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Bad Times Lead Good Times Burgers to Reinvent Itself

good_unitWhether it succeeds or fails, Good Times Restaurants Inc.‘s recent 10-k filing with the Securites & Exchange Commission should serve as a Harvard Business School case study in how this recession knocked the legs out from under many small businesses and how some businesses fought to right themselves.

Good Times hopes to survive by reducing prices, reengineering its menu mix and revising its marketing positioning, as outlined below. Can it work?

The company operates or franchises 51 Good Times Burgers & Frozen Custard quick-service restaurants, 42 of which are in the Denver area. To put it mildly, its fiscal 2009 (ended Sept. 30, 2009) went steadily downhill “as the economy slowed and competitive pricing pressures intensified.” As a result:
Net revenues decreased 8.2% or $2,133,000;
The company posted a net loss of $1,352,000, compared with a 2008 loss of $946,000;
Same-store restaurant sales decreased $2,587,000 or 12.4%;
Average company-unit sales volumes fell 15.6% to $773,000;
The company suspended development of new company-owned stores;
The company formed a Special Committee to “explore and evaluate strategic alternatives aimed at enhancing shareholder value and explore alternatives to reduce the cost burdens of being a publicly held entity.”

After all that, Good Times declares with world-class positive thinking that “our outlook for fiscal 2010 remains cautious” in the face of economic pressures and continued decreases in consumer spending. It forecasts flat sales for 2010 followed by 2% to 3% annual gains from 2011 onward.

So how do you rebuild a regional burger chain when the economy still is shaky and many consumers think burgers should cost a buck?

goodburgerGood Times reports that it already has made these changes in operation:
Introduced fresh, never frozen, all natural, purebred Angus beef for all of our burgers;
Increased the size of hamburger patties by approximately 10% on a new split top, sponge baked bun that is 20% heavier with increased portions of fresh produce;
Reduced the price for core Deluxe Burger and Deluxe Cheeseburger;
Introduced Everyday Values in both core and fountain menus with price points from $1.25 to $1.99;
Established a new fresh-grilled, honey-cured bacon burger category with new flavor profiles;
Reworked the chicken category with 100% breast-meat sandwiches and tenders with revised flavor profiles;
Tested and is rolling out fresh, hand-cut fries cut fresh daily from whole aho russet potatoes.

Good Times’ 10-K says it will make its menu even more competitive “through re-engineering smaller menu items at lower price points rather than focus on discounting premium products”  and while maintaining its quality standards. The chain says it doesn’t anticipate going the dollar-menu route, but “we are testing and plan to implement lower price points for the increasingly value conscious customer.”

In 2009 Good Times cut ad spending by 15.3% to $1,292,000 (5.6% of restaurant sales), or roughly the equivalent of one afternoon’s ad spending by McDonald’s. This fiscal year, Good Times expects that “advertising will consist primarily of television and radio advertising, on-site and point-of-purchase merchandising totaling approximately 5.8% of restaurant sales.” Marketing will use a new umbrella positioning statement, “Back to Real Food” (perhaps too strongly evocative of Wendy’s new ad line?), and a new advertising tagline: “Get Back to What’s Good. ”

Marketing will push such hot-button terms as “Fresh”, “All Natural”, “Fresh Grilled”, “Authentic”, “Homemade”, and “Fresh Squeezed” with what Good Times says is “a theme of fresh ingredients and hand crafted food.” The chain also will try to improve customer service and “the delivery of our brand experience through retraining of all of our employees on new standards and heightened expectations.”

Good Times’ ambitious plans to remake itself are reminiscent of casual-dining chain Ruby Tuesday’s attempt to upgrade its food and image. That strategy proved ill-timed as the economy tanked, and Ruby Tuesday has fought hard to make it work, so far with mixed results.

How well will Good Times’ strategic reinvention succeed? We’ll keep an eye on it, but feel free to voice your opinion by leaving a comment.

3 comments to Bad Times Lead Good Times Burgers to Reinvent Itself

  • Won’t work one bit.

    1. No one ever shrank themselves to greatness.
    2. The marketing plan looks like everyone else’s.
    3. Mass media doesn’t work.
    4. Not one word about adding value to the guest experience. (Price does NOT equal value.)
    5. Not one word about differentiation.
    6. Not one word about social media.
    7. Not one word about a Voice-of-the-Guest program.

    I could go on all day but it wouldn’t matter. ‘Sameness’ will kill their brand like it has many before, and the many that will follow it down that path.

  • RTH

    Jeffrey-
    The marketing plan looks like everone else because it WORKS like everyone elses.

    I’m not sure what business school YOU went to, but mass media is the ONLY thing that works. Besides, I didn’t see a mention of mass media in their plan.

    Good Times indicates they will be emphasizing “authentic”, “homemade”, “all natural”. Those are indeed differentiating factors.

  • rosebud1950

    “Authentic”, “homemade”, “all natural”?? How about “dry and bland”?
    For quite some time until recently Good Times was just about my favorite fast food place. The Oven Roasted Chicken Sandwich was the best I have had….SOOO flavorful and juicey! Well, for some unknown reason, they took it off the menu. I thought “well, I’ll try the Grilled Chicken Sandwich” and what a huge disappointment! It was dry and bland. After a few months I stopped at a Good Times other than the one I used to frequent and was told “oh, the Grilled Chicken at this Good Times is the same as the Oven Roasted Chicken”. NOT TRUE!! It was the same dry and bland disappointment that I tasted at the other location. The only reason I would stop at a Good Times now is for the Wild Fries and Dippin Sause, but is it really worth the time? I sent an email and the response I received was “well, that’s our menu”. Oh, wow, thanks a lot!!

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