Alasdair Murdoch cuts a relaxed figure as he strides into Gourmet Burger Kitchen’s (GBK) Soho branch. With a CV that includes pub company Taylor Walker, Pizza Hut and Pizza Express, the 59-strong chain’s chief executive is a seasoned multiple operator and looks every bit the part in his shirt, jeans and well-maintained brogues.
Others in his position might appear less calm. While numbers are good – GBK has chalked up 20 months of solid like-for-like sales growth – a bun fight is looming in the premium burger space as a host of new players enter the London market and others begin to eye the provinces.
Back in 2001 – when GBK was founded by a trio of New Zealanders in Battersea, South London – it was nearly impossible to find a decent burger in the capital, let alone the rest of the UK. It was an odd state of affairs, considering the enormous popularity of the category.
As well as kicking off the premium burger revolution in London, GBK took posh patties nationwide when it was bought by Clapham House Group in 2005. And its success did not go unnoticed, with two rivals entering the market shortly afterward: the Gondola-owned Byron – now GBK’s closet rival in terms of price point and geographical reach – and the predominantly Midlands and north-based Handmade Burger Co, which currently operates 16 sites.
No siege mentality
But recently things have got seriously interesting. Over the last couple of years London has gone bonkers for burgers with a host of trendy upstarts including MeatLiquor – soon to go regional with a site in Brighton coming up – Honest Burgers, Haché and Patty & Bun to name but a few. On top of this there is an incoming US burger invasion: an entirely new category of premium fast food led by Shake Shack and Five Guys – both opening this month – and Smashburger and Fatburger, which are also gearing up to cross the Atlantic.
Does Murdoch feel the sharks are circling? “Well it does seem like every man and his dog is opening a burger chain at the moment,” he laughs. “But no, we don’t feel under siege.” He is extremely gracious about his most obvious competitor, the 30-strong Byron. “They’re great competition for us. They do a good job.” But he’s also keen to emphasis the differences, namely Byron’s slightly more upmarket demographic, table service (compared to GBK’s fast-casual counter format) and a tighter, US-inspired offering.
Murdoch – who has overseen GBK since its purchase by Nando’s owner (and Wahaca investor) Capricorn Ventures in late 2010 – doesn’t see the predominantly London based trendies as direct competition for his brand. In fact, he actually believes the likes of MeatLiquor and Honest Burgers are helping GBK’s cause by getting burgers talked about and raising awareness of what a good product is. There's certainly no doubt burgers have never been under more scrutiny with legions of dedicated food blogs, nerdy lists and category competitions. Indeed, GBK used the explosion of interest in premium burgers as a hook to justify a new tranche of expansion last year.
Capricorn closed some branches immediately after purchasing GBK but has since added to the estate. Five restaurants opened in 2012 and this year will probably see seven additions, with a further 10 new branches slated for 2014. “There’s still a huge amount of potential for the brand in the UK. We could easily go to 150,” says Murdoch.
The Kiwi connection
Aside from its size, one factor that sets GBK apart from the competition is its Antipodean theme. High-profile New Zealand-born chef Peter Gordon created the original menu and continues to work with current head of food Tim Molema. The group’s lengthy burger list includes The Wellington and Kiwi Burger, though in truth GBK’s menu is more a world cuisine take on the burger restaurant, drawing influence from everywhere from Italy to Indonesia.
But is this eclectic theme an advantage in a market that traditionally looks to the US for inspiration? Murdoch believes so. “We’re very aware of our heritage and where we came from,” he says. “We still have the link with Peter Gordon, we still sell [Kiwi beer] Steinlager and some of the burgers are inspired by New Zealand. It’s an important part of the brand but we’re careful not to overplay it – it’s not the be all and end all.”
In terms of design, GBK is moving away from its roots. When Capricorn took control of the group a major programme of refitting began and over half of the sites have now had a full facelift. The brand’s new look no longer references Australasia and is intended to be youthful and premium, with a light colour palette and quirky elements, including scrabble tiles and disco balls. Several design agencies have been commissioned in a bid to give the branches an individual feel.
While Murdoch is tight-lipped about the average cost of each revamp, he says the ROI has been strong, buoyed greatly by a policy of scrapping two-for-one and similar vouchers at the overhauled sites. This initiative is part of a suite of measures designed to help wean the brand off deep discounting (see Deal breakers, below). Along with the look of the restaurants, Murdoch and the senior management team are striving to improve both food and service. “It’s a simple offer, but we’ve worked hard to raise the quality of all the elements. For example, GBK wasn’t buying the best quality ice cream, but is now sourcing organic product. That investment cost us something like £400,000 a year, but the number of customers buying milk shakes has risen from 10 per cent to 25 per cent,” says Murdoch.
Supply chains have also been improved. GBK was sourcing meat from multiple suppliers at varying specs, but a single company has now been brought in to improve eating quality, traceability and logistics, with fresh patties made with forequarter delivered to all branches every day.
Staff turnover has been halved since the group was sold to Capricorn. Murdoch attributes this impressive stat to a better working culture, better career paths and better incentives. “We offer extra holidays after three years and sabbaticals after five – which is an unusual practice for the restaurant business. We’re also not a minimum wage payer, we are quite a way beyond that,” he says.
Training regimes have also been rethought with a focus on good English and customer interaction. Counter service often leaves customers feeling neglected, but GBK has compensated with more staff presence on the floor and at the new condiment stations, which are stocked with free sauces, tap water and monkey nuts.
Much like its sister company Nando’s, GBK’s fast-casual set-up creates an important point of difference to the current restaurant competition. “When we took over, the group was experimenting with table service, but I am committed to fast-casual,” says Murdoch. “Take this Soho site for example. It’s 70 covers which isn’t quite enough for a classic dining model, but because it’s fast-causal our average table turn time is well under 45 minutes, so we take enough money. It also allows us to get into spaces that many of our competitors would not be able to.”
The key operational benefit of counter service is that customers order their food and drink as soon as they enter, although there is obviously a trade-off with upselling. Again in parallel to Nando’s, counter service is a major contributing factor to GBK's younger customer base. "Our demographic is slightly older than Nando's but we're still a young person's place," says Murdoch.
With a style of service relatively similar to GBK, the US interlopers are perhaps the players Murdoch should be watching most closely. Five Guys, Smashburger and Fatburger all have experience of major rollouts under their belts, deep pockets and a price that undercuts the UK operators. With its fast-casual service style and lower price point, Gourmet Burger Kitchen is arguably more exposed than its full-service peers.
“Five Guys and Smashburger are interesting and could create a whole new segment with prices somewhere between us and the fast food boys,” says Murdoch. “It will be interesting to see if they can get the economics to work. Getting the quality right while working within the constraints of a relatively low average spend will be tricky – but I’m certainly not saying they can’t. They’re going about it the right way with a big investment.”
Clearly GBK is moving in the right direction with a drive for quality in key areas backed up by significant investment. But it’s going to take a great deal of concentration to stay ahead in such a crowded and rapidly changing marketplace.
This article first appeared in the July edition of Restaurant magazine. View the digital edition here.
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