Rapid transition to casual dining offers ‘another consumer access point’: Smashburger president

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Smashburger President Carl Bachmann sits down with Yahoo Finance Live to talk about how the chain is addressing inflationary pressures, labor shortages, increasing drive-thru access and its menu.

Video transcript

[AUDIO LOGO]

David Briggs: Food prices have soared more than 11% in the past year, the biggest annual increase since 1979. And now we take a look at how prices are affecting America’s favorite fast food. Carl Bachmann is the president of Smashburger and its 239 locations across the country. Allie Canal also here with us. Carl, what impact does this have on business across the country?

CARL BACHMAN: Oh, I think it affects us a bit, but I think you just have to think about doing business a little differently. One of the things we do is to make it simpler, faster and easier for our customers to access our food, ensuring that they have different access points, an omnichannel approach, one of them being our virtual drive-thru program, which really gives that person who may be juggling work and home and everything in between another option to get a fast, relaxed, premium experience without even leave his car. So really taking different aspects of the industry and applying them to fast casual.

ALEXANDER CHANNEL: And, Carl, your company is in the process of reassessing its real estate portfolio. How do you handle that given that we’re in an environment where we have high inflation, but the real estate market is also hot?

CARL BACHMAN: Yeah, it’s hard. I think – I think the smart thing is to really employ what I call, I guess, economy of scale and really a hub-and-spoke approach. When we open new restaurants, we really want to open where we are strong, where we really have our supply chain in place. We can get more penetration and marketing so we can save some of those costs on that side of the business. And then from a supply chain perspective, also thinking about what we can do with freight, regional sourcing to really save money on the back so we don’t have to pass on this inflationary cost on the consumer.

ALEXANDER CHANNEL: And outside of real estate – you alluded to that – but a big focus on technology, a big focus on automation. One of your goals is to be completely contactless. How will this impact your current workforce?

CARL BACHMAN: In fact, I think it will probably help us gain more workers. We will need more workers as our volumes increase. The company must make the transition. Fast casual is changing, and we need to ensure that, again, this omnichannel approach allows more people to access our products and services.

So going to the virtual drive-thru, for example, that’s an example, we’re starting with a three-step process — a traditional drive-thru is to place an order — get your car online, an order , go to the second window, make a payment, then collect. It therefore requires a lot of time and effort from the consumer. By going to the virtual drive-thru, that same employee can handle all three functions because through technology, we can ask our customers to pre-order and pre-pay, and now we’re just timing the run time to come to the window.

It creates that ability to have a smaller footprint. That’s less real estate, less traffic jams. Many municipalities are unhappy with traffic jams during the pandemic with the number of driving passes and car piles. So, with a virtual drive-thru, this kind of technology will take us to a stack of three or four cars instead of a stack of 40 cars. So, smaller real estate, opportunities to go where fast-casual restaurants couldn’t go before, and another access point for the consumer.

RACHELLE AKUFFO: And, Carl, what about the operators themselves because you said they’re more optimistic than ever, and that’s even despite what we’re seeing with inflation? What do you think is really driving this optimism?

CARL BACHMAN: I think the challenge and the competition of upping our game. We’ve continually, through the pandemic and now through this kind of economic time, we’ve decided to go the other way and really up our game by food quality and standards. And I think people are excited about it.

We deliver a better product. We provide better services. And I think competition just breeds more competition and makes it better. So I think everyone wins. And we saw the opportunity to have an omnichannel approach, whether it’s catering, takeout, delivery, walk-in counters, drive-thrus, etc., to give different points access to our customers.

So I think that’s why we’re optimistic. I think the pandemic has just accelerated the need for these services. And now, chains across America understand that if you want to be successful today, you have to have that approach and really give the consumer extra points of access. So I think that’s why I’m optimistic about our ability to do that and using technology to help us do that.

David Briggs: It’s probably a different game. It is shocking that so few are emerging from the pandemic. Blame my producers for making me hungry by putting up this video. Your spicy chicken sandwich. Is this going to be a permanent addition? I know it was only a limited time. And what do you have behind in terms of innovations?

CARL BACHMAN: Well, the spicy chicken sandwich – we call it our Scorchin’ Hot Chicken Sandwich. There was the chicken wars of 2021. So we said, well, we’ll…even though we’re a great burger concept, we’ll throw our hats in the ring. And we did, and we sold our chicken sandwich.

So we brought it back this year by popular demand. And we will see. It may last on the menu. This may not be the case. We do our best to make sure we can prepare them every day. So right now it’s what we call a limited time offer, but it could last forever. We will see what the public demand is. But great-great chicken sandwich.

We also just launched chicken wings in a bunch of different flavors. So we are constantly innovating and giving people the opportunity to try different proteins and different constructions. We offer five different proteins, whether it’s ground beef or ground turkey or black bean burgers, turkey burgers, ground turkey burgers and of course crispy grilled chicken, so we try always to innovate and give people an opportunity. We believe we can break any product just right.

ALEXANDER CHANNEL: And, Carl, I want to pick up on that because I feel like with the rise of TikTok, Gen Z, all of these fast food chains are really jumping on all of these trends. How do you use social media in your business? And what are you hearing from consumers, especially younger consumers, about what they want right now?

CARL BACHMAN: I think what we try to do in social media is really show them how we do it and why we do it. Our name is Smashburger for a reason, and you see that smasher in the logo because that’s what we do. We crush it to create what we call our meat candies, this fresh and exciting product.

And then– I don’t know if you’ve ever baked a pancake at home and watched it bubble and knew it was time to flip it, but that’s kind of what we do with our burgers to cook in their own juices, and that’s cooking with our own spice. So what we did was take social media and really have fun with it. And we take our cooks and our best chefs on our team, and we let them play and teach people how to do that at home, it’s really exciting.

And I think social media has become so culinary. And one of the things we’ve done in our design is we’ve opened up our restaurants and lowered our counters so that when consumers walk in, they can really see the process. So they can see us smash burgers and see how we cook and how we prepare our products.

I think it gives the consumer confidence and more importantly it makes it fun. And I think that’s where social media comes in because people can enjoy the process. So we really focus on that and let them see why we do things the way we do and why our products are different from others.

David Briggs: Dude, we’re hungry. Allie, I’ve never tried this smash method, but I have to figure this out. Carl Bachmann, good to see you. Allie, thank you too. There are a few places within a mile of here, so let’s go.

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