Cross Country Fare
California-based Taxi’s Hamburgers drives East with a combination of casual dining and quick service.

Shopping Center Business recently spoke with Taxi’s Hamburgers Founder Jeffrey Neustadt about his drive to succeed — and to help his franchise partners succeed — in the quick-service hamburger business.

SCB: Tell us a little bit about your background and how the Taxi’s concept came about.

Neustadt: Since the mid-1980s, I had been involved in commercial real estate in retail leasing and shopping center development. Around 1991, I worked with a partner regarding this idea of a high-end hamburger restaurant that had the food quality of a Chili’s or TGI Friday’s, but in a quick-serve environment. Back at that time, the niche didn’t really have a name — now it’s called ‘fast casual.’ The only thing different was we had a health-conscious side to the menu, along with our oversized burgers, chicken, milkshakes and desserts.

SCB: How many units do you currently have and where are they located?

Neustadt: Currently, we have six locations in Northern California, including Hacienda Crossings in Dublin; Mercado Center in Santa Clara; and a Macerich mall in Modesto. We also have a small strip center in Walnut Creek, a downtown location in Palo Alto and a freestanding location in San Mateo. We own and operate five of those locations in the San Francisco Bay area, and the Modesto store is franchised. I think we have 12 additional franchise deals on the books right now. We have a four-store deal in Atlanta, the latest of which opened in September in Alpharetta, and we have deals signed in several other places in California.

SCB: How did you begin to grow the business from the first location?

Neustadt: The first store was in San Mateo and was well-received; we opened right across from a Burger King that was selling 99-cent Whoppers, and we were selling $3.75 hamburgers. The customer could quickly figure out the difference in quality, and that level of quality made us realize we had something special. So we got the concept poised and ready for growth, and that has been our goal over the past couple of years — to grow mostly through franchise partners in other parts of the country. We started doing individual locations until our fourth store and really had a lot of interest in the concept, from venture capitalists to other restaurant chains. So we brought in a team of designers, operations people and franchise people to take what we started as a base core concept and get it ready for growth. We spent a lot of money getting the company ready to grow into a regional and, potentially, national company, putting all the systems in place and fine-tuning our operations to put a profitable number down for the franchise partners and to keep our costs down going in.

SCB: How do you choose locations? What kinds of locations do you like?

Neustadt: Taxi’s is open for two day parts — lunch and dinner — so we look for locations that offer a daytime lunch population base as well as that evening fun factor. We tend to look for more regional locations than pure neighborhood locations because we need that lunch business. A lot of our restaurants are in pretty dominant retail locations, and we go for a medium to high demographic because we’re not a low-ticket item — we’re kind of the high end of the hamburger chain. Our average check is about $11, which is quite high for any type of QSR, and it’s even pretty high for fast casual, so we look for a demographic that can afford to spend $8 on lunch. We also do a lot of family business and get very active in the communities that we’re in.

SCB: Your restaurants have a garage-like interior that goes with the name, Taxi’s. What were your design goals when you started?

Neustadt: Taxi’s was just a fun name we came across. I’m a car nut, so it kind of played into my passions and made it something we could theme around and have some fun with. It’s a fun, casual interior — not QSR at all — no stock canned finishes like you’d find in a fast food restaurant. It’s inviting and comfortable, and a place where you can stay and have a beer but, at the same time, if your kid spills a drink, it’s not a big deal. And we have an exposed kitchen so the customer typically can see what’s going on in the kitchen.

SCB: How do you go about choosing franchisees? How many stores does your average franchisee operate?

Neustadt: A lot of our approach is direct cold calling to existing multi-unit franchisees of other concepts. We like to grow with people who have some experience in the industry. Typically we do a development agreement for an entire market and, obviously, it takes someone who has a little more financial backing than the one or two-store franchisee to be able to do that. So we do a lot of direct marketing and some Web advertising to attract other franchise partners in different markets. In some areas we’re doing five- to 10-store deals, and other markets are single-store markets initially. We can do some one- or two-store deals, as long as they are within a fair proximity to our support staff so we can keep the franchisees profitable.

SCB: What are your goals for the next year and the next 5 years?

Neustadt: We’re in the process of a deal, which will capitalize us substantially for our future growth. We plan to open up more additional franchise units this year and fill the pipeline for next year. Our plan over the next year is to do 18 new deals and then double that in years after. Our 5-year plan calls for about 200 stores. We’re currently targeting the West, going as far as Arizona, New Mexico, Colorado and the Pacific Northwest. And because Atlanta is our hub, we’re really going to focus on the region down there as well, and kind of grow from there to the Carolinas and maybe into Florida. We want to make sure our franchise partners are successful, so we really want to give them the support that some of the larger companies can’t give them. We know they have a unique product that’s going to be well received. Our goal is to help them to be profitable, build out their markets and, hopefully, exceed their development plans.

— Susan H. Fishman

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