Smashburger CEO on Franchising, Cyclospora Outbreak and Pricing

Summary

Smashburger CEO Jim Sullivan discussed the chain's franchise expansion and move toward an asset-light model, its response to recent food safety outbreaks, and strategies to manage beef inflation through a new value menu and product innovation. No publicly traded securities were mentioned.

• Smashburger same-store sales grew 2.4% in Q4 and it plans to open 12 new franchise locations this year.
• CEO Jim Sullivan said franchising yields great return on invested capital and the company aims to become asset-light within 18 months.
• The company uses no iceberg lettuce, double washes its green leaf lettuce, and voluntarily pulled jalapeños as a precaution during the Cyclospora outbreak.
• Sullivan stated there has been no decline in traffic or guest inquiries related to the outbreak headlines.
• Beef inflation has hurt margins, prompting the launch of a $4.99 everyday value price point.
• Offsetting beef cost pressure, Smashburger is promoting other proteins and menu innovation.