On Thursday, "better burger" chain Smashburger announced plans to open several locations throughout Latin America. The first two outposts are slated to open in Costa Rica late this year. Company representatives said down the line there will be outlets throughout Central America, in the Caribbean, and in Venezuela and Ecuador.
Latin America is the third major target for Smashburger's international expansion. The first two, Canada and the Persian Gulf, were announced just a few months ago. That means that Smashburger, based in Denver, may soon have its flag planted on three continents -- within roughly five years of its founding. In the quick-service arena, that's downright revolutionary.
"Most companies' strategy is to grow in their home markets almost to saturation before going abroad," Smashburger CEO David Prokupek told the Huffington Post. "But we're different."
Prokupek explained the expansion to such disparate regions is motivated by a desire to quickly establish global awareness of the Smashburger brand -- in the hopes that strong consumer awareness now will translate into real sales down the road.
"Our business model looks more Google-like or techlike, in terms of having our brand be very established very quickly, before going back in and filling the gaps," he said. "It's just a change of mind-set, ... a new paradigm. "
The reason virtually no one has tried the model so far is that, on the face of it, it doesn't make any sense. Most restaurant chains spread locally before going far afield because their supply chains and quality control are difficult to manage. Ingredients vary widely in quality from place to place and go bad rapidly, so the types of strategies that work in one place might not work in another.
And Smashburger is unlike the tech companies that Prokupek compares it to in that his product is hard to replicate. If you visit Google's website in Seoul, it's guaranteed to be the same as it is in Mountain View, Calif. The same can't be said of the fries at a Smashburger in Denver compared with those at a Miami branch. Computer code stays the same, but potatoes and cooks vary throughout the world.
These realities have kept even established, world-famous companies from attempting universal saturation. In-N-Out Burger is everywhere in Los Angeles, but there are no branches in Boston; the opposite is true of Dunkin' Donuts. Even companies that have expanded across the United States relatively rapidly, like Chipotle and Panera, have so far shied away from serious international expansion.
Smashburger is a privately held company, so its financial records are not public. But already it's opened 143 restaurants, all during a recessionary period.
"We've gotten to ourselves almost national. We're not in quite every state, but almost, and we've done that very quickly," Prokupek said. "It wasn't that efficient, but what it's done is establish a national brand right away."
The strategy got some external validation recently, when Forbes named Smashburger the most promising company in America -- above any of the tech companies you might expect. Forbes specifically named the company's explosive growth as the factor that set it apart.
When asked to explain the factors underlying the success of this growth, Prokupek cited his franchise partners; many are seasoned hotel and restaurant operators. Because they figure out how to adapt the Smashburger model to local laws, regulations and customs, they're especially crucial when it comes to international expansion.
Richard Eisenberg, a veteran franchise operator in Latin America who is heading up the new branch of the chain there, expressed confidence that Smashburger would succeed in the region and asserted that there's large unfilled demand for hamburgers in the area.
"If you come to Costa Rica, it's hard to find a good burger," he told The Huffington Post.
Both Prokupek and Eisenberg admitted that Smashburger's price point could be a sticking point in Latin America, a region not as wealthy as, say, Canada or Dubai.
Eisenberg noted, though, that even if some Smashburger prices end up being lower, the sales might not be. He drew an analogy with his Quiznos franchises. "The average Quiznos in Latin America has prices that are 20 to 30 percent lower than at the average Quiznos in the United States," he said, "But the average transaction count is actually higher in Latin America," largely because many Latin Americans dine in large groups and as entire families.
Going forward, Prokupek said Smashburger has its sights set on even further international expansion. He declined to say precisely which region would be next, but mentioned Australia, Southeast Asia as well as Europe and Eastern Europe.
"Then," said Prokupek, exhaling, "I think our plate will be full."
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