What a year for beef. Quick-service burger brands were pumping out their products to the tune of nearly $200 billion in total sales for 2023.
The three largest brands on the newly released Franchise Times Top 400 ranking—McDonald’s, Burger King and Wendy’s—combined for more than $170 billion in sales.
In a category rife with competition, a handful of smaller but fast-growing franchises generated double-digit percentage sales increases, with No. 35 Culver’s leading the way at 16 percent. The Wisconsin-based company topped $3 billion in sales last year as its unit count rose to 945.
CEO Rick Silva noted traffic was up 4 percent in 2023 and said a “crazy commitment to people and hospitality” is what keeps customers coming back. To support that focus, Culver’s drew on data science to more efficiently deploy workers in its drive-thrus and throughout the restaurant, with managers able to model sales by channel and adjust accordingly.
And, as it added third-party delivery and an order-ahead app function for the first time, its owner-operators are hiring more people to support the growing digital business. The additional sales justify the expense, Silva noted—average sales at franchise restaurants hit $3.48 million last year—“and we were obsessively focused on we didn’t want our digital activity to negatively impact dine-in guests.”
“I don’t want that digital business if it’s going to result in a negative experience for our core customer,” he said, with Culver’s remaining committed to its strong dining room business. Culver’s did take some price, which makes providing a better experience that much more important,” he added.
For Chris Dull, CEO of Freddy’s Frozen Custard & Steakburgers, the 14.5 percent systemwide sales growth to $925 million comes as the brand makes strides in its digital channels and improves execution in the kitchen.
Freddy’s CEO Chris Dull says the brand takes a careful approach to price increases and is mindful of the “detrimental” impact on traffic.
A mobile app and new web platform launched in 2022 are generating more first-party sales, while “third-party delivery is up in the teens,” Dull said.
Freddy’s, No. 82 on the ranking, rolled out a new restaurant prototype last year with better grills, an improved kitchen display system using graphic instructions and repositioned its cold lines. Restaurants added freezer boxes at the pass-through station for the drive-thru to ensure orders of the brand’s signature custard stayed cold.
Freddy’s brand took some price, Dull said, “but we’re very cognizant that price can be detrimental to traffic and we fend that off as much as possible.” A pricing study conducted in 2022 proved “quite fortuitous,” he noted, and the company collects P&Ls from franchisees on a quarterly basis to ensure it can closely manager prime costs.
Texas icon Whataburger, meanwhile, is firmly in growth mode, said CEO Ed Nelson. Sold to BDT Capital Partners in 2019 when it had 828 units, the chain finished 2023 with 997 stores, including 72 it added last year. Whataburger comes in at No. 31 and grew systemwide sales 12.8 percent in 2023.
The average unit volume increased by $800,000 from 2022 to 2023, Nelson said, to $4 million, and the brand is “constantly investing in quality,” from ingredients to technology improvements and franchisee support. Adjustments to in-store training and operations brought the introduction of QR codes for employees to scan and see videos and other visualizations of steps, versus reading them, he added, a change to suit “a generation of YouTubers” used to watching how-to videos.
Digital transactions account for more than 22 percent of sales, but the brand is careful in how it approaches new tech, such as the PopID biometric payment system it’s testing at stores in College Station, Texas. A constant fine-tuning of operations and emphasis on product quality is what really drives results, he said.
“I will never be your fastest drive-thru because I want to be make-it-fresh good, the best quality, the best experience,” said Nelson, who will retire at the end of 2024. Chief Operating Officer Debbie Stroud will step into the president and CEO roles effective January 1.
Whataburger grew its net unit count by 72 last year to finish 2023 with 997 stores.
Better burger concepts aim to pull market share
In a better burger segment that’s constantly working to attract customers willing to pay a bit more than they would at their fast-food counterparts, total sales growth slowed slightly in 2023, to 5 percent versus 7.8 percent the prior year.
Five Guys continues to lead the segment in systemwide sales and growth percentage, up an estimated 5.6 percent to $3.2 billion. It gained 63 net new units last year, to reach 1,863 global stores, the bulk of which (1,453) are in the United States but with a growing international presence in Europe, Hong Kong and the United Arab Emirates.
Five Guys emphasizes its own ordering channels, Chief Marketing Officer Molly Catalano said, and aims to drive business in its stores while still utilizing delivery platforms. “In the end, our burger is better if you eat it right away,” she said.
Elsewhere in the segment, Fatburger and Elevation Burgers, both owned by FAT Brands, had opposite sales growth in 2023. Fatburger was up 5.1 percent, while Elevation was down 7.2 percent.
Mooyah Burgers, Fries and Shakes, a smaller brand at 82 units, grew sales slightly, by 3.3 percent. A more compact prototype is intended to better accommodate carryout orders, while a new online ordering system launched in late 2022 enables a better customer experience.
At BurgerFi, sales declined 3.1 percent in 2023 and its total unit count shrunk by 12, perhaps a foreshadowing of what was to come in 2024. At press time, BurgerFi International filed for bankruptcy as it said a “drastic decline in post-pandemic consumer spending amidst sustained inflation and increasing food and labor costs” meant it needed to stabilize the business “in a structured process.”