Did you know that the burger industry in the United States has an estimated value of $108.51 billion? With that said, if you want to get into the burger business, you might want to take a look at Smashburger a burger joint I recently ate at for the first time in about 10 years last week.
Smashburger is a chain of fast casual burger restaurants in the United States that has been operating for 15 years. Their burger style is all about smashing their beef patties on the grill which results in a delicious juicy burger. The chain is open for franchising which you can check out if you’re interested in bringing smashed style burgers near you.
How much does it cost to open a Smashburger? To start, you’ll need a minimum liquid capital of $1,000,000 and a net worth of $2,000,000. The estimated initial investment range is $941,860 to $2,017,426 and the with a franchise fee of $40,000.
Are you interested in smashing some burgers? This guide will help you through everything you need to know about Smashburger and what to expect if you decide to open the franchise business. Take our 7-minute franchise quiz to be matched with the best franchise business option for your skillset and budget.
Financial Requirements and Fees
Here are the fees and expenses to expect when franchising Smashburger:
|Fees / Expenses
|$941,860 to $2,017,426
In addition to all these, there’s also a royalty fee 5.5% of gross sales and an ad royalty fee that’s up to 3% of gross sales. And in the event you want to renew your franchise with them, expect to pay 50% of then-current initial franchise fee. The standard term of agreement to run Smashburger is 15 years. Make sure you really believe in this concept before signing on the dotted line of franchise agreement because you need to be prepared to operate the business for the long haul.
Average Sales / Revenue per Year
According to Restaurant Business Online, Smashburger’s revenue was $187 million for the year 2020.
Smashburger Franchise Facts
|Fast Casual Restaurant
|Food and Beverage
Smashburger was founded by Tom Ryan and Rick Schaden in Denver, Colorado in 2007. Both of them were experienced in the fast food industry with Tom Ryan known for developing Pizza Hut’s stuffed crust pizza while Rick Schaden was the former owner of Quiznos. Ryan decided to go for smashing burgers, an old burger-making technique that would sear the bottom of the meat and also release juices and flavors. It was also a way to cook burgers fast. Fast casual restaurants were only starting to take off that year and their hand-crafted smashed burgers became their business venture into that category and called it Smashburger.
Smashburger aims for a better burger experience. They use 100% Certified Angus Beef that’s never frozen. They cook and smash it on a hot seasoned grill so that the meat is cooked in its juices and fat. Their slogan back in the day was known to be “Smashed Fresh. Served Delicious.”
The menu at Smashburger consists of beef burgers such as the crowd favorites like Classic Smash, Double Bacon Smash, and the Smoked Bacon Brisket Burger. You can choose whether to have a single patty or a double patty. They also offer chicken sandwiches that are either grilled or fried. Crispy sandwich options are Bacon Smash Crispy Chicken Sandwich, BBQ Bacon Cheddar Crispy Chicken Sandwich, and Avocado Bacon Club Crispy Chicken Sandwich. For their grilled chicken sandwich, they have the Spicy Baja with Guac Grilled Chicken Sandwich, Truffle Mushroom Swiss Grilled Chicken Sandwich, and more. And if you think that’s all the burger options they have, Smashburger also serves turkey burgers and black bean burgers for vegetarians.
A burger place like Smashburger also has sides such as French fries, sweet potato fries, tots, crispy Brussels sprouts, and haystack onions. They also serve chicken tenders made with all white meat.
Another popular item at Smashburger is their milkshakes. They’re thick and creamy and all made with Häagen-Dazs ice cream.
Customers with dietary restrictions can still enjoy themselves at Smashburger. The chain has a keto option which means they remove the bun from their burgers. They also have vegetarian options and gluten-free options.
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Catering is also available. Smashburger requires a $50 minimum order for their catering services and the food comes in party-ready packaging.
To franchise Smashburger, you can start by directly calling them or emailing them at [email protected]. Smashburger’s franchise team will then contact you. If you pass all their financial requirements and you have a proven track record in the restaurant industry, you’ll get to move on to the next steps.
This includes site selection, construction, décor, and training all of which you will be guided by Smashburger’s franchise experts. Once you open your unit, Smashburger’s Franchise Business Consultant will regularly visit you and give you feedback on how to improve your operations, increase your sales, and help you monitor guest feedback.
Smashburger is owned by Jollibee Foods Corporation, a Philippine-based company. In 2015, Jollibee owned 40% of Smashburger. They bought an additional 45% in early 2018. By the end of that year, Jollibee was able to buy the remaining percent making them the owner of the Smashburger chain.
Smashburger official website.
Smashburger continues to expand despite their revenue taking a hits over the past few years. The company is also set to open more stores and squashing rumors of Smashburger brand folding up shop all together. But there’s a bit more to this story than meets the eye.
At the time of writing, Smashburger has a grand total of 220 locations in the United States. The highest density presence for the burger joint is Colorado (28 locations), New York (24 locations), and New Jersey (20 locations). The company has been adding more stores in the Chicago and New York area over the past two years.
While Smashburger performs well in many established markets, but doesn’t have much brand awareness in most of the United States. In fact, there are 34 states without a Smashburger location.
