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Emerging Brands

Culver’s hits the big time

But the chain is keeping its small-town Midwestern roots, even as it expands nationally.
Photograph courtesy of Culver's

Culver’s slick, decade-old headquarters stands out along a county highway on the rural outskirts of Prairie du Sac, Wis., a town of about 4,000 just northwest of Madison.

It is not exactly the environment expected of a growing national chain. It has to be tempting, in fact, to move somewhere more urban, closer to an international airport and the city amenities so-called millennials love so much, where it could tap into tech trends such as delivery and mobile ordering.

But then you look out the east-facing windows of co-founder Craig Culver’s corner office overlooking the Wisconsin River, and forget all about that. That view is fantastic year-round, including in the winter, when the open water created by the 100-year-old dam to the north brings eagles by the dozens, so they can fish.

“This is home,” Culver says in an interview for Restaurant Business’ podcast “A Deeper Dive.” “This is where we started. This will always be home.”

Besides, he says, “I grew up here.”

Culver’s is at its heart a small-town chain, with a broad menu that hearkens back to rural Wisconsin supper clubs and features local favorites such as cheese curds and frozen custard. Though it has grown to more than 700 locations in 25 states and is moving into more urban areas, it remains deeply connected to those roots.

While the chain’s headquarters might stick out in Prairie du Sac, Culver’s small-town culture would stick out even more in an urban setting.

Quiet growth

Culver’s has quietly been one of the biggest growth stories in the U.S. restaurant business.

System sales were close to $1.6 billion last year, up 74% over the previous five years. Unit count was up 39% over that same period, according to data from Restaurant Business sister company Technomic.

The chain has done this amid a number of corporate changes and tragedy. In 2015, Culver stepped down as the company’s CEO. Phil Keiser, who had been with the company for two decades, was picked to replace him.

Culver's Unit Count

Keiser died unexpectedly just one year later and Joe Koss, the chain’s CFO, was ultimately named his replacement.

And then, in 2017, private equity firm Roark Capital bought a minority interest in the Wisconsin chain.

Culver, however, remains a major presence in the company’s ads and at its headquarters, even if he is not quite active in day-to-day operations. And he still has that office.

“If you’re going to charge more ... you better be serving it with a please or a thank you or a my-pleasure attitude. Otherwise, it becomes just another burger.” —Craig Culver

Small-town roots

Culver’s strategies largely came from Craig Culver’s parents, George and Ruth Culver, who had operated A&Ws and supper clubs in Wisconsin since 1961.

George Culver developed the Culver’s recipe for chili, and early on he kept Culver’s books. He also thought it was important to ensure the brand held to a quality standard, which he felt was vital in the restaurant business.

As a result, Culver’s makes its burgers and sandwiches to order, a strategy that takes more time, but is worth it in the end, Craig Culver says.

Ruth Culver was known as the “Hospitality Queen,” which is why the brand takes its food to the table and trains its employees to say “please” and “thank you” with every customer. “Every time you came in,” Culver says of his mother, “it was like she wrapped you in a hug.”

The brand also has higher prices and does not push discounts to get traffic, something Culver doesn’t apologize for—but which also puts pressure on operators to do their jobs well.

“We’re more expensive than most of our direct competitors,” he says. “We feel we serve the very best. Accordingly, you have to charge for that. If you’re going to charge more as well, you better be serving it with a please or a thank you or a my-pleasure attitude. Otherwise, it becomes just another burger.”

Nearly bankrupt

Craig and Lea Culver and Craig’s parents opened the first Culver’s in 1984 on the site of the family’s old A&W in Sauk City, Wis., with a broad menu featuring items such as fried fish, pot roast and chopped steak as well as Wisconsin favorites such as cheese curds and frozen custard, an idea that Craig Culver got while attending the University of Wisconsin-Oshkosh.

It is known most for its ButterBurgers, which are scooped with an ice cream scoop and then pressed onto the grill. The burger is served on a hot buttered bun.

The business did well at first and then died off. Six months in, Culver didn’t think it would survive.

“We just about went bankrupt the first year,” he says. “We really had our doubts. I had my doubts. But family held me together.”

The family stuck with the business, working long hours to do “whatever it took … within the groundwork of fairness” to get the brand operating.

The brand began luring travelers from the Chicago area headed to the Wisconsin Dells, a resort community 30 miles north of Sauk City. The location broke even the second year and made money the third. They opened more restaurants and then decided to franchise.

“It’s not important how many restaurants you have. What’s important is how many good restaurants you have.” —Craig Culver

Franchising

The initial foray into franchising didn’t work, either—the family at one point vowed never to franchise again. Two years later, however, they found operators who worked well with the brand, and after that, the company “took off.”

Culver’s has since used a model featuring smaller operators who work out of their restaurants. People interested in buying a Culver’s spend a full week working in one before they even sign the franchise agreement. 

It’s worked. Only two stores have closed in 35 years.

“If the leadership is not right, boy, it’s certainly not going to work,” Culver says. “We franchise to owner-operators, people who are going to own restaurants and operate restaurants.”

“That is the true secret,” Koss says. “They are the difference makers.”

Technology and growth

Many of the chain’s franchisees have come up through the ranks in its restaurants. And when they become operators, they frequently move to states where the brand is expanding, such as Florida, where openings have been greeted by lines of customers wearing Cheesehead hats and Green Bay Packers shirts.

The company is growing in all of its markets, and much of that growth is in the Southeast. “We’ve got a strong pipeline,” Koss says.

The brand’s focus on quality and service has helped it through the past few years, as industry sales weakened and more business shifted to takeout.

U.S. System Sales

Much of Culver’s sales growth has come through its drive-thru. When the brand opened, it had carhops, much like A&W. The company replaced them with a drive-thru, and sales at the first location jumped to more than $1 million—even though the chain continued to make its burgers to order and pull customers ahead to designated drive-thru waiting spots.

Now, more than half of the brand’s sales are takeout, despite the chain’s traditional focus on dine-in service. So the brand is focused heavily on improving its drive-thru technology, testing things such as tablet order-taking, for instance.

It’s also working on mobile ordering. Delivery? It’s taking a cautious approach, Koss says. The brand is studying the service to see if it would work with the chain’s quality standards and would be profitable for operators.

“More you read, more you learn, more questions come up,” Koss says. “But you’ve got to pay attention.”

While the brand continues to grow, Culver says there is no set number or focus on how big the brand can be. He recalls something his father said to him once:

“It’s not important how many restaurants you have,” he says. “What’s important is how many good restaurants you have.”

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