April 21, 2015
Fresh-never-frozen beef is driving the growing popularity of premium and niche burgers. (Photo courtesy of George Motz)
Despite high beef prices that are causing many consumers at retail and foodservice to trade down from steak to more moderately priced poultry, the demand for high-quality hamburgers is alive and well. Yes, ground-beef prices are high in the meat case and hamburgers are no longer the cheapest items on most menus; and consumers are gravitating away from venues that don’t make it clear their patties are made fresh, never-frozen and are sourced responsibly. Trendy burger-based chains like Twisted Root, Burger Lounge, Burger 21 and Hopdoddy Burger Bar have entered the fray with well-established and global chains like Five Guys Burgers and Fries and Smashburger.
To quantify the sustained demand, Chicago-based The NPD Group reports there were 9 billion servings of hamburgers ordered in US restaurants and foodservice outlets in 2014, a 3 percent increase compared to the previous year.
Corresponding with the servings ordered at restaurants is the volume of ground-beef shipments to restaurant and foodservice outlets. Bulk ground-beef shipments to total foodservice outlets increased by 2 percent, according to NPD’s SupplyTrack service, which tracks products shipped from broadline distributors to foodservice operators.
The demand for hamburgers hasn’t been channel-specific although the fast-casual chains have hogged the spotlight as of late. However, the casual-dining channel, which saw servings of hamburgers rise 4 percent in 2014, also profited as many operators added burgers to menus to offset higher prices for beef entrées, according to The NPD Group. The impact was stark, as beef entrée servings declined by 8 percent at casual dining restaurants, a volume loss of 55 million servings.
“The success of burgers in 2014 was a combination of factors,” according to Bonnie Riggs, restaurant industry analyst for NPD. “Quick-service restaurant chains launched new burger items, casual-dining restaurants added more burger items to the menu to offset higher beef costs, and Americans simply love their burgers.”
A modern-day ‘Wimpy’
George Motz knows his way around hamburgers and has been around hundreds of burger joints all over the US. You could say ground beef is in his blood. It’s even on his car’s license plate, which reads: “HMBRGR.” He’s practically made it his life’s work to be the top hamburger guru and has appeared on many talk shows and burger-based TV broadcasts. Currently, he’s working on a cookbook companion to his 2011 book, “Hamburger America: A State-by-State Guide to 150 Great Burger Joints,” which was based on his 2001 documentary, “Hamburger America” – telling the story of eight hamburger restaurants and the people behind the businesses. The cookbook, scheduled to publish in March 2016, provides recipes to make regional burgers at home.
Click image to view more trends in burger and ground beef consumption
Motz says the better-burger category is far from hitting its peak of popularity.
“I think it’s just getting started,” he says, while admitting the segment has seen a saturation of companies in the space. “This is kind of the beginning of a thinning out,” in the market.
Part of the thinning out has resulted in some struggles among some companies in the quick-service segment. The “Big three,” Motz says, are going to have to start re-thinking how they do business. “I would not be surprised if some of the big guys were at a conference table five years from now and having a conversation about going to all-fresh beef,” as opposed to the frozen-patty system they have all relied on for decades.
Fresh beef that is never frozen is the direction the market is trending. “Kids today can tell the difference between fresh and frozen beef. The fresh-meat segment is going to keep growing because that generation will know better than we did,” Motz says.
As for the fate of the niche-burger segment focused on better-for-you attributes, including bison burgers, burgers sourced from the Akaushi breed and processors offering ground beef fortified with omega-3 fatty acid, Motz says there is no threat to the tried-and-true 80 percent-20 percent ground chuck burger.
“It’s the standard and people are always going to return to it,” he says. For most consumers, it is a decision based on price and the cost for specialty, niche burgers are well above the already-inflated price tag for ground beef.
The trend toward ultra-indulgent burgers, including Carl’s Jr.’s ½ lb. Original Six Dollar Thickburger and the 10,000 calorie “Quadruple Bypass Burger” on the menu of Las Vegas-based Heart Attack Grill, is another fad that Motz says is more about marketing and less about the meat.
Having released his movie, in 2001, Motz says of the burger landscape: “Everything has changed since then.”
For starters, consumer awareness of fresh-vs.-frozen burgers and the variety of what is available to them has been fueled by social media and the Internet. Because consumers have become accustomed to educating themselves online about the food they eat, fast-casual chains serving fresh, not frozen, ground beef including Five Guys Burgers and Fries, Smashburger and many others have thrived.
Drawing steak holders
Habit Burger Grill went public on NASDAQ.
Premium-burger chains Habit Burger Grill, Irvine, Calif., and Manhattan-based Shake Shack have ridden the wave of burger popularity as both companies went public in the past five months. With 63 restaurants in nine countries, Shake Shack’s opening stock price was $47 per share, 125 percent higher than the $21 per share pricing the day before. Habit Restaurants, with 98 restaurants in four states, raised $90 million in its first day of trading (this past November) on the NASDAQ as its shares jumped 120 percent to finish its debut at $39.54 after pricing shares at $18 the night before its opening day.
“It’s great to see a fresh ground-beef restaurant go public,” Motz says, but sustaining the success and satisfying stakeholders’ expectations will be the challenge, he adds.
One notable shift Motz has seen in the foodservice segment is the increasing number of new eateries taking a “do-it-yourself” approach to their burger offerings.
“A lot of restaurants all over America are beginning to grind their own, in the restaurant,” he says. “It’s a whole, new trend. They will actually get a grinder and control not just the fat content but the size of the chop, the size of the grinder plate – they can control everything now.”
The trend for eateries grinding their own beef is far from regional and Motz says he’s seen it in restaurants “from Nashville, to Atlanta and in New York and LA.”