Wednesday, April 17, 2013

The Burgers of Burlington, MA

There are conflicting claims as to its origin and inventor, and its name derives from a city in Germany, but there’s no more American food item than the hamburger. It’s estimated that on average, Americans eat three hamburgers a week – and some are enjoying as many as five (I can tell you right now I’m not meeting my quota). Briefly out of favor due to healthier eating habits, the lowly burger is lately enjoying a renaissance with the rapid rise and widespread expansion of so-called “better burger” restaurants, a category that now includes at least 50 chains, and which, between 2011 and 2012 (according to research firm Technomic), grew by 21% and rang up sales of over $2 billion,  even with an average ticket of $15.

In our last KeyPoint Report on Eastern Massachusetts (based on our GRIIDTM), Five Guys Burgers and Fries ranked 6th on our list of retailer expansion by number of stores (Eating Places in general ranked second in our lists of both expansion by square feet and expansion by number of stores). It seems a new burger place opens every day – good news for retail landlords. In the Boston area, Shake Shack recently opened in Newton, and Checkers, Tasty Burger, and other chains are poised to enter the market soon.

Burlington, MA, where our corporate headquarters is located, is a strong retail market (over 3.2 million square feet of retail space in approximately 100 retail properties, including a major regional mall, lifestyle centers, and other property types), which according to GRIID currently enjoys a healthy 97% occupancy rate. There’s also a very strong office population in this area, so it’s a prime market for the proliferation of restaurants in general and burger places in particular. With the recent opening of Bobby Flay’s Bobby’s Burger Palace at the Burlington Mall, several of the key current players in this category are now active within a mile of each other. Burlington, MA, has become a veritable better-burger nexus. Therefore, since I’m always ready for a story that combines legitimate commentary on current retail tenancy with the chance to provide enjoyment to my co-workers – and, you know, eat hamburgers – we present, following a brief profile of the major purveyors of better burgers in Burlington, an informal, unscientific rating of the bun-encased offerings of each nearby chain, conducted by a distinguished panel of volunteer taste-testers. The players:

Bobby’s Burger Palace: Bobby's Burger Palace was inspired by Flay's “extensive travels throughout America and love of the grill in a convenient casual setting”, according to their website. BBP burgers are made with Certified Angus Beef and served on a sesame seed bun.  You can get your burger “crunchified”, which means topped with potato chips. BBP has one location in the Boston area (this one), with others in the works, and 14 locations nationwide.

b. good: b. good is a locally-based chain. The creators, best friends who grew up “eating in our uncle's kitchen”, based their restaurants on “a simple idea - make fast-food "real" by making it the way it should be…by people not factories”. b.good has nine Massachusetts locations, and  plans 30 or more throughout New England.

Five Guys Burgers and Fries: Five Guys began in Washington, DC in 1986. They serve “only hand-formed burgers cooked to perfection on a grill along with fresh-cut fries cooked in pure peanut oil”. In 2003 Five Guys began offering franchise opportunities, and in just under 18 months, sold options for over 300 units. There are now over 1,000 locations nationwide and over 1,500 units in development. There are 31 in New England, including 25 in Massachusetts.

Johnny Rockets: Retro-diner-themed Johnny Rockets, whose tagline is “The Original Hamburger”, was launched in 1986 as a place where diners “can escape from today’s complicated world and experience the uncomplicated goodness of classic Americana. The name originated by combining the timeless Johnny Appleseed story with the classic Oldsmobile Rocket 88”. Johnny Rockets has 300 restaurants in 30 states and 16 countries, including 11 cruise ships, and they serve, according to their website, 17 million burgers a year. They have 4 Massachusetts locations.

The Ratings: Judges were asked to rate each better burger bistro on a scale of 1 to 5 (1 = poor, 5 = excellent) in the following categories:

Restaurant: Atmosphere; cleanliness/orderliness; service
Burger: General appearance; quality of patty; quality of roll/bread; quality/quantity of toppings
General: Ratings were also given on value in relation to price, and overall experience.

