Smashburger CEO Jim Sullivan said the company is doubling down on franchising to accelerate its growth across the U.S.
This strategic shift comes as the company navigates public health challenges and pricing pressures that could affect its long-term profitability and consumer trust.
During an interview on Bloomberg Open Interest, Sullivan said the chain is intensifying its franchising efforts. He said the push is intended to scale the business more rapidly than company-owned expansion allows.
Sullivan also addressed a recent outbreak of cyclosporiasis. The parasitic infection has had a significant impact in Michigan, where the outbreak affected about one in every 1,000 people [1]. The health crisis resulted in two deaths in that state [2].
Beyond the health crisis, the CEO discussed the company's current pricing strategy. Sullivan said the goal is to balance profitability with the need to maintain a consistent customer base amid shifting economic conditions.
By pivoting toward a franchise-heavy model, Smashburger aims to reduce the capital expenditure required for new locations. This allows the company to expand its footprint while shifting operational risks to individual franchisees.
Sullivan said managing the fallout from the cyclospora outbreak remains a priority. The company is working to maintain customer confidence while addressing the specific failures that led to the contamination in the Michigan region.
“Smashburger is doubling down on franchising to accelerate its growth”
Smashburger's decision to prioritize franchising suggests a shift toward a lower-risk, asset-light growth model. However, the simultaneous struggle with a deadly parasite outbreak in Michigan creates a reputational headwind that could undermine the attractiveness of the brand to potential new franchisees.
