In 2019, when news emerged that a Chicago-based investment firm, BDT Capital Partners, had acquired a majority stake in Whataburger, reaction from the chain’s Texas fans was swift. And generally not positive.
To wit:
The reaction was predictable. Texans love Whataburger. The chain had been family-owned for 69 years by the Dobson family. They clearly did not enjoy the idea that it would be owned by someone else, someone outside of Texas.
It was Ed Nelson’s job to guide the San Antonio-based chain through that transition. Nelson was promoted to CEO in 2020 after 16 years with the company, the first person outside the Dobson family to take the role.
“They’re telling us exactly what they want. It’s on us to deliver that,” Nelson said. “It’s on us to protect what’s made us great.”
He appears to have done that just fine, despite the pandemic and its complicated aftermath. System sales increased 47% in the time he’s been the chief executive to $3.8 billion, according to data from Restaurant Business sister company Technomic.
The chain now has more than 1,000 locations in 16 states and is the country’s sixth largest fast-food burger chain. Average unit volumes are now over $4 million, one of the quick-service sector’s best.
Whataburger is now preparing another transition. Nelson is retiring as CEO at the end of the year. In his place, the company’s chief operating officer for the last year and a half, Debbie Stroud, will take over. It will be up to Stroud to lead the chain in its 75th year and beyond.
Nelson and Stroud sat for an exclusive interview for an upcoming episode of the Restaurant Business podcast A Deeper Dive.
“We were the only brand that stayed open 24 hours a day, seven days a week during COVID. My general managers at that time led at a higher level. They were responsible and took care of their people. They were conscientious and they showed up every day with the leadership team at Whataburger to stay open 24 hours a day.” -Whataburger CEO Ed Nelson.
The transition
Harmon Dobson founded Whataburger as a small burger stand in Corpus Christi, Texas, in 1950. His plan was to serve burgers so big that customers would hold them with both hands and exclaim, “What a burger!”
By the end of the decade, the brand had 21 locations, including its first outside Texas in Pensacola, Florida, according to the company’s website.
The chain’s restaurants are open 24 hours and serve a wide-ranging menu. But burgers remain at the center that customers can customize with various toppings such as jalapenos or grilled onions and they can dip their fries in spicy ketchup. The menu also features the chain's popular Patty Melts.
Nelson joined the company in 2004 as controller. He was promoted to chief financial officer four years later and then president in 2019.
He was then asked to become the CEO just after BDT took over majority control of the company. “BDT asked me to bridge the transition from family owned to private equity, merchant bank-owned,” Nelson said.
Any ownership change can be difficult. But it can be particularly challenging for companies that were owned by one family for several decades, only to be sold to an investment firm. Nelson, however, said the transition has gone smoothly.
“It’s been a phenomenal transition,” he said.
But he then added this: “I didn’t plan for COVID. I didn’t plan for the Great Resignation. I didn’t plan for inflation to be what it has been.”
The pandemic, obviously, created all kinds of problems. So did its inflationary aftermath, as those resignations led to a spike in labor costs that drove up menu prices, which in turn has created its own set of issues.
Whataburger awarded $90 million in bonuses to the company’s employees, or “family members,” for their work during the pandemic.
The pandemic, Nelson said, gave employees an opportunity to show the company what they could do. Whataburger in response connected bonuses to success metrics. “It gave me the opportunity to really align bonus levels to the level I saw people,” Nelson said. “And once you see people at a different level, you inspire them to that level, you elevate them to that level.”
The company also elevated general managers into operating partners so they are more visible in their local communities.
“We were the only brand that stayed open 24 hours a day, seven days a week during COVID,” Nelson said. “My general managers at that time led at a higher level. They were responsible and took care of their people. They were conscientious and they showed up every day with the leadership team at Whataburger to stay open 24 hours a day.”
“Part of transitioning out of COVID was [to tell] general managers, ‘You have shown your ability to lead. You’ve shown your passion for the brand. You’ve showed responsibility to your people. So let’s elevate your role to a different role, operating partner.’”
The company also pushed more technology. It created a loyalty program last year, Whataburger Rewards. It also opened a digital-only restaurant where customers order via app or kiosk.
