Good Times Burgers & Frozen Custard isn’t one of the big boys, but neither is it a corner burger joint. Publicly traded and based in Golden, Colo., the “better burger” chain has 43 locations, most of them in Colorado. This week Good Times President-CEO Boyd Hoback, with the chain since 1992, announced a “financial advisory services” agreement with Heathcote Capital LLC to guide “a possible strategic transaction.”
BurgerBusiness.com talked to Hoback about the low-cal menu it added this week, its plans for breakfast and what the chain wants to become.
You’re a regional chain in a business dominated by national brands. How do you see your status?
With the brand, we got a lot of renewed momentum over the past few years as we continue to move away from the Big Guys with our menu and our brand attributes. Our status is that we plan to continue to build out Colorado [with Good Times]. But with Heathcote our objective is to look at other opportunities, other concepts that we could acquire and grow as we grow Good Times in Colorado. As you know, taking a QSR concept into a whole new market is a difficult proposition, so we’ll continue to grow where we have significant brand equity.
Do you see your company as being at a crossroads?
I think you’re right that we’re really at an important inflection point. [It’s time] for us to either grow significantly with access to public capital or to go private. With Heathcote we’re looking more at the former, and, in tandem with private equity, we’re taking a look at a number of concepts. We have the infrastructure and systems in place to run a much larger enterprise than we’ve got now. Everything from accounting and IT to development, human resources and everything else that can translate across multiple brands.
Often when companies bring in outside advisors it’s because they’re looking to sell themselves.
No, that’s not the case with us.
You’re looking purely at acquisitions then?
Correct. We want to be the acquirer not the acquiree.
Necessarily in Colorado?
Oh, not at all. More than likely it would be outside Colorado. If it’s here, great. But it’s likely outside Colorado and outside the burger business.
Wait. Outside burgers?
Quite possibly. We’re looking at a number of possibilities.
I guess I assumed you want to buy another concept and absorb it into Good Times Burgers & Frozen Custard.
We’re not looking to convert something into more Good Times units. We’re looking at acquiring something in another segment and growing it. It may be in the “better burger” or fast-casual categories but there are a number of concepts we’re looking at.
Is that a reflection on your view of the state of competition in the burger category?
I’m not sure what your perspective is, but I think it’s getting fairly crowded. There’s room for huge growth still, though, because most of the companies in it are small. There’s a lot of mom-and-pops in there. I think there will be a washout in the long run. There are some good concepts [in burgers], but there also are a lot of other healthy niches within fast casual.
What’s the biggest pressure holding back your growth? Is it that level of competition, or the economy, or commodity costs, or what?
We’ve gotten though most of the big headwinds. The biggest for us was the economy and consumer buying power because we operate at the top end of the QSR business. And Denver, I believe, also is the highest-penetrated fast-casual market in the country. So we got a double whammy of soft economy and huge competitive intrusion. We’ve weathered through that and have continued to move the Good Times brand to a more and more distinctive place. We’ve got good momentum there.
The commodity costs are starting to ease, but the big question remains whether the economic recovery and employment rise will continue. That’s probably the biggest issue we face, honestly.
You’re optimistic enough, though, to look to buy and expand the business?
Oh, certainly. We’re very optimistic. We think the U.S. will continue to come out of it and grow. And the concepts we’re looking at are in pretty well-defined niches. As long as we’re looking at the right things, there’s plenty of opportunity out there now.
You talk about positive momentum for Good Times. What have you done to bring that about?
A lot of things, really. We’ve tried to move underneath a brand umbrella of “innovative, hand-crafted flavors.” Everything from our all-natural beef and fresh frozen custard and freshly squeezed lemonade. We’ve upgraded pretty much every category on our menu and we’re rolling out this week a new horizontal platform rather than just a new flavor.
That’s the healthier foods?
We call it our “5280 Lifestyle” menu [named for the number of feet in a mile]. It’s a lower-calorie menu with a Portobello Mushroom sandwich [with pesto and mozzarella on focaccia], an Asian Ginger Chicken Wrap and a Lemon Caesar Salad with or without chicken. All under 500 calories. We’re overhauling our whole chicken category right now to move towards antibiotic-free, hand-breaded chicken. We’ve really been trying to take the quality underpinnings of our brand up a notch.
We introduced fresh-cut fries. We went to a cooked-to-order platform so we don’t fries at all. We’re moving in that same direction with our fries. We’re fundamentally still about burgers and fries and frozen custard, but we feel like there’s more opportunity for us to go horizontal in variety rather than just add more flavors.
Are you looking to add new burgers?
We’ve got a lot of things in test for LTOs and permanent items, but right now our focus is mostly on non-burger items. We feel we have an opportunity to grow with the healthy foods and our chicken overhaul. Then with our burger products we can take it up in quality.
You already serve 100% natural Angus beef. Do you need to kick it up a notch?
Well, no, not in terms of ingredients but in terms of preparation and packaging. We want a little higher sear level on the patty, and we need to move our packaging farther and farther away from a fast-food look.
Are you looking at remodeling the restaurants themselves?
We are. We’ve been around for more than 20 years, so we’re reimaging some of our stores with new graphics and exterior. We have one in test. We’re refining that design but so far it’s working out well.
What would I notice as different about it?
It’s a much bolder look. Not understated. We’ve tried to keep it consistent with being within QSR but it’s got unique graphics and a new menu board. It’s a different feel, not just new paint.
You say you’re at the high end of the QSR price scale. Is that a position you feel you can stay in long term?
No plans for 99¢ snack wraps?
We’ll never go there. Never will. We had our chance during the recession and didn’t. We can’t compete down there. Our consumer is a little different than the traditional QSR heavy-user: They’re less value oriented and more discerning about quality. We have a lower-price tier on the menu but it’s not a dollar menu.We have some combos under $4 with what we call gourmet sliders. There’s a meatball slider, barbecue chicken slider and a couple of hamburger sliders. You can get one with a small fry and small drink for under $4. It’s not a White Castle slider, though. It’s a larger sandwich.
Any other new menu categories under consideration?
We’re looking at a new daypart, but it’s early. With our core menu, we’ll keep looking at improving the quality.
Whoa. Are you looking thinking of moving into breakfast?
Yeah, we’re taking a hard look at it. The key for us is to be able to come at it in a completely new way that would be unique to the category. We’re not going to do another egg and sausage sandwich.
But that’s early. We’ve had 20 months of same-store sales growth and we think we’ve got enough new ideas in the pipeline to get us another 10% to 15% sales bump above where we are. We’ll build out the market [in Colorado] and look at other concepts. And there we are. It looks good.