Fast-casual burger restaurants
2 Scott Crane was heading up the second-largest Yum Brands franchisee in 2007, when he got a call to check out Smashburger. They had one restaurant. “I was like, ‘Well, thank you, but I’m not interested in one,’” Crane recalls, but the founders convinced him to make the leap. “All my friends that I knew thought I was crazy. Everybody here thought I was a genius,” says Crane, who was Smashburger’s president until last November, when he ascended to the CEO spot.
Genius might be right after all. Today Smashburger ranks No. 2 on the Franchise Times Fast and Serious list, has 250 stores, half franchised and half corporate-owned, and is a pioneer fighting for dominance in the highly contested better-burger space, itself part of the red-hot fast-casual sector. News is swirling around the brand—Crane replaced Dave Prokupek in November after a high-profile shake up. Prokupek was also a managing partner for Consumer Capital Partners, the private equity firm that is also Smashburger’s largest investor.
Crane plays down news reports that Smashburger needs a new equity partner, although he allows they’re always looking for new money at the right price. He points to the company’s first senior debt facility, $35 million from Golub Capital last June, as a sign the company has arrived. “It’s much cheaper capital,” he says about the Golub deal, compared to private equity, and they’ll use $15 million of it to open 29 corporate stores in 2014, plus 40 to 50 franchises. “We had to be a certain size to stand on our own as Smashburger and get a senior debt facility. It puts you on the stage, that you’re becoming a real-size company.”
It also means the days of 107 percent growth (in units from 2010-12) are over. But Crane expects 30 to 35 percent in 2014, and he’s fine with that, especially with all the room he believes is ahead in the still tiny fast-casual sector. “The white space is so big,” he says. “I would not begin to quantify that, but I think it’s exciting.”