By Julie Jargon
The once-humble hamburger has gotten too fancy for its own
good.
As the number of outlets serving "better" burgers -- featuring
nontraditional toppings and artisan buns -- skyrocketed over the
past decade, so has the average burger tab, turning some customers
off.
Brian Cockerline, a 20-year-old Rutgers University student, used
to go to Five Guys for a burger once a week in South Plainfield,
N.J. With fries and a drink, his tab was around $13. Now, he is
cooking burgers at home instead.
"I like Five Guys but I can buy ground beef and one onion and
get pretty close to the same burger for half the cost," says Mr.
Cockerline, who rarely goes to Five Guys anymore. "A hamburger, to
me, is not a luxury," he said.
Five Guys declined to comment.
Lunch traffic to quick-serve hamburger restaurants dropped by 5%
last year -- the biggest-ever year-over-year decline
market-research firm NPD Group Inc. has recorded.
"It's not sustainable for them to expect people to show up and
spend $13 on a burger on a consistent basis," said Kurt Kane, chief
concept and marketing officer at Wendy's Co., which is among the
fast-food burger chains engaged in an intense price war to attract
and keep their core, budget-conscious customers. Wendy's has a deal
of four items for $4.
Mr. Cockerline now mostly goes to Wendy's when he is too busy to
cook -- because he can't make a meal any cheaper than $4, he
said.
The average lunch burger check -- including fries and a beverage
-- has risen 22% since the financial crisis to $5.83, with a 4%
increase last year alone, according to NPD.
Choices used to be limited to fast-food chains like McDonald's
Corp. and Restaurant Brands International Inc.'s Burger King,
diners or sit-down chains that served a range of other menu items.
In the 2000s, quick-serve restaurants such as Shake Shack Inc.,
Smashburger Master LLC and BurgerFi International LLC, specializing
in making bigger burgers with fresh ingredients began popping
up.
The number of such outlets has nearly quadrupled in the U.S.
since 2005 to more than 2,700, according to restaurant consultancy
Technomic Inc. Today, the fast-food and fast-casual burger business
is estimated at $82 billion in sales, says Technomic.
With so much competition and only so many ways to differentiate
a burger, upstarts have been coming out with evermore gourmet
ingredients, such as Wagyu beef, roasted garlic aioli and truffled
arugula, which have raised the bar for burgers overall -- and their
price tag.
All restaurant tabs have climbed in recent years as labor costs
have risen due largely to state and local minimum wage increases.
The cost of eating out -- especially when cooking at home has
gotten cheaper -- is one major reason hamburger chains are seeing
less foot traffic, NPD restaurant analyst Bonnie Riggs said.
Many burger places also have been placing a premium on their
food. Those places have found they can beef up profits by charging
extra for additional toppings.
"We've had a good 10% increase in average check over last couple
of years," said Andrew Wiederhorn, chief executive of Fatburger
North America Inc. "Menu price increases are a piece of that, but
60% of it is from premium offerings we've added to the menu, like
fried egg or guacamole."
A basic hamburger at the Los Angeles-based chain starts at
$5.94, but after adding bacon and chili, it is $8.14. With fries
and a drink, the combo totals $13.37.
The Habit Restaurants Inc. has raised overall menu prices in
response to rising labor costs and has added new, higher-priced
items like a Portabella Charburger, which at $4.75 costs $1.40 more
than the original Charburger. With fries and a medium drink, it
comes to $8.75.
Some traditional fast-food chains have been struggling to
attract customers who have migrated to places serving more gourmet
food. McDonald's recently adopted a back-to-basics approach after
years of chasing health-minded customers with products like salads,
sandwich wraps and fruit smoothies. It had neglected its burgers
and recently found that only one in five millennials had ever tried
its signature Big Mac.
The burger giant has been trying to improve the quality of its
burgers by adjusting temperatures and cook times to deliver hotter,
fresher burgers. Next year, it plans to make its Quarter Pounders
with fresh, instead of frozen, beef. It is also in the process of
rolling out higher-end, customizable burgers from a "Signature
Crafted" menu to compete with the "better" burger places, but at a
much lower price.
Burger King's deals include two cheeseburgers, a small order of
fries and a small drink for $3.29 at participating restaurants
nationwide. McDonald's has experimented with a number of value
meals, such as two items for $5. Wendy's created its four-for-$4
menu because it found that, on average, people only have $4 to $6
to spend on lunch each day.
Write to Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
May 31, 2017 10:56 ET (14:56 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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