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Why Elevation Will Survive the “Better Burger” Shakeout

Elevation Burger, based in Arlington, Va., stakes its claim to a share of the “better burger” category by offering a very limited menu of  freshly ground, 100% USDA-certified organic, 100% grass-fed, 100% free-range beef burgers and fresh-cut fries cooked in olive oil.  The basic, single-patty hamburger is about $3.59; the double-patty Elevation Burger is $6. Eight locations are open in six states; Founder/CEO Hans Hess is working to expand Elevation across the nation. He talked to BurgerBusiness.com about that limited menu, a new prototype coming soon, moving into downtown locations and the coming shakeout among so-called “better burger” concepts. He also answers the “10 Burger Questions.” 

Elevation Burger CEO Hans Hess

Elevation Burger’s slogan is “Ingredients Matter.” So why not have more of those ingredients? I ask because Smashburger recently broadened its menu beyond burgers with seven new chicken sandwiches and salads. Elevation has a very limited menu now. Can you stay with that? Or will you need to follow Smashburger’s lead?
It’s a great question. To me that sort of menu proliferation or innovation, however you want to characterize it, is not something that we aim to do too much of. It’s a function of real estate and density and so on. If you’re 15,000 McDonald’s units in North America, you have to be all things to all people. Smaller operations look at the most successful concept in the world and think, ‘If I don’t do that, I’m not going to be in the game.”
            There’s another approach and that’s to do one thing and do it really, really well. To be known for it. We spend our innovative energy trying to figure out how to get our product hotter, fresh, faster. Still doing a fresh-made product but getting to the customer in—and these words are very important—a short, predictable format. So we’re working on a new prototype to get it to the guest in a short, predictable fashion. If you can do that, then what happens is increased through-put. From an operator’s standpoint, you can sell more of what customers want to eat at dinner and lunch.

You’re moving into more center-city locations. I know you’re looking at Miami and New York City and others. Is that an impetus for reconsidering your prototype or does it require changes in how you do business?
We view the concept as competitive in those environments as is. If we hadn’t taken a hard look at how we could increase through-put and put so much time into this prototype, I think we’d still be competitive, but what we’re doing will take the game up to the next level. [Note: In his answers to the “10 Burger Questions,” Hess says that the new Elevation prototype will have cast-iron griddles.]
            I think we do pretty well [at preparing and selling burgers], but could we do better to where none of our competition could keep up? Yeah, I think so.

Does operating in large markets where there’s more competition and more varied concepts make it easier for you to remain focused on your limited, organic menu?
Our store operations are optimized for larger operations as is. I’ve spent a long time designing our kitchen. I read “The Toyota Way,” which is sort of the bible for modern production.

 Hopefully, you won’t have a recall, though.
No, absolutely not! But we spent a lot of time on the kitchen design and, looking back on it, it works really well when the volumes are higher. It’s optimized for that. So city centers are good for us.

But then doesn’t it make sense to look at a breakfast menu to maximize your customer traffic throughout the day in those downtown locations?
Yeah, it’s a fair question, but I think for us there’s still something important in that focus. Breakfast would be a pretty big distraction, and I’m not really interested in becoming Denny’s 2.0. Once you start adding breakfast, and chicken and fish and pancakes, then you stop being a focused operation that’s relatively easy to operate. We have a hard enough time doing one product, a burger, really well day in and day out. I’m a big believer in the depth that comes from focusing.

You’re expanding the concept from coast to coast. Can your supply chain, especially of organic foods, handle the expansion?
It is, is the short answer. But certainly it presents a challenge. We work with about 30 family farmers right now and they have the capital and the land and the scaling to grow with us. It’s a great situation to be in. It would be hard to find another coalition like it. I’d be surprised if someone else could duplicate it.

You’re selling franchises and building, so what’s your view of the overall economic situation? How positive and confident can you allow yourself to be?
Everything I’m reading suggests the economy is heading in the right direction, so in that very macro sense, short of looking out for inflation, I think things are going well. As far as franchisees getting capital, that has never been a problem. Even at the bottom of the downturn, we didn’t see people not get loans because we take pains to make sure our operators are well capitalized.
              We did see, back in the second of 2008, franchise leads really dry up. So we had a tough time then just getting people interested. I think it was a fear factor rather than actual circumstances on the ground. This year the picture has totally changed. We’ve been averaging selling a five-unit deal every month.

What about the burger category? You’re watching it grow and change around you. Is it expanding in positive directions?
I’m not as optimistic as some. There are some people who say the “better burger” category is going to be $23 billion in the next five years. To me, that’s a little pie in the sky. Sounds great and I can see why people say it: They have to put on a show for their investors. I do think the market can be in the $5 billion to $10 billion range.

Is that because “better burgers” has only $10 billion worth of expansion room or because consumers will tire of it and move on to the next big food trend?
I think there will be some fatigue. I also think that players who offer short, predictable wait time and who can add a convenience component will succeed.

How do you define the “better burger” segment?
My working definition is when you put the patty on the grill it has to be a fresh patty, not frozen. All your toppings have to be fresh, and the meat has to be cooked after the order is placed. That’s my simple rule for deciding who’s in the category. If they use a frozen burger patty, it’s not a better burger.
            “Better burger” has been around for a while, from In-N-Out and Fuddruckers to Five Guys. What’s happening now is we’ve created a name for the category and everyone’s rushing in to stake out their territory. I think the weak will not survive. You’ll see the filtering out of the folks who aren’t in it for the long haul. To survive what’s coming you need more than just a $500 million market capitalization. That’s cool and I’m all for it. But you need a vision that goes beyond it, that’s guest-centric.
            Ingredients matter, you know? Your vision has to be about things that people care about. It’s great as an owner to care about your market cap but at the end of the day your success comes from your guests saying “Hey, I like that. I want to come back again.”
            I think you get there by focus, not hitting the panic button and saying “Average unit volumes are down! Quick! Chicken! Fish sandwiches on Friday!”
            You know the Staples commercials with the Easy Button? Franchisees have that on their desks, and every time something freaks them out, they hit the Easy Button. “We’ve gotta have chicken!!”
            But that’s not how you build a brand. You build it by trying to keep hitting the ball. You define what the ball is and you devise 800 ways to hit it. To me the ball is better burgers. That’s where I’m coming from.

 Go here to read Hans Hess’s answers to BurgerBusiness.com’s “10 Burger Questions.”

2 comments to Why Elevation Will Survive the “Better Burger” Shakeout

  • Cooking fresh meat is the best way to cook hamburgers. McDonald’s cooks the hamburgers ahead of time and they end being dry when they are sold. I don’t purchase hamburgers from fast food chain stores. All the hamburger chains cook ahead in order to provide fast service, but the customer suffers because the meat has been cooked an hour ahead and you eating meat that is dry and not hot. People have gotten used to eating poorly prepared hamburgers, french fries and other meat products. Good Luck and you will have an excellent market, but you may have problems keeping up with the demand.

    Lou Luna

  • MEP

    Great article.
    I couldn’t agree more with the previous comment. Sounds like a man who understands the joy that is a great burger. I wish him well too.

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