Robert Carrier estimates that he was two weeks from closing his Burgerim restaurant in Reno, Nev., when he was given a lifeline from a YouTuber.
Carrier was given the opportunity to sell burgers for the virtual concept MrBeast Burger, the popular virtual brand from the YouTube personality known as MrBeast. The concept provided an almost immediate, $7,000-per-week infusion that, though it has slowed, helped the restaurant stay afloat long enough for him to rebrand the location.
Today, Carrier is planning a second location of his Sizl Burger concept and is already eyeing other markets like Las Vegas and Boise.
“I had one key in the door,” Carrier said. “We were two weeks out. PPP helped a little bit. We sold cars. We went through our savings. We pretty much bankrupted ourselves to the point where we had nothing left to keep this thing afloat. Then this virtual dining thing came.”
Burgerim signed up an estimated 1,550 franchisees, most of whom never could get a restaurant open. For those who did, many have opted to rebrand into other concepts—either existing franchises like Fatburger or something they’ve built from the ground up.
A few of these concepts are finding some success. Others are finding what they’d hoped to get when they signed onto the Burgerim franchise in the first place. All of them are trying to make it work after sinking hundreds of thousands of dollars into a brand that has largely collapsed.
“Some guys switched,” former Burgerim operator Joey McCullough said. “Some guys are doing their own thing just trying to survive.”
Fatburger steps in
Burgerim is one of the biggest controversies in franchise history. The vast majority of those who signed on as franchisees had little savings other than the franchise fee and struggled to get a store open. Those who could were plagued with cost overruns, bad lease deals, complex operations and financial losses.
The company’s founder abandoned the chain in late 2019, leaving behind unopened mail and office supplies and unpaid employees. Burgerim then said it planned to file for bankruptcy but never did and provided little support to its operators.
Earlier this year, the state of California ordered the company to refund the franchise fee of any operator who asks and make them whole—a penalty potentially worth millions. It was the biggest penalty levied to a franchise in recent memory.
While some franchisees are holding out hope that they can one day get something back from Burgerim, those who converted are less confident. “They’re broke,” Carrier said. “I’m not sure how they’re still surviving.”
As Burgerim had problems, some brands began to contact franchisees to get them to convert. One of the more aggressive was Fatburger, the Los Angeles-based concept that is part of Fat Brands. Several Burgerim operators opted to join the brand.
Fatburger operates 91 U.S. units, mostly in California, and 172 around the world. Its CEO Andy Wiederhorn is among the most opportunistic industry executives in the country and saw an opportunity to expand by convincing Burgerim operators to convert. Some franchisees said they’d been contacted several times by Fatburger.
One who made the plunge was McCullough, who converted his Norfolk, Va., location earlier this year.
“I decided to do it,” said McCullough. “It made sense to do that rather than to carry on with Burgerim. It got to the point where I closed down at the end of December. It was cheaper for me to stay closed rather than to operate.”
McCullough is happy with his decision. Fatburger has provided what he’d hoped with Burgerim. “They provide proper support, proper structure. Everything is where it should be,” he said.
He also said sales are good with the new concept. The company is only open Wednesday through Sundays because of labor challenges. “Yet I get three to four times more than I did with Burgerim,” McCullough said.
Going independent
Not everyone has opted to convert to another franchise. Many felt burned by Burgerim’s high costs and complexity and relished the chance to make changes. They also felt angered by the inability to change prices to reflect higher costs because, until recently, the brand controlled the point-of-sale system.
“I will never do a franchise,” said Ravi Pradhan, who has turned his Burgerim at a mall in Torrance, Calif., to Burgers n Bites. “I have learned a lot from this fiasco. I would rather do my own. It gives me flexibility to do a lot of things—menu changes, point-of-sale. I can change according to a market need. Not with a franchise.”
Many others have done the same. They’ve created their own brands with names like Flight Burger, Sizl Burger, Handcrafted Gourmet Burger Bar and iniBurger.
Operators love their independence. They can choose their own menu and branding, and sell what makes money and ditch what doesn’t. They don’t get that kind of freedom in a franchise. “I love it,” Carrier said. “I think we’re going to do good with this. We didn’t want to reinvent the wheel. That’s why we went with a franchise in Burgerim. Unfortunately, we chose poorly.”
