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Is Habit Burger becoming a QSR chain?

Brand adding more drive-thru locations; leaders address closure of Orlando units

The parent company of better burger brand, Habit Burger Grill, is increasingly adding more drive-thru restaurants as the quick-service format has proven to add another level of convenience for customers.

Leaders of The Habit Restaurants Inc., which experienced is sixth consecutive quarter of positive same-store sales growth, said the fast-casual chain is also equipping new restaurants with kiosks, increasing digital ordering channels and adding a new delivery partner.

“We continued to make progress on our mission to be a total access brand to our customers in this ever-changing consumer environment,” CEO Russ Bendel told investors during the company’s third quarter earnings call.

For the quarter ended Sept. 24, the Irvine, Calif.-based company opened four restaurants with drive-thrus, bringing its overall total to 51. That’s about 20% of the company’s store base. The company said locations equipped with drive-thru lanes generate 45% of total sales from the car lanes. Traditional QSR restaurants typically generate 65% of sales at the drive-thru.

HabitBurger.png“Drive-thrus will continue to account for at least half of our development schedule going forward as well,” Bendel said.

Besides adding more drive-thru locations, the Habit is also expanding in-house and off-premise ordering solutions for customers. Kiosks are now installed in 20 of the chain’s 265 restaurants.

“On average, we're finding that over 8% of our sales are coming through the kiosks at these locations,” Bendel said. “Going forward, all new stores and all remodels will have self-order kiosks in the store.”

In July, the company also rolled out an enhanced mobile app, which allows customers to order for in-store pick up. Bendel said orders made from the app and kiosk typically result in higher checks.

The company, which currently partners with DoorDash and Postmates, also plans to add Uber Eats as a third delivery partner by the end of the year.

“We believe that adding a third partner will allow us to continue to grow our delivery business by reaching customers that are currently not being served by the other two providers. We are very pleased with the trajectory of that delivery channel and it has quickly grown to be a meaningful part of our business,” Bendel said.

During the quarter, Habit opened six company stores and closed three poor-performing company operated restaurants in the Orlando, Fla. Bendel and Ira M. Fils, chief financial officer, addressed the closures on the call.

“Based on their amount of losses, it just didn't make sense for us to keep operating them,” Fils said. “We were better off closing those down and then really focusing our capital in other markets in the East.”

Total revenue increased 12.1% to $117.3 million, compared to $104.6 million in the third quarter of 2018. Same store sales for company units increased 3.1%. Net income of $1 million, or 5 cents per share, compared to loss of $600,000, or 3 cents per share, in the third quarter of 2018.     


Contact Nancy Luna at [email protected] 

Follow her on Twitter: @fastfoodmaven


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