The Burger Trend, You Know, Those $5 + Burgers, Might Be Over
If what is going on in Chicago is any indication, burger chains might be in trouble.
"The fast-casual burger segment got too crowded, the competition got too intense and a lot of these places did not give customers a compelling reason to visit," says Bonnie Riggs, an analyst with market research firm NPD Group. "It's a tough place to be." The fast-casual market, which posted six years of growth ranging from 8 to 20 percent annually, is slowing down dramatically. Restaurants overall have clocked six consecutive quarters of declining traffic, the worst stretch since the recession.
Here’s what’s going on in Chicago .
Red Robin has closed all five of its Red Robin Burger Works, two years after launching in Chicago.
Smashburger, the Denver chain had 11 Chicago-area restaurants in 2015, now has just four restaurants.
Five Guys is down to 23 restaurants from 36 two years ago.
Tom & Eddie's a "better burger" concept launched in 2010 by two former McDonald's executives, grew to five suburban locations in 2014; today it's down to three.
Mooyah Burgers, Fries & Shakes debuted two locations, in Glenview and Lombard, in 2014 and broadcast plans for 10 more franchises by 2016. Now, the two original locations are gone and a single Mooyah, in Joliet, remains.
Are we just getting tired of those bigger burgers? Yes and no.
Americans are cutting back on burgers do to growing concerns about health risks associated with red meat. Then there are those who like to grill their on their BBQ and then there are those who prefer to order their burgers through Uber Eats or other restaurant delivery services. The bottom line is that the number of fast-casual burgers sold in the U.S. has fallen by single-digit percentages two years in a row, to 6.8 billion for the 12 months that ended in June, according to NPD.
"It created a double whammy last year when health care costs forced operators to increase restaurant prices at the same time that consumers were feeling their own health care pinch," she says. Add to that an 18-month stretch of food deflation, born of low oil and grain prices plus cutthroat grocery competition, and most middle-class consumers suddenly see little reason to go out. "It's just not worth the money," Riggs says, "especially when you can grab a prepared meal at the supermarket. The options are endless."