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Josef Roberts, BurgerFuel’s chief executive, hopes to make it big in America by way of a partnership deal with Subway. Credit Lottie Hedley for The New York Times
AUCKLAND, New Zealand — Inside the headquarters of BurgerFuel Worldwide is a spray-painted mural of a skull wearing a combat helmet emblazoned with the slogan “Born to Grill.â€
Executives at BurgerFuel, a New Zealand fast-food chain, say the image — a takeoff on the film “Full Metal Jacket†— reflects the company’s attitude. This year, BurgerFuel, a relatively small player, is undertaking an ambitious expansion plan in the crowded American market through a partnership with Subway restaurants, an industry giant.
The partnership is unique, BurgerFuel’s group chief executive, Josef Roberts, said, sitting in a boardroom in the company’s office in Grey Lynn, an Auckland suburb. “I don’t know of anyone else who’s got this sort of opportunity to hitch their wagon to such a huge freight train.â€
Subway, operated by Doctor’s Associates, is the world’s largest fast-food chain by number of stores, with revenue of $12.05 billion in 2012, according to the research firm Euromonitor International.
Photo
At the fryer in Auckland. Credit Lottie Hedley for The New York Times
BurgerFuel, by comparison, is small fry, with 12 million New Zealand dollars, or about $10.3 million, in revenue in its 2013 annual report. In New Zealand, the company ranks just 11th in market share in the fast-food industry and fourth in hamburger fast-food chains, according to data supplied by Euromonitor International.
BurgerFuel hopes to use Subway’s scale in the United States by signing up some of its franchisees to open BurgerFuel stores. The company has already been taking registrations from interested Subway franchise owners.
In January, BurgerFuel signed a partnership with Franchise Brands, based in Connecticut, a company set up by the Subway founders Frederick A. DeLuca and Peter Buck to support small and midsize companies. Franchise Brands is aiming to support BurgerFuel’s expansion efforts in the United States with business mentoring and legal advice. Franchise Brands has also bought a 10 percent stake in the New Zealand company for 8.05 million New Zealand dollars, with the option to expand its holdings to 50 percent over the next eight years.
Franchise Brands’ managing director, Lisa M. Oak, declined to comment directly, saying by email that the company was “excited to be an investor.â€
BurgerFuel began selling burgers in 1995 with a single restaurant in the Auckland suburb of Ponsonby. Since then, it has expanded to 57 outlets in New Zealand and overseas.
The emphasis on cars and combustion is a crucial part of BurgerFuel’s image. The menu items have names like Bacon Backfire, Burnout and Low Carborator, and the company has a fleet of muscle cars painted with its logo and color scheme.
The burgers are marketed as having high-quality ingredients, including fresh vegetables and aioli sauce, New Zealand beef from grass-fed cows and vegetarian options. Recently the company announced it would use only free-range chicken in its New Zealand restaurants. And although Mr. Roberts said he could not commit to doing the same in the United States, he said attracting ethical and health-conscious consumers was important.
“We don’t upsize,†Mr. Roberts said. “We’re not about filling up a liter of Coca-Cola to go with the product; you know, I’d much prefer people to have a bottled water.â€
He added, “We’re about not wanting to put out a regret meal; it’s really about a meal that you can go in and you can feel good about.â€
Keith Syron, 52, said that was one of the reasons he took his 12-year-old son to have dinner on a recent night at the restaurant in Ponsonby.
“It feels like you’ve had adult food instead of kiddie food,†Mr. Syron said. He and his son agreed that it was worth paying more for BurgerFuel’s burgers than for cheaper options that they said were of lower quality. In BurgerFuel’s New Zealand stores, burgers are priced from about 6 to 13 New Zealand dollars, or about $5.20 to $11.25.
Before eyeing the United States, BurgerFuel focused on the Middle East, and it now has many franchises in Saudi Arabia and the United Arab Emirates. The company signed its first Middle East licensing partner, in Dubai, in 2011.
“We went to the Middle East because there was wealth, there was an ambition and a market that was ambitious for higher-tier brands, and, yeah, there was a lot of youth,†he said. “Our concept was simple: We’ll go to Dubai. We’ll set up an amazing store in a good location — and we kind of saw that as a permanent sort of trade exhibition center for BurgerFuel — and we’ll see if we can attract interest globally from there.â€
The Middle East has been a standout. Sales were up 95 percent to 16.7 million New Zealand dollars in the region as the company added five stores there in the year that ended in March 2013. The only other outlet outside New Zealand is in Sydney, Australia.
The focus on the Middle East has also led to projects in unexpected areas. BurgerFuel has opened a store in Iraqi Kurdistan, and a spokesman for the company said the first of three stores in Egypt was scheduled to open this weekend. A store in Kuwait is also expected to open soon.
The United States presents its own challenges for BurgerFuel. The fast-food business is already crowded, with 256,000 outlets and $204 billion in sales, according to Euromonitor International figures from 2012, the most recent data available.
Elizabeth Friend, a senior research analyst at Euromonitor International, said there was still some room in the upscale hamburger industry, which BurgerFuel is aiming at. But she said the company would have to distinguish itself from brands like Five Guys, Epic Burger, Umami Burger, Shake Shack and In-N-Out Burger.
“The better burger segment in the U.S. is highly saturated in terms of concepts, but not necessarily in terms of actual outlets,†Ms. Friend said. “The novelty of the specific ‘better burger’ model has worn off to the point where this positioning alone is no longer enough to set a brand apart. BurgerFuel will have to offer something truly better if they want to survive.â€
Mr. Roberts pointed to Radio BurgerFuel, a company station that broadcasts to its stores, as a point of differentiation.
When Mr. Roberts announced the deal with Franchise Brands, he said the company wanted to open 1,000 stores in the United States over the next eight years, but he cautioned that the figure was an aspiration, not an official target. He said he hoped the first United States store would open within the next six to 12 months.
Back at BurgerFuel’s headquarters, the company is already anticipating growth. On the ground floor, drywall has been stripped away, laying bare steel girders as construction workers prepare to expand the work space.
“Whilst we want to grow at pace, the challenge is not to go too fast in the beginning,†Mr. Roberts said. “I think we just need to be a little bit patient with ourselves and appreciate the fact that this is a long-term play, and so we need to get everything right in the first year.â€
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