Company News

Industry News: National

U.S. comparable chain store sales for March posted a modest 1.4% gain as measured on a year-over-year basis by ICSC Research's tally of 16 major retail chain stores, below the ICSC's expectations for a 2-3% gain overall. An early Easter and particularly cold weather throughout much of the US were likely contributing factors. Among individual retailers, Gap was down by 1.0%, and Limited rose 5.0%; Costco was up 5.0%, and TJX was down by by 2.0%. Rite Aid was down 2.0%, and Walgreens was up by 4.2%.  See retail sales results on Page 4...Limited Brands has temporarily changed its name to L Brands as part of a planned transition process required after the sale of its original chain of stores, The Limited, to Sun Capital Partners. The retailer, parent of chains such as Victoria’s Secret and Bath & Body Works, will announce a new permanent name in a few months...J.C. Penney has no plans to close stores or reduce headcount, the retailer stated after drawing $850 million out of a $1.85 billion revolving credit facility to help buy inventory after a failed turnaround. Penney will use the proceeds to fund working capital needs and capital expenditures. Penney brought in Ron Johnson as CEO in 2011. Its sales slid in 2012 as his dramatic changes alienated core customers without bringing in new ones. Johnson has been replaced by his predecessor, Myron Ullman.

Industry News: Accelerating

Twin Peaks Restaurants has awarded its second largest franchise commitment. GT Hospitality Restaurant, LLC, signed an agreement to expand into Southern Virginia, Kentucky and Ohio with 16 stores over the next seven years. Twin Peaks, owned by Front Burner Restaurants LP, opened locations in Chicago and Las Vegas last month and will open its 32nd restaurant in Kansas this month. The chain has 31 locations in 15 states and expects to have 50 restaurants by the end of the calendar year...Nordstrom will open a 33,000 s/f Nordstrom Rack store at Shelbyville Road Plaza in Louisville, KY, and a 35,000 s/f store at the Shoppes at University Town Center in Sarasota-Bradenton in Florida. The retailer currently operates 9 full-line stores and 8 Rack stores in Florida...Francesca's Holdings Corp. plans to open 80 stores in fiscal year 2013...Rue21 opened its 900th store last month in Missouri. Rue21 has opened more than 500 stores in the last 5 years, and expects to open another 125 stores in 2013. It expects to open its 1,000th store in the fourth quarter. The retailer’s plan is to grow to more than 1,700 US stores...Health club chain Crunch signed a deal with Fitness Holdings LLC & RLB Holdings to open an additional 42 clubs across New York, New Jersey, Massachusetts and Pennsylvania. Crunch has 61 gyms worldwide...Panda Express will open 100 more units this year. The chain has 1,600 units currently...New York & Company will open 8 to 12 outlet stores, remodel 10 to 15 existing locations, and close between 30 and 36 stores, ending the year with between 491 and 501 stores...Smoothie King Franchises will open 70 franchise and 30 corporate US locations in 2013...E&I Holdings, Inc., franchisor of The Egg & I Restaurants, has opened its 73rd and 74th restaurants, in Portland, ME and Dallas, TX continuing its rapid US expansion. The company currently has 24 new restaurants under development and has commitments for the development of 92 restaurants over the next few years...Five Below expects to open 60 stores this year, including new markets in Texas, as well as adding units in existing markets...Signet Jewelers Ltd., parent of Kay Jewelers and Jared, anticipates opening 65 to 75 new US stores for the year...Upscale ice cream emporium Sloan’s has launched a national franchising program, targeting Florida, the Carolinas, Georgia, New York, New England and California. Sloan’s anticipates a total of approximately 200 US franchise locations...The Bon-Ton Stores Inc.’s 29,000 s/f Boston Store Clearance Center, its first-ever standalone clearance store, opened this month in Wisconsin. Bon-Ton has 271 department stores, including 11 furniture galleries, in 24 states under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers brand names...Saks Fifth Avenue Off 5th opened a 28,000 s/f store is in Phoenix Premium Outlets, Chandler, AZ...Shoe Carnival expects to open 30 to 35 new stores, relocate 7 stores and close 5 to 7 stores in 2013...Leslie’s Poolmart opened 15 Leslie’s Swimming Pool Supplies stores across 10 states this month, part of a plan to open 48 new stores this spring...Aaron's plans to open 125 stores this year. The rent-to-own company has more than 2,075 stores...Polaroid opened its first-ever retail store, Polaroid Fotobar, a 2,000 s/f store where customers can upload and print digital images, in Delray Beach, Fl. Nine additional US locations are scheduled to open by the end of the year...Samsung Electronics and Best Buy Co. have entered into a partnership to install Samsung in-store shops in more than 1,400 Best Buy and Best Buy Mobile stores across the US beginning this month. The shops will feature Samsung’s full range of mobile products including smartphones, tablets, laptops, connected cameras and accessories...7-Eleven has acquired 46 Hickory Point and Palms Stores in the Carolinas from CB Mart...Family Dollar will open 500 new stores in 2013 and close 30 to 50...Build-A-Bear Workshop will open 20 to 25 stores in 2013, all under the newly introduced store design. The retailer opened six stores under the new design in fall 2012, and the success of the stores prompted an escalated rollout...Sony launched a new Sony Store in California, and plans to reopen three other concept stores in Miami, San Diego and Orlando. Sony also plans to create freestanding “Sony Galleries” in major shopping centers. The first opened in San Diego at Westfield UTC Mall.

