From $7.5 million to almost $20 million: Why Huxtaburger expects to more than double its revenue as it ventures to NSW
Thursday, September 13, 2018/
After more than seven years developing a loyal following of millennials in Victoria, Huxtaburger is preparing to take its next big step.
The gourmet burger business, established in 2011 by restaurateurs Jeff Wong and Daniel Wilson, will launch its first restaurant in New South Wales in September, with plans in motion to open a further 10 locations in the state.
The move will more than double the number of Huxtaburger stores over the next four years and open the fast-growing business up to Australia’s largest consumer market.
But chief executive Matt Fickling says there won’t be a Huxtaburger on every street corner, as the brand, which includes a mix of company-owned and franchised stores, looks to chart a different path through the quick service restaurant industry than mass market stalwarts like McDonald’s and KFC.
“We just don’t have dreams of having 100 stores,” Fickling told SmartCompany.
“We don’t want a store on every corner, and we don’t want to cannibalise ourselves … we want to establish connections with local areas.”
Huxtaburger has made its mark on Australia’s $20 billion fast food market in recent years, joining a wave of fresh brands in the industry like Mexican food chain Guzman Y Gomez in shaking up the space.
Within a year of opening its first store, the business had managed to generate $1.64 million in revenue with its gourmet take on the traditional burger, growing to $7.5 million in revenue by 2016-17.
With seven stores now trading in Victoria, Fickling believes revenue will more than double to almost $20 million in 2018-19 as the business also looks to build on an initial store in Perth and considers international expansion options in Malaysia, Singapore, Thailand, Indonesia and China.
“We’re entering discussions in five countries, but those discussions are in their infancy,” Fickling explains.
“We’d love to go if its 100% right for the brand.”
Finding suitable franchise partners will be the challenge underpinning future decisions about international expansion though, Fickling says, a point of no-compromise he attributes to Huxtaburger’s success.
“Our motivations with franchising are probably quite different to what people would be hearing out there in the media at the moment,” he says.
“It’s solely people focused, it’s not a capital raising activity.”
Huxtaburger has partnered with food and beverage investment group Yesdec on its NSW expansion, but has opted to avoid signing a master franchise agreement, choosing instead to consider them a multi-store franchisee.
Redfern will host the first Sydney store, a decision that builds on the success the brand has had with urban fringe locations in Melbourne.
Fickling says while some potential partners could have opened 30-50 stores in NSW over four years, Huxtaburger is more interested in retaining control of its brand and customer experience.
“We’re brand first … millennials are our customers and there’s a massive element around needing to align with those people,” he explains.
“[It’s] more than just having the best tasting burgers, it’s on an emotional level.”
The burger business has benefited from broader shifts in the fast food space in recent years, as younger customers gravitate towards new options for convenient eating, particularly through delivery platforms like UberEATS and Deliveroo.
IBISWorld senior industry analyst Bao Vuong says the platforms have boosted the growth of up and coming players as millennials look for convenience without compromising quality.
“Millennials are more concerned about food providence and have supported the rise in gourmet fast food chains,” he told SmartCompany.
Huxtaburger was one of the first burger chains to sign up with Deliveroo when the delivery provider entered the Australian market, and while Fickling says sales through the platforms are less profitable, they’re ultimately invaluable.
“If all of our delivery sales turned into in-store sales, profit would be out of control,” he says.
While some businesses have turned away from the platforms, Huxtaburger is embracing them.
“Our customers want that convenience, that’s what the market is demanding and as a brand we’re going to embrace that,” Fickling contends.