Smashburger Makes Texas Next Stop for Expansion

Smashburger
DALLAS-Keeping to its fast-paced growth plan, Denver-based Smashburger is expanding beyond its home state, securing its first sites in Texas for a four-year plan to put 30 restaurants in both Dallas/Fort Worth and Houston. Backed by veteran restaurateurs, the long-range plan is to take the concept nationwide and build a portfolio of roughly 500 locations.
Smashburger is challenging fast-casual peers in the better-burger category. Its first restaurant
opened in June 2007 at 1120 S. Colorado Blvd. in Glendale, CO and five more came on line in the
Denver metro before the year ended. With four more Denver spots in the pipeline, the owners
believe it’s time to take their show on the road and Texas is a natural next stop.
“We think it’s a great market because Texans definitely like their hamburgers,” says Ryan
McMonagle, Smashburger’s CFO. He tells GlobeSt.com that Dallas/Fort Worth and Houston each
will start with two “grade A-plus locations” this year and reach eight to 10 before 2009 ends,
putting the new chain on “a clear path to 30 over the next three-year period” in each city. The
Texas drive will round up San Antonio and Austin in the next wave along with Minneapolis. “We
are actively working LOIs in all cities,” McMonagle confides, adding the Central Texas cities are
being primed for 15 to 20 restaurants each. Orders also are being placed for spots in Kansas City
and Wichita, KS.

Interior
A Dallas lease will be signed any day now, with talks already underway
for a second location. Houston’s first Smashburger is going into an
unnamed strip center at the intersection of Main Street and Kirby Drive,
right beside Reliant Center. Smashburger’s Dallas scouts are Kelly
Hampton, senior vice president, and James Dunn, vice president, both
with Venture Commercial Real Estate LLC and its Houston hunt is being
led by Baker Katz Commercial Real Estate, which has two more leases in line to be signed.
“It’s a proven genre. While it’s relatively new to Dallas, it’s being very well received,” Hampton
says. “We are being very selective.” The search is focused on Dallas proper, North Dallas and the
Plano-Frisco submarket.
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Smashburger Makes Texas Next Stop for Expansion
Smashburger’s executive team is signing five-year leases for 1,800-sf to 2,200-sf inline and end-
cap spots. McMonagle says the must-haves are locations with high visibility, strong daytime
populations in a three-mile radius and residential density to seed demand for dinnertime too.
Smashburger’s chief competitors in the fast-casual better-burger category are Five Guys Burgers
& Fries and Mooyah Burgers & Fries. “There is no dominant play in this category. We think every
local market has a very strong local competitor and there are some other hamburger concepts
that target a similar market as well,” McMonagle says. “We really knew where we wanted to go
with this concept, but we let the customers tell us what they wanted–the burger is for burger
lovers.”
In Greater Dallas, Five Guys Enterprises LLC of Lorton, VA, has opened in the Galleria Dallas mall
and Southlake. Dallas-based Mooyah has three locations in the metroplex, and like its
competitors, has eateries coming on line in the Austin and Houston metros.
McMonagle says Smashburger’s parent, Consumer Capital Partners of Denver, has mapped out its
expansion as a mix of corporate-owned restaurants and franchise territories. Talks are underway
with franchisee prospects on both coasts.
Based on the five Denver restaurants, Smashburger is ringing up $682 in sales per sf. “We are
outperforming what our internal expectations were,” McMonagle says. The cost to open a
franchise location is $280,000 to $400,000, including equipment, according to Smashburger’s
franchise development document.
Smashburger’s specialty fare is a Angus steak burger in one-third pound or half-pound patties,
smashed on a flat grill to seal in natural flavor as it’s cooked and then served open face on a
toasted buttered bun in a “create your own” sandwich by choosing buns, cheeses, toppings and
dressings. Chicken sandwiches and salads are on the menu too. It’s fast-casual with modern
décor to create an atmosphere for a family- and business-driven customer base.
Consumer Capital’s founders Rick and Dick Schaden and their entire team are seasoned concept
chefs, with ties to dining hits for many nationals, including Boston Market, Quizno’s, McDonald’s
and Pizza Hut. Consumer Capital is a private investment, concept/brand development and
strategic advisory firm.
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Smashburger Makes Texas Next Stop for Expansion
“We’re restaurant operators so holding a restaurant for a long time is a possibility, but we’re not
closing any doors,” McMonagle says. “There is not an ultimate exit scenario in play right night
now.”
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