Industry News: Decelerating

Supervalu said it would cut an estimated 1,100 jobs in the wake of its sale of its largest retail chains Albertsons, Jewel, Acme and Shaws/Star Market. The cuts affect most departments within the organization...Caribou Coffee will close 80 stores nationwide and turn 88 other locations into Peet's over the next 12 to 18 months. Caribou had 610 locations at the end of 2012. That number will be trimmed to 486 by 2015...Pool and patio supply company Namco LLC filed for Chapter 11 status in US Bankruptcy Court. Namco operates 37 US east coast stores.

Industry News: New England

Boston’s first Shake Shack opened in Chestnut Hill, MA last month. The 3,000 s/f Chestnut Hill Shack is constructed with recycled and sustainable materials...Downtown restaurant Remington's of Boston isn't renewing its lease on Boylston St., which means Dick Doherty's Beantown Comedy Club is seeking a new location...Faneuil Hall restaurant Durgin-Park has opened a 3,405 s/f restaurant in Logan’s Terminal E...Construction is under way on Hit Wicket, a cricket-themed Inman Square, Cambridge restaurant and bar that will serve popular food from major cricket-playing nations and broadcast live cricket matches. Hit Wicket will also broadcast Bruins, Celtics, Red Sox and Patriots games...Kings Bowl will join a Wegmans as an anchor tenant for the Nordblom Co. 3rd Ave mixed-use Burlington, MA project, which is part of Northwest Park, a 4.6 million square foot redevelopment. Kings Bowl has signed a lease for just over 27,000 s/f of space, and is expected to open later this year. Wegmans is projected opening is spring 2014...The 31,000 s/f former Johnnie’s Foodmaster on Beacon Street in Brookline will open next month as a Whole Foods Market. In November, Johnnie’s closed its 10 stores and Whole Foods purchased six leases for $30 million...Plaster Fun Time, which has locations in Braintree, Framingham, Newton, Reading, Salem, Saugus, Chelmsford, Dedham, and Waltham offers plaster painting for kids, is looking for a strategic investor or buyer to help the company grow nationally and internationally...Panera Bread Co. opened a 4,000 s/f store at Fresh Pond Mall in Cambridge, MA, and has opened a store at Wayland (MA) Town Center. Panera has 1,650 US cafes..Federal Realty, of Rockville, Md has acquired a Darien, CT retail complex of 6 properties totaling 90,000 s/f for $47.3 million. The portfolio consists of buildings leased to Stop & Shop, Citibank, Equinox Fitness and Chase Bank, as well as several others...Treat Cupcake Bar is expanding to a second location at The Street in Chestnut Hill. Treat is leasing 1,100 s/f of space in the newly renovated retail center on Route 9.

March Retail Sales Report

Commerce Department Monthly Sales

Retail and food service sales in the U.S. fell 0.4% last month after a slightly revised 1.0% gain in February, according to the Commerce Department.

Source: U.S. Department of Commerce -

Treasury Yields

Treasury Yield Sources:;

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had improved in February, declined in March. The Index now stands at 59.7 (1985=100), down from 68.0 in February. The Present Situation Index decreased to 57.9 from 61.4. The Expectations Index declined to 60.9 from 72.4 last month.

Source: The Conference Board -

Purchasing Managers Index

Manufacturing expanded in March as the PMI™ registered 51.3 percent, a decrease of 2.9 percentage points when compared to February's reading of 54.2 percent. This month's reading reflects the fourth consecutive month of growth in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business -