Financing

Habit Burger Grill works to become a ‘total access brand’

But traffic remains down and labor pressures keep mounting for the fast-casual burger chain.
Photograph: Shutterstock

The Habit Burger Grill says its mission to become a “total access brand” is well underway as it rolls out more drive-thrus, app-based ordering and digital menu boards.

But the Irvine, Calif.-based fast-casual burger chain nevertheless saw traffic slump for the second quarter ended June 25, with a transaction decline of 2.5%. Company-operated same-store sales for the period rose 3.9%, and total revenue was up 14.7%, to $117.9 million.

Average menu pricing increased 4.3%, and that’s after a 5.3% price increase in May to offset rising labor costs, particularly in California.

Habit Burger executives, during a call with analysts Wednesday, said the price increases have not hurt traffic. They expect labor pressures to continue to mount for the foreseeable future.

“The trajectory up to 2020 is pretty brutal,” Habit Burger CEO Russ Bendel said.

Bendel noted that operators are working hard to wisely deploy labor while the company works via a variety of means to boost revenue, including new LTOs, hiring a marketing agency and digital marketing team, and rolling out a mobile app nationwide.

“Building sales is the best tool to manage labor there is,” he said.

Habit Burger now has 50 drive-thrus open, and it has installed self-order kiosks at 14 restaurants, with plans to add additional locations.

The better-burger chain also plans to boost its franchising mix in coming years. Currently, about 10% of Habit Burgers locations are run by franchisees.

“That could increase to 20% of the store base in coming years if we find the right partners,” Bendel said.

The company recently signed two new franchise agreements, one to open 25 stores in Cambodia and the other for seven units in New Hampshire and Massachusetts.

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