Whataburger is continuing to invest in technology, Nelson said, on both sides of the counter to make life easier for customers and employees.
“We’re investing heavily in some systems to be able to really connect,” Nelson said. “It’s a family member connection, real time. It’s a customer connection, real time. And the information goes back into the hands of our operating partners and market leaders, real-time.”
Leadership change
Nelson, however, said that it’s time for him to hand the brand over to someone else. “It’s been such a phenomenal, phenomenal five years,” he said. “We have a great team in place now. It’s time for me to step back and watch the brand flourish again under Debbie.”
Stroud represents another change for the brand. She was hired last year to be Whataburger’s chief operating officer, and before that spent more than 30 years with the world’s two biggest restaurant chains: McDonald’s and Starbucks.
Stroud spent 27 years with McDonald’s in numerous financial roles, eventually rising to general manager of the U.S. Southeast. She then jumped to Starbucks, where she spent five years, most recently as SVP for U.S. retail operations.
She’s been able to spend the past year and a half learning the company and its culture.
“It’s a brand that I’ve been falling in love with,” Stroud said. “It is an iconic, fun brand that is recognizable. There is truly a unique history and legacy of this company, which I really have loved learning about and immersing myself in.”
While Stroud acknowledges that she’ll be able to look at the brand with “fresh eyes,” she also understands the chain’s history and what makes it special. People have routinely shared their love of the brand and their experiences with it in her year and a half with the company.
Stroud isn’t about to change any of that. And indeed her experience to this point helps her recognize what stands out about Whataburger.
“We need to lean into what makes this brand so special,” she said. “While I have these wonderful experiences in my career to this point, it’s really allowed me to think about the differentiators for Whataburger, so Whataburger is the absolute best Whataburger that we can be. And that’s what we’re working on.”
Nelson said Stroud has the experience to take over the company. But he also said that she is buying into the brand and its strengths.
“She believes in what got us here,” he said. “Her experiences gave me the confidence to choose a time now, knowing that Whataburger can be carried into the next five, 10 years because, again, this was my time and my chapter and the team’s in place now to move forward.
“What a blessing.”
“It’s a brand that I’ve been falling in love with. It is an iconic, fun brand that is recognizable. There is truly a unique history and legacy of this company, which I really have loved learning about and immersing myself in.” -Debbie Stroud
The future
Investment firms frequently push brands into more aggressive growth. And Whataburger could certainly do that, at least based on people who ask Stroud to put locations in their town. “I do get a lot of requests,” she said.
Yet Whataburger’s plan, much as it has been for decades, will be “thoughtful,” Stroud said.
“It’s a thoughtful and intentional plan, and that’s exciting,” she said. “It’s also one that we want to ensure that we go through the legacy of this great Texas brand.”
To be sure, the company does have plenty of room to grow. It just opened its first stores in South Carolina, the chain’s 16th state. It plans to open stores in North Carolina next year.
And while it is indeed a Texas brand, its name is known far beyond the state’s borders at this point. It gives Whataburger permission—and the potential customers—to go into more states.
Whataburger doesn’t just let its reputation do the talking, however. Last month, the chain held an event in Tampa, Florida, featuring its food truck along with Stroud and Nelson. The company gave away Patty Melts. All to announce plans to open restaurants in the area in 2026, a key milestone for the company.
Whataburger, she said, wants to open in new markets “in a way where we can introduce ourselves to the community, where we can build upon and engage with the people that live there. It’s about being your favorite hometown burger. And that’s important to us.”
As for what it will take to get the chain to the next level, Stroud mentioned several priorities: Speed of service, accuracy, focusing on its bold flavors. But she also went back to those employees, or family members.
For the chain to continue to grow and thrive, it needs to focus on people development.
“This is about developing leaders,” Stroud said. “Developing leaders that can be part of the community and lead and develop other leaders for the future.”
It’s also something Stroud fell back on when asked whether she felt pressure taking over a company like this one.
“Sure there’s pressure, but here’s what I’ll tell you,” she said. “I love this team. You know, the 51,000 family members who I’ve gotten to know. I have every bit of confidence in what they do every day to make the moment right for our customers. And that makes it a lot easier.”
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