Business

'Fast-casual' burger joints, popping up all over Lexington, are growing market

A late lunch crowd filled many of the seats Thursday at Smashburger on South Upper Street. "Business is great" at the restaurant, which opened in April, said franchise owner Jim Phelps, "and we couldn't be more pleased with the situation we are in."
A late lunch crowd filled many of the seats Thursday at Smashburger on South Upper Street. "Business is great" at the restaurant, which opened in April, said franchise owner Jim Phelps, "and we couldn't be more pleased with the situation we are in." HERALD-LEADER

They're not exactly fast food, and they're certainly not formal restaurants. But "fast-casual" eateries, which offer a sit-down dining experience at affordable prices, are revolutionizing the foods Americans love. And in light of what Chipotle and Qdoba have done for the burrito, it appears that the hamburger market is following suit.

These "better burger" restaurants have been popping up all over Lexington. In the past year and a half, Lexington has been introduced to two popular gourmet burger chains, Smashburger and Five Guys Burgers and Fries. Include Red Robin, which opened in Nicholasville in spring 2007, and Hugh Jass Burgers, scheduled to open soon, and the rate of growth is taking on a quick pace.

Molly Catalano, director of communications for Five Guys, says the demand for quality burgers is nothing new, but it is growing.

"It's a product that people really enjoy," Catalano said, "and the demand has always been there. Burgers are sold in many, many restaurants and have been even before the fast-casual market arrived. That shows why there is a desire and demand for a good burger."

Catalano said Five Guys is in "extreme growth mode" and has been for nearly a decade. The franchise, based in Lorton, Va., had five stores in 2002 but now boasts 631 locations nationwide and is on track this year to open 200 more this year. The Lexington location, at 2467 Nicholasville Road, opened in spring 2009.

Even though it was the fastest-growing restaurant chain in the nation last year, Five Guys doesn't have a complete grip on the market; competition is booming as well. The Denver-based chain Smashburger entered Lexington's fast-casual burger market in April; it was the first store in Kentucky.

"Corporate is amazed by" Lexington's performance, franchise owner Jim Phelps said of his restaurant, in the Center Court complex on South Upper Street. "We were $300 short of the franchise record for opening day, business is great and we couldn't be more pleased with the situation we are in."

Phelps plans to open five more Smashburger locations in Kentucky. The second one, near Fayette Mall on Nicholasville Road, is under construction, and other sites are being negotiated, he said.

Elissa Elan, the East Coast bureau chief at Nation's Restaurant News, a trade publication, says fast-casual is growing for several reasons.

"Not surprisingly, the fast-casual market is doing better than the fast-food market," Elan said. "It offers people what they want ... and lets consumers enjoy going out in a tough economy. People don't really want to spend more than $10 anymore."

Still, fast-casual burger restaurants represent just 2 percent of the $65 billion burger market, said Darren Tristano, executive vice president of Chicago-based restaurant consultant Technomic. In light of what the other 98 percent — traditional fast-food franchises — is focusing on, there can be expected growth in fast-casual.

"McDonald's, Wendy's, Burger King, they're trying to be everything to everyone," Tristano said. "They are no longer emphasizing the burger. They now focus on enhanced coffee, chicken sandwiches, breakfast, frozen desserts, shakes and smoothies. Places like these, the original burger chains, are no longer burger chains."

"Bar-and-grill restaurants, such as Chili's and Applebee's, are even starting to follow suit with the cheaper burger," Tristano said. "People are trading down from higher price points. And if you add in the shorter time it takes (to dine), about 30 minutes at Five Guys compared to an hour or more at a formal restaurant, it becomes much more appealing for both lunch and dinner."

Lexington's newest fast-casual burger joint is not a chain. The cheekily named Hugh Jass Burgers is scheduled to open within weeks at South Limestone and Euclid Avenue, on the edge of the University of Kentucky campus. It takes the "better burger" idea and adds to it: There will be a full-size bar, a patio and TVs showing professional and college sports.

Owner David Toole, creator of the original Logan's Roadhouse, off Nicholasville Road, says he knows what his customers want and plans to deliver with Hugh Jass.

"I've been in the quick-casual market for quite some time now," Toole said. "My plan was to gear my restaurant to a captive audience — in this case, a college campus."

The Lexington restaurant is the first of several that Toole said he hopes to open throughout the Southeast.

By offering $1 domestic drafts at all times and meals for less than $10, Toole is confident and assured in the growing market he plans to tackle.

"This isn't too risky of a concept that we have here at Hugh Jass Burgers," Toole said. "It was specifically made for who we will be serving."

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