At present, Tom Ryan is the Chief Executive Officer of Smashburger. He has Bachelors, Masters, and Doctorate degrees in Flavor and Fragrance Chemistry and is a graduate of Michigan State University. Smashburger’s headquarters is located in Denver, Colorado.
How Much Does a Smashburger Location Make in Profit?
There is no official and updated record of how much Smashburger makes in profit per location. But a listing from 2015 showed one location in Fargo, North Dakota had gross sales $1,009,053 and an EBITDA (earnings before interest, taxes, depreciation and amortization) of $39,426.
Obviously there are other locations that will perform better than this from a financial perspective. But this example also demonstrates the challenges of operating the burger business in a region that’s not established or well known.
Advantages of a Smashburger Franchise
What advantage could a Smashburger franchise possibly bring? Let us answer that question with a few pros I’ve written down below.
People may be used to regular old burgers but smashed burgers are a tweak on the popular menu item. There’s just something about eating a smashed patty with a grilled crust formed around it that makes it taste more delicious. Though smashed burgers have been around for quite some time, the unique cooking style continues to be a favorite which is probably why Smashburger continues to appeal to customers.
Watching what you eat? As mentioned above, Smashburger isn’t all just about delicious premium beef burgers. They have other options for those watching their health or have dietary restrictions. They have vegetarian options, gluten-free options, and keto options. And if you don’t want a burger, they also have salads.
So bringing Smashburger near you isn’t only just for the burger fans. Smashburger is for everyone.
First Mover Advantage
When Smashburger got opened in 2007, the market opportunity for gourmet hamburgers looked wide open and there wasn’t as much competition for share of stomach. Sure there were still fast-food joints like McDonald’s or Burger King. But being the first gourmet burger QSR in certain markets allowed the chain to gain a fast following for offering a distinct burger for the time period.
Challenges of a Smashburger Franchise
All businesses, including franchises with an already established business model, bring challenges every now and then. Here are a few you can expect when you franchise Smashburger:
There doesn’t seem to be a Smashburger review that’s entirely positive or negative. The chain has mixed reviews which makes one wary because the chain can be viewed as a business that’s not consistent with their cooking. For example, one review claims that the burgers did not look like how it was advertised in the pictures. If anything else, the buns were smooshed and they were “sad looking”. However, another review claimed that the service was great and that the burgers were juicy.
These reviews come from different locations so it could be down to the management to make sure their staff are fully trained when it comes to serving good burgers.
Similar Logo and Menu Issues
Smashburger has gotten flak before for copying certain things. The first of these is the logo. Smashburger used to have a logo that resembles Gamestop so well that one might think they were an extension of the other.
Another copying issue was brought up by In-N-Out, another big burger chain. In-N-Out sued Smashburger for trademark infringement and claimed that Smashburger copied their “Double Double and Triple Triple” burger which is two patties and two slices of cheese for the Double Double and three patties and three slices of cheese for the Triple Triple. Smashburger’s version was the “Triple Double” burger which has two patties and three slices of cheese.
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In addition, In-N-Out sued Smashburger for false advertising. Smashburger advertised that their “Triple Double” burger is triple the beef and double the cheese when in fact they meant the weight and not the number of patties and cheese slices.
Stories like these can be damaging to a business’s reputation so if you franchise Smashburger, expect that these stories can come up from time to time.
If you decide to open a Smashburger, be prepared to open not just one but two. It seems as if Smashburger is only interested in granting franchise opportunities to multi-unit owners. However, this information can change at anytime so it’s best to discuss this with the franchise team. But in the event that it’s true, be prepared for the expenses when it comes to franchising Smashburger.
Over the past 15+ years, a lot of competition has entered the gourmet burger category. Now the consumer has all sorts of high-end, quick-serve burger options to enjoy from Shake’ Shack to Red Robin. Many of these concepts weren’t around when the company first opened in 2007. I think the increased competition has made it more challenging for Smashburger to stand out and expand over the past half decade.
Is the Smashburger Franchise Right For You?
Smashburger looks like a good franchise opportunity for those who have the financial requirements and interest in bringing smashed burgers to a location near them. However, revenue numbers from Smashburger businesses that have gone up for sale in recent years should be cause for concern before making the leap.
Make sure to review the latest Financial Disclosure Document before signing and agreement so you understand the environment. A good location also matters so it’s important to focus on site selection too… preferably in a market where there’s brand recognition.
What is an alternative Smashburger franchise?
If you’re still on the hunt for a good burger place, check out Farmer Boys. They’re known for their 100% USDA freshly ground burger beef that’s never frozen, hormone-free and antibiotic-free beef. They’ve been around since the 1980s serving up burgers and have over 100 locations.
To franchise Farmer Boys, expect the investment to be around $1,200,000 to $2,100,000 with a franchise fee of $45,000. To know more about Farmer Boys, check out our full franchise guide here.
Burgers continue to be an all-time favorite and winning concept in the United States. There are the fast food burgers and the burgers made with premium meats that have garnered a name for themselves such as Smashburger. I hope that after reading this guide, you’re able to decide whether or not this fast casual burger chain is right up your alley and if they could be the right business venture for you.