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Fatburger CEO: We'll Survive the Better-Burger Shakeout

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Smashburger CEO Dave Prokupek agrees.

"I don't know that everyone can survive, but I do see two to three national players and, of course, there's going to be a lot of chains that have nice regional businesses along the way as well," Prokupek says.

Fatburger's Wiederhorn spoke with TheStreet earlier this week to share how the burger chain is staking its ground in the fiercely competitive better-burger category.

What does Fatburger stand for?

Wiederhorn: Fatburger started here in L.A., and it's a brand that's been frequented by celebrities for years and years, both because of the availability of a Fatburger around L.A. and also because of the burger experience. Think of it as the original Hollywood homemade hamburger and that translates into real authenticity and simplicity. We're serving the same burger, the same recipe from meat, the same bun, the same toppings and things that we've been serving for 60 years, and that really in itself differentiates us from everybody else because you have all the competitors that have come into the "better burger" sector. We're fast-casual, so it's not fast food.

As we've expanded both domestically and internationally, people want the burger that started here in L.A. that celebrities eat often, that the Angelenos' and the Hollywood crowd has eaten forever. Celebrities are eating it because they like it. It's their burger. It's not because there's some other cache to eating a Fatburger. This is the place you go late at night, middle of the day, whenever, when you really want a good hamburger.

They called it a Fatburger because it was genuinely giant in size, and it also was in the era when "fat cat" and "fat city" were cool and hip, and that translates to who our customers are today.

Who are you targeting as customers?

Wiederhorn: Half of our customers are the 18- to 40-year-old male category, but the other half is everyone else. It's families. It's women. We sold a million turkey burgers last year, and we have veggie burgers -- things to offer to everyone.

When we're trying to take market share, we're trying to pull up the consumer. If you remember when the recession was so bad, and the quick-service chains came out with dollar-value meals, and people flocked to those for a pretty short period of time. Then they came back in waves because they just said, "You know, I can't eat that stuff. I'll pay an extra $2 for a fresh custom-made burger than I will for a fast-food burger that's pre-made and high fat content and greasy and whatever." That's an easy one for us.

Then when you get into the casual-dining burger segment, where the really high-end gourmet burgers are, they've just priced themselves into a niche. Our average check is around $11, and our burgers are around $5 to $6 with toppings and such, and so when you look at a gourmet, sit-down burger place, you could end up with a $20 check, and that's a different experience.