Houston Chronicle

A recipe for success

Two years in, Whataburge­r’s new owner is riding the chain’s popularity with expansion plans into a handful of new markets

- By Madison Iszler STAFF WRITER

SAN ANTONIO — What do you do when the closest honey butter chicken biscuit, taquito, and mushroom Swiss burger from your favorite orange-and-white chain is hundreds of miles away?

If you’re Patrick Mahomes, you open a Whataburge­r in your backyard. Maybe even a string of them.

The Kansas City Chiefs quarterbac­k is part of an investor-led franchise group that plans to develop 30 Whataburge­r restaurant­s in Kansas and Missouri over the next seven years, including a cluster in Kansas City.

The locations operated by KMO Burger will stretch from Wichita, Kan., to St. Joseph, Mo. The first two, both in Kansas City, are scheduled to open late next year.

“I love Kansas City and I love Whataburge­r,” said Mahomes, a Tyler native and Texas Tech University star who tweeted at Whataburge­r to open a Kansas City location in 2018. “I’m excited to help bring a gift from my first home to my second home.”

Since Chicago-based BDT Capital Partners acquired a majority stake in Whataburge­r in 2019 to expand it, the San Antonio chain has been pushing deeper into the Midwest and Southeast. Constructi­on is underway on restaurant­s in Overland Park, Kan., and Lee’s Summit and Independen­ce, Mo., Whataburge­r said last month.

Tennessean­s will soon be able to get their fix too. Five restaurant­s are coming to the Memphis area in 2022 and 2023, and nine to middle Tennessee, including a location in Nashville, according to a company announceme­nt and local media.

In Colorado Springs, longtime franchisee BurgerWork­s is opening the first Whataburge­r restaurant and training center in the state this year, with more locations planned in 2022. BurgerWork­s owns and operates nine Whataburge­r locations in Texas.

Restaurant industry experts say Whataburge­r’s expansion to states such as Kansas, Missouri and Tennessee is logical, considerin­g the chain’s popularity in the South.

“That will allow them to deal with consumers whose taste preference­s they are comfortabl­e with as well as be able to get to people who are aware of the Whataburge­r brand,” said Darren Tristano, CEO of Foodservic­e Results, a Chicago research and consulting firm.

The new restaurant­s’ proximity to vendors that supply beef, vegetables and other ingredient­s is also a considerat­ion in determinin­g where new locations will be, said Reba Haskell, a lecturer at the University of Houston’s Conrad N. Hilton College of Hotel and Restaurant Management.

“It’s not just about, ‘Oh, this is a great location for a Whataburge­r,’” said Haskell, who has had Whataburge­r executives visit her classes. “(They’ve) got to make sure that they can still uphold the Whataburge­r brand standards with the support that other Whataburge­rs have.”

After BDT Capital purchased the majority stake, the company started franchisin­g again after a 20-year pause. It’s a faster and less expensive route than opening company-owned stores, but it also leaves corporatio­ns with less control over the brand, analysts said. The key is focusing on franchisee­s, training them

and sticking to the standards that have kept customers coming back to Whataburge­r for decades.

The process of opening in a new city involves researchin­g the market, finding sites, lining up vendors, deciding how ingredient­s will be brought in, and finding the right locations, said David Littwitz, a restaurant broker and consultant with Houston-based Littwitz Investment­s. That’s why local knowledge and partners are important. Enter Mahomes.

“Who better to use in the Kansas City area right now?” Littwitz said. “I think every business up there would want to have Patrick Mahomes associated with their business on a positive basis.”

‘What a burger!’

Harmon Dobson and Paul Burton started Whataburge­r in 1950 in Corpus Christi.

Their goal, according to a company history, was “to serve a burger so big that it took two hands to hold, and so good that after a single bite, customers couldn't help but exclaim, ‘What a burger!’ ”

Whataburge­r steadily expanded and opened more than 200 restaurant­s in 12 states by the 1970s.

The chain then added its first drive-thru, put taquitos and Whatachick’n on the menu, and began operating some locations around the clock. The 400th Whataburge­r opened in 1987, and it reported its first $1 million sales day in 1994, according to the company.

Whataburge­r reached 500 restaurant­s in 1995 and $500 million in sales chain-wide in 1998. The Texas Legislatur­e recognized the company as a state treasure in 2001.

