Hopdoddy Focused on Growth
Pandemic taught burger chain to grow more effectively
Hopdoddy Burger Bar is moving into a new phase — expanding into more locations, condensing its larger footprints and focusing on the suburban market.
The restaurant’s new focus will allow it to add eight to 14 restaurants a year once Hopdoddy finds the right locations. That's up from three or four locations a year pre-pandemic; it took the onset of Covid-19 and a complete change in consumer behavior to reformulate business plans.
“We hemorrhaged a lot of cash from the end of March through August of 2020,” said Hopdoddy CEO Jeff Chandler. “We wanted to race to the bottom of the hill; we went from 35 restaurants to 17 overnight. It was a hard decision to make and we had to furlough 800 team members.”
The restaurant is back to operating 32 stores: 30 original locations and two new restaurants. Five locations closed permanently. Hopdoddy already has four signed leases for next year. The restaurant uses Jones Lang LaSalle Inc. as their real estate group.
Hopdoddy has grown more profitable as it has rethought how it worked, Chandler said.
One major step the chain took was to do certain food preparations cooperatively in big batches and send it out to its other restaurants. Despite lower sales during the pandemic, profitability rose.
“We’re in the best place we’ve ever been and [are] ready to grow again,” Chandler said.
Hopdoddy's growth strategy has been altered by the pandemic.
People’s habits have changed, causing the company to gear more toward suburban needs. Destinations that work in the urban downtown areas continue to be polished casual or fine dining, Chandler said, but the fast casual dining restaurants have suffered in that environment.
The South Congress Hopdoddy location continues to succeed because it is a neighborhood and tourist destination. But the fastest-growing location is Lil'Doddy Burger Lab on William Cannon in South Austin.
Kyle, which is about 15 minutes south of Austin, might be next on the list for Hopdoddy expansion, Chandler said, because it is a growing commuter town. Many Hays County residents in the I-35 corridor have been restless about getting more sit-down eateries, as opposed to the wealth of fast-food options.
Kyle has even developed an incentives program designed to attract more sit-down restaurants, recently attracting a new location of Z’Tejas Southwestern Grill through the program. Kerbey Lane Cafe and P. Terry’s have also recently added restaurants in Kyle.
Residents who were commuting into Austin from areas like Kyle are now less likely to make that drive. There is a larger daytime and nighttime population remaining in Kyle now as consumer behavior has shifted, Chandler explained.
In its pursuit of finding the right growth formula, Hopdoddy also found its large restaurants performed poorly. The next step for Hopdoddy is going to be converting large sites by cutting them in half. One portion would remain Hopdoddy and the other becomes another casual dining restaurant.
Part of this analysis plays on the psychology of the consumer. If a customer walks into a restaurant which seats 300 people and has 50 diners, a customer will feel an emptiness in the space. At a smaller establishment, 50 people will feel busy, and many have missed this sense of community, Chandler said.
The company aspires to be a national brand and already has sites in California, Colorado, Arizona, Tennessee and Texas. Chandler said that national growth will continue along with the additions of more locations in Texas.