program, which Chandler says helps to draw customers for use occasions beyond the three dayparts.

While Hopdoddy also invests in premium design and customer service and a technology-powered back end, Chandler says thriving in fast casual still necessitates three restaurant fundamentals: value, convenience, and craveabilty. “I don’t think the consumers in fast casual, especially in the burger space, are willing to frequent a concept or brand that only has one of those three,” he says. “It has to be price value, it has to be convenient, and it has to be differentiated with quality.”

Dog Haus and Hopdoddy diverge in one big way: While Chandler says Hopdoddy is trying to limit the growth of its off-premises business (which he says approaches 20 percent of sales in some locations), Vener says Dog Haus is leaning into the trend, which includes last year’s partnership with Kitchen United for ghost-kitchen real estate in several U.S. cities. Dog Haus is also in the midst of setting up sub-brands for its menu (for example, breaking out its chicken sandwich offerings) in order to grab more real estate on third-party delivery services.

Tristano’s Take

“Led by expansion by the top three chains—Five Guys, Shake Shack, and Habit Burger—growth in the category for 2019 will be in the 6–7 percent range. With strong growth from newcomers, including Dog Haus and Hopdoddy Burger Bar, the outlook for 2020 continues to see continued expansion, consumer demand for burgers, and increasing competition from full-service rivals.”

How often do you plan to visit fast casuals within this category?

Pizza: 
Settling into tiers

Better burgers solidified fast casual’s place in the restaurant marketplace. But it was fast-casual pizza that turned the model into a machine, churning out competitor after competitor serving customizable, personal-sized pizzas. Starting with Your Pie and MOD Pizza in 2008 and continuing with Blaze Pizza, Pieology, &pizza, and others around 2011–2012, dozens of fast-casual brands sprouted up around the U.S., collectively helping to turn pizza into more than just a shareable, deliverable dinner.

Fred Morgan is cofounder of Phoenix-based Fired Pie, which launched in 2013 and has grown to 19 Arizona locations. He says the fast-casual pizza space quickly separated itself into three categories. “You had the low end, maybe the Pie Fives doing it really cheap and smaller,” he says. “Then you had the MODs and Blazes that were middle of the road. Then you had the 1000 Degrees, which were plateware, high-end, three toppings and after that they charged. We wanted to be in between that middle of the road and high-end.”

Morgan and his cofounder, Doug Boyle, were veterans of California Pizza Kitchen when they decided to open Fired Pie, and based on that experience knew that customers would want more choice beyond pizza. That’s why they put mac ‘n’ cheese on the menu, as well as an extensive array of salads.

“Anything you put on a pizza you can put on a salad,” Morgan says. “That really adds an element. You go into some of our busier lunch stores and you’ll see all these people sitting down eating a salad, and then tomorrow they’re having a pizza. That’s how we get that three-, four-times-a-month guest coming in to see us.”

Dave McDougall became CEO of Athens, Georgia–based Your Pie last year. He says pizza will always be in the consideration set of American consumers because it is so well-liked and convenient. Still, he recognizes that fast-casual pizza became cluttered quickly, and he also believes the category has fractured into tiers: a top tier with MOD and Blaze and a middle tier with Your Pie and several others—a tier, he adds, that Your Pie is comfortable to occupy, with slow and steady growth through the right franchise partners.

Your Pie, which has over 70 locations in 19 states, has also grown more in secondary and tertiary cities where fast-casual pizza competition is lighter. McDougall says the diversity of customer use occasions ensures that even in tight competition, there’s consistent demand for pizza. “You really have to look from concept to concept how people use a particular concept at a particular need state, from the delivery folks with the big three to more of the niche, local pizza, and then with fast-casual pizza,” he says.

Just like the burger category, fast-casual pizza is reckoning with the off-premises boom. Once rejecting delivery as the specialty of major pizza chains, fast-casual pizza joints have since embraced off premises. Fired Pie’s newest store is an express location intended just for online ordering, delivery, carryout, and catering.

“All of a sudden I have these 2,500-square-foot restaurants and they’d be empty after lunch, yet we’d still be busy as heck because we had stuff going out the back door all day long,” Morgan says of the decision to open the small-footprint store.

Both Morgan and McDougall point out that the pizza industry is uniquely tailored to satisfy the demands for more healthful foods. With a plethora of vegetable toppings and now vegan cheeses and gluten-free and cauliflower crusts available, fast-casual pizza is a perfect crossroads of health and indulgence for the American consumer.

Tristano’s Take

“The category is expected to reach $2.5 billion in sales in the U.S. in 2020, led by strong growth from the top two players: MOD and Blaze Pizza. Both brands will exhibit double-digit growth in both sales and unit expansion in the U.S. Although some brands are shuttering locations, over 30 chain brands exist today with 10 units or more. Sales growth in the category for 2019 will be around 9 percent. The outlook for 2020 continues to be strong with high lunch demand, consumer desire for customization, and expansion through third-party delivery.”