Every operator interviewed said they made cuts to the menu. Burgerim has a complex menu. It features burgers in three sizes—three-ounce mini burgers sold in groups of two or three, quarter pound and third pound. It features seven other alternative proteins including chicken, salmon, falafel and lamb along with Impossible Burger.
Operators have been quick to cut back on the number of proteins. “We completely revamped the menu,” said Abdul Popal, who converted two of his three California Burgerim locations into a new concept called iniBurger. “We got away from the complexities, the different patties and styles that made it very difficult and operationally expensive to operate. Nobody made any money.”
Popal had been a successful operator with some of the brand’s highest profile stores. He was attracted to its halal menu and its differences from existing burger chains. But he began asking to get out of the concept in 2019 and opted to create his own after Burgerim said it would file for bankruptcy but never did.
“When I saw all the trickery and that they never intended to file for bankruptcy, that was my signal to leave,” Popal said. “Burgerim was eventually going to die by 1,000 lashes.”
Challenges and opportunities
Pradhan had a good IT job when he decided to open a Burgerim location, hoping it would provide consistent ancillary income. He ultimately quit that job to keep his restaurant afloat as it struggled to survive.
Like Popal, Pradhan opted to rebrand shortly after the bankruptcy letter. He was closed for a year due to COVID. He spent that time looking at other burger concepts. But when he did rebrand he had to create recipes on his own—despite his lack of experience. “I just started making my own burgers,” Pradhan said. “Testing it. Trial and error.”
They work so far. He’s dramatically cut from the menu, keeping it to a selection of burgers and chicken and fries. “We know from the reaction we’re getting that what we’re doing is better than Burgerim,” Pradhan said. Food costs are down, too.
But not all is perfect. The Burgerim name remains on the outside of the company’s location and all the interior signage because of a dispute with the landlord. Burgerim wrote many leases with landlords before placing franchises into them—and some landlords will not let the concepts rebrand. Popal has a similar problem with one of his three locations.
Pradhan has also found that the mall location isn’t bringing the traffic that was promised and cannot accommodate delivery used by operators such as Carrier. He may reopen his concept somewhere else with the Burgers n Bites name, but it will be a different type of location.
“If I had a gun to my head and I was forced to choose a mall location,” he said, “I might choose the gun.”
Family matters
Burgerim operators who have created their own brands have taken various routes to get there. Some, like Pradhan, developed the recipes themselves. Popal worked alongside a food consultant for iniBurger’s recipes.
The company uses freebies and limited-time offers to see what works and makes changes based on the response. “Even today, we’re continuing to make small edits,” he said, noting that iniBurger has been open for a year. “We see what fits the profile better as we ask consumers what they think of this or what they think of that.”
Carrier said the pandemic last year provided enough of a slowdown in sales to enable him to take his time building Sizl Burger.
Carrier took some unprofitable items off the menu, including a trio of 3-ounce burgers sold for $12 in total. He said they proved too good a deal for people and took away from the sales of single quarter-pound burgers that are more profitable. He also got rid of party boxes and cut down the menu—though he kept more items than others and added a wild game menu including bison burgers and wild boar.
He found a local supplier for Angus beef and added a smashburger too the menu similar to the one developed by MrBeast Burger.
Carrier also got the family involved. The chain’s logos, uniforms and signage were developed by his son, daughter and nephew. “Luckily in my family they’ve got a lot of children,” he said. His biggest challenge was taking over control of the location on Google and social media platforms from the company.
As for customers, Carrier said the response has been good, though he acknowledges that some were upset by the menu changes, notably the removal of the Trio and the party boxes. But he said reviews have been good since.
Carrier now has a line on a location in downtown Reno with two kitchens, one that will be devoted to virtual brands like MrBeast and the other his own concept. He is already considering another one.
“My goal is to have three-to-four locations in the next 12 months in the Reno-Sparks area,” he said. “Then we can go down into Las Vegas and Boise.”
“We were put into this situation because of the situation with Burgerim,” Carrier added. “There’s no going back now. We’ve just got to do what we’ve got to do to make our brand successful.”
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