CEO on how Fatburger went from bankruptcy to growth spurt

 
March 26, 2013 | by Cherryh Butler

Editor's note: This is just one story in a recurring series that features interviews with top-level execs in the fast casual industry. If you would like us to feature a specific exec, please make your request in an email to Cherryh Butler at cherryhb@fastcasual.com.

Although Fatburger has been around since 1947, and has more than 150 units, the chain has done most of its growing in the past 10 years. It has nearly quadrupled the number of units it had in 2003. Under the direction of CEO Andy Wiederhorn, the brand has not only expanded its footprint across North America but has also focused on the Middle East and Asia. Even after two of the chain's subsidiaries filed for Chapter 11 Bankruptcy in 2009, Fatburger is thriving.

Wiederhorn told FastCasual.com how he's pulled off this comeback. (To hear more from Wiederhorn, attend the Fast Casual Executive Summit Oct. 13-15, where he'll speak about his strategies on the CEO Roundtable.)

Q: You closed a few locations a few years ago but have since made quite the comeback. Why was the decision made to close those units?
Wiederhorn: The majority of the units that we had to close down were due to leasing agreements coming to an end or stores that were not generating a positive cash flow. In regards to leasing agreements, in some cases, we could not come to terms with the landlord in negotiating rent, and therefore made the decision to close. Also, when dealing with Chapter 11 Bankruptcy with two of our subsidiaries (California and Nevada), we had to make the difficult decision to close units that were no longer profitable.

Q: What has led to your recent success? How have you been able to double the footprint in the last few years?
Wiederhorn: We were able to turnaround the brand by placing great focus on areas like the Middle East and Asia, as capital was more readily available there at the time. Our first international location opened in Canada in 2006, followed by Macau, China in 2007, and Dubai in 2008. Since then, we have made great strides in increasing our presence internationally, with about half of our 150 current locations based overseas. Also, over the last few years, we have converted our business model to be 99 percent franchisee operated.

Q: You have a strong international presence. What are one or two things that any Western chain needs to consider when going international?
Wiederhorn: The most important thing that a Western chain needs to take into consideration is the versatility of their product. We are fortunate that burgers travel well and are loved throughout all areas of the world. In recent news, we opened in Karachi, Pakistan and were under the impression that our chicken items would be more heavily sought after, but soon realized that our beef was in higher demand. As a result, we needed to think quickly and actually airlifted beef in to feed our customers. Overall, when launching a store internationally, you must be able to adapt to the cultural preferences of the market and handle any situation that is presented to you in a timely manner.

Q: What is your growth plan — more international markets or more in the U.S.?
Wiederhorn: We plan to grow both significantly in the United States and in international markets. Last year, we signed a notable development deal with Shanghai-based investment bank, Puji Capital Limited, to aggressively expand the Fatburger chain by a large number of locations over the next several years. In addition to expansion in China, Taiwan, and Singapore, we are growing our footprint around the Middle East, opening units in Jordan, Lebanon, and The United Arab Emirates. In terms of our domestic presence, we will be bringing the burger brand to the New York City area. Our first location will open in the Murray Hill neighborhood this Spring, with nine more units to come over the next few years.

Read more about operations management.


Topics: Fast Casual Executive Summit , Operations Management


Cherryh Butler / Cherryh Butler has been a reporter for nearly 10 years, writing on a variety of topics ranging from the restaurant industry to business and health and fitness news. Before joining FastCasual.com as editor, she oversaw KioskMarketplace.com and PizzaMarketplace.com and contributed to RetailCustomerExperience.com. She's also written for several daily newspapers, magazines and websites, including The Kansas City Star and American Fitness magazine.
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