There’s no question that fast casual burgers have been the restaurant industry’s hot growth segment of late; it’s popular with hungry customers and eager franchise buyers alike. Soon we’ll learn what happens when a dominant full-service burger chain, Red Robin Gourmet Burgers, takes on Five Guys, Smashburger and their fast casual burger brethren and attempts to beat them at their own game.
It’s not that 466-store Red Robin isn’t doing well with its full-service business. It’s more that this publicly held company has been standing on the sidelines while new players have enjoyed wild success by offering a highly similar product in a somewhat different format. If you run Red Robin and look at the nonstop growth of Five Guys or Smashburger, you have to think, “Why couldn’t that be us?”
Now it might be. The company has just opened its third Red Robin's Burger Works, its spin on a fast casual gourmet burger concept. This one is in downtown Denver. Like the first two iterations (Columbus, OH, on the campus of Ohio State University; The Shops at Northfield Stapleton in Denver), the restaurant offers a build-your-own-burger option as well as classic Red Robin burgers. Its menu is an abbreviated version of the extensive offerings available at a full-service Red Robin.
One key advantage this fast casual venture gives Red Robin is that the company can explore new areas where its original format didn’t quite fit. Full-service Red Robins are often located in suburban areas and require large parking lots. Burger Works can work at a variety of locations.
“The Red Robin's Burger Works format allows us to offer Red Robin’s creative and popular burgers to communities we haven’t been able to serve in the past, including urban locations like Denver’s 16th Street Mall,” says Nathan Brodbeck, the new unit’s general manager. “Downtown Denver is an ideal setting for Red Robin's Burger Work’s casual, quick and contemporary approach to serving great burgers.”
Arriving customers proceed to a counter to place their order, which is brought to their table when ready. They might go with a classic Red Robin burger such as the Royal or Banzai burger, which is $5.99. Full-service Red Robin outlets price these particular burgers higher, but throw in the chain’s signature “bottomless” fries. Fries cost extra at Burger Works. Or customers might opt for a Burger Works Original like the Tavern Double, a double cheeseburger priced at $4.99.
But many will head straight for the heart of the menu—the Build Your Own Burger Masterpiece section. The starting point for all sandwiches here is a 1/3 pound fire-grilled burger that goes for $4.49. Free add-ons include mayo, chipotle mayo, Thousand Island dressing, house bourbon BBQ sauce, Thai Chili Ketchup, Red’s Relish, pickles, lettuce, Roma tomatoes, jalapenos, raw or grilled onions and beer-mustard onions.
Customers can choose to upgrade this basic offering by adding cheese (50 cents per slice), guacamole ($1), applewood-smoked bacon ($1), onion straws ($1, fire-roasted salsa ($1), sautéed Portobello mushrooms ($1), a fried egg ($1) or an extra beef patty ($2). The food cost for some of these add-on items is definitely attractive.
The same treatment can be given to the Burger Works chicken sandwich, also a fire-grilled item.
Even without free bottomless fries, Red Robin still offers customers something special on its side dish menu. Burger Works sells French fries ($1.99), sweet potato fries ($2.49) and onion straws ($1.99) separately; a 3-for-all combination basket goes for $4.49. Soft drinks are $1.99; hand-spun real ice cream shakes cost $3.99.
How well will Burger Works do? On one hand, its menu and price points are very similar to other fast casual burger concepts, making it tough to stand out in what is increasingly becoming a very crowded field of gourmet burger purveyors. But on the other, the Red Robin name supplies a lot of brand equity and recognition, and the company has deep experience in producing a satisfying burger experience for its current customers.
If it works, all of a sudden Red Robin will have uncovered a dynamic path for new growth; not many built-out full-service chains can make that claim