By 2008, the company had outgrown its Corpus Christi headquarte­rs and executives were concerned about hurricane damage. Whataburge­r moved to its offices to San Antonio the

“I love Kansas City and I love Whataburge­r. I’m excited to help bring a gift from my first home to my second home.”

Chiefs QB Patrick Mahomes, a Tyler native and Texas Tech alum

next year.

The chain is known for its quality and customer service, and has cultivated a devoted customer base. Whataburge­r donates to local causes, sponsors events and has garnered more than 2.1 million page likes on its Facebook page and 1.2 million Twitter followers with its casual, conversati­onal tone. Customers host birthdays, engagement photo shoots and even weddings at its restaurant­s.

Major players in the burger category have taken notice.

“In-N-Out and Whataburge­r are two companies that I know internally McDonald’s has been concerned about,” Beck said. “They see what their average unit volume is and how popular they are.”

The Dobson family had built Whataburge­r into a flourishin­g company with over 800 restaurant­s by 2019, when they announced they were selling a majority stake to BDT Capital to expand the chain. The firm, led by Goldman Sachs veterans and Warren Buffett adviser Byron Trott, advises and invests in family- and founder-owner companies.

Many loyalists were incensed, worried that putting their beloved Whataburge­r in the hands of a Northern private equity firm would change the quality and customer service the chain is known for.

Whataburge­r rushed to reassure them.

“Texas, we don’t want you to be upset,” the chain tweeted. “We will always be Texan and represent you in a way that makes you proud.”

Since then, the handwringi­ng has largely stopped as Whataburge­r’s growth plans materializ­ed.

Slow, steady race

The company, which has more than 50,000 employees, last year announced plans to expand to Missouri and Tennessee. Whataburge­r rolled out new restaurant models and remodels.

The company also launched a clothing line that includes orange-and-white fishing shirts, boat shorts and hats with the Katy retailer Academy Sports + Outdoors . Shoppers who spend $20 or more on the collection get a Whataburge­r and Magellan Outdoors table tent, an homage to the table tents with order numbers that are regularly stolen from Whataburge­r restaurant­s.

The majority of Whataburge­r’s restaurant­s are company-owned and that remains the chain’s preferred method of expansion, CEO Ed Nelson said in a 2020 interview. “Our objective is to balance maybe 80/20, so we will be 80 percent company-owned and 20 percent franchised.

Whataburge­r thrived during the pandemic as customers flocked to drive-thrus and delivery apps during the coronaviru­s pandemic. When the pandemic forced the company to close its dining rooms in the spring of 2020, it rolled out curbside pickup and delivery services, generating strong sales. The company announced more than $90 million in bonuses for its employees.

The company also said it would change general managers’ titles to “operating partners” and that they could earn six figures annually.

Technomic ranks Whataburge­r the 26th-largest U.S. restaurant chain by sales, which reached $2.7 billion last year, up 5.6 percent from 2019. The company is outperform­ing the industry: Sales among the top 500 chains fell 1.9 percent last year.

Coming into new markets is difficult initially because it takes time to establish a “critical mass” of restaurant­s, educate customers on a brand and differenti­ate from competitor­s with deep roots, the industry experts said.

“For every person who’s out there who is familiar with Whataburge­r, there’s 10 people who go, ‘Oh, goody, another hamburger joint.’ They could care less ... and you have to somehow get their attention,” said Littwitz, a self-described Whataburge­r fan. “This is a slow but steady race.”

 ?? ?? The chain started as a hamburger stand in Corpus Christi. This is a replica of that original Whataburge­r.
The chain started as a hamburger stand in Corpus Christi. This is a replica of that original Whataburge­r.
 ?? Staff file photo ??
Staff file photo
 ?? Reed Hoffmann / Associated Press ?? Like many Texas natives, Kansas City QB Patrick Mahomes is a Whataburge­r fan.
Reed Hoffmann / Associated Press Like many Texas natives, Kansas City QB Patrick Mahomes is a Whataburge­r fan.
 ?? Whataburge­r ?? Whataburge­r offers unique faves such as the limited-time pico de gallo burger.
Whataburge­r Whataburge­r offers unique faves such as the limited-time pico de gallo burger.

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