Burger Bonanza: Rare or well-done?
Like many of you, I just got back from RECon, and I’m still processing what I saw and heard. One thing that was interesting to me was the fact that it seemed like burger concepts were on everybody’s site plans, from In-N-Out Burger to Smashburger and Five Guys. If you like a good burger — and, who doesn’t — this is great news. If you are a developer or landlord though, I think you should proceed with some caution. While the burger binge shows no immediate signs of slowing down (I heard Smashburger plans to open 85 new restaurants in 2011 and has a franchisee pipeline of 463 locations; and, Five Guys just announced the largest annual sales growth of all major U.S. restaurant chains in 2010 with an increase of 38%), I’m not sure this kind of growth is sustainable.
You have to ask yourself: Are burger joints here to stay or is this just the latest themed restaurant concept that will overextend itself and fall off the map in a few years like so many other “hot” concepts we’ve seen? Something nobody is really discussing is how many of these we really need. In my own neighborhood in Phoenix, Arizona, for example, there are eight burger concepts within a two-mile radius of my house: Two upscale independents, a Five Guys, a Smashburger, a Culver’s, two McDonalds and a Burger King! It doesn’t seem sustainable. On a side note, I think this whole phenomenon has actually been a blessing in disguise for McDonalds. They’ve been forced to diversify their product line with things like coffee and smoothies to “beef up” their sales and it seems to be working for them.
I think that in order to determine the staying power of the burger guys, we have to look at why burgers have enjoyed such a counterintuitive renaissance at a time when it seems like people are trying to be healthier. Everywhere you turn, restaurants are adding low-fat and low-carb alternatives to their menus. Some might say it’s the economy; consumers are still cautious with their spending, especially when eating on the run. I think it might actually be less economical and more psychological, though. Most of the independents generally offer what people think of as higher quality ingredients. There’s a big push toward organic and locally grown products. Some even offer Ahi tuna burgers and the ever-popular veggie and turkey burgers. That seems better for you, right? So, maybe it does play into the whole “healthier” idea.
I’m still not convinced. My message to real estate professionals is simple: Just because it’s a hot concept now, it doesn’t necessarily mean that it will stay that way. Be careful! A competitive marketplace can quickly become saturated, and today’s hot concept might be tomorrow’s raw deal.
That’s my “food for thought” (a side of fries — wait, make that sweet potato fries — is extra!). What do you think? Email me at [email protected].
Jeff Green is president and CEO of Phoenix-based Jeff Green Partners (jeffgreenpartners.com), a leading consulting firm specializing in retail real estate feasibility, retail expansion planning, medical retail planning, location analysis and commercial land use.
What do Arne Sorenson and Aida Alvarez have in common?
They both serve on the Walmart board of directors and were re-elected by shareholders at the company’s annual meeting last week, but for some reason they also drew the largest number of negative votes, according to results of the election Walmart filed with the Securities and Exchange Commission late Thursday.
Alvarez, Sorenson and the entire slate of directors received a similar number of “for” votes; there were 52,545,582 shares voted “against” Alvarez and 57,451,417 votes cast “against” Sorenson. Those figures were substantially higher than the 35,175,451 shares voted “against” Michele Burns and more than double the number of negative votes received by any other board member.
Alvarez, 61, has served on the Walmart board since 2006 and is the former administrator of the U.S. Small Business Administration and served in former President Bill Clinton’s cabinet from 1997 to 2001. She was the founding director of the Office of Federal Housing Enterprise Oversight from 1993 to 1997. Prior to 1993, she also served as a VP of public finance at First Boston Corporation and Bear Stearns & Co. Inc. She also chairs the Latino Community Foundation of San Francisco and has served as a director of UnionBanCal Corporation and Union Bank, N.A. since 2004.
Sorenson, 52, has served on the Walmart board since 2008 and has served as president and COO of Marriott International Inc., for the past two years. He joined the hotel chain’s board earlier this year and prior to assuming his current role with Marriott, Sorenson served as EVP and CFO from 1998 to 2009 and also previously served as president of Marriott’s Continental European Lodging division. Prior to Marriott, Sorenson was a partner with the law firm of Latham & Watkins in Washington, D.C.
The business credentials of both individuals qualify them to serve on Walmart’s board, but the disparity in votes among the board members is rather curious and the volume of shares voted against Alvarez and Sorenson suggests some institutional holders of Walmart shares didn’t want them on the board.
How shareholders voted for Walmart board nominees:
Gap going value
“The economic model of Outlet is the highest return on capital and is where customers gravitate," Gap CEO Glenn Murphy said at an investment conference in New York City, where he revealed the company will close 200 U.S. Gap stores and expand its outlet base.
But don’t expect the stores to be filled with last year’s castoffs.
"I don’t want them bringing stripes in the stores if stripes are last year’s idea,” Murphy said.