The Counter: Restaurant (Re-defining) Success in a Recession

When last we heard from Jeff Weinstein, the man behind the hip and popular burger eatery, The Counter, it was 2008. At the time, Weinstein had developed a loyal following designed around his build-your-own burger concept (over 300,000 possible combinations made from beef, ahi tuna, chicken, turkey, or veggie burgers and topped with everything from roasted corn to Danish blue cheese) in Santa Monica, California. In the blink of an eye, Weinstein had created that rarest of creatures: a bonafide phenomenon.

To recap Weinstein’s lightening quick success: three months after launching in 2003, the firm was profitable. In 2005, The Counter was ranked No. 15 in GQ magazine’s seminal list of “20 Hamburgers You Must Eat Before You Die,” and two years later Oprah Winfrey mentioned the burgers on her show. Weinstein said the company was on tap to earn $9 million in sales in 2008, and he was planning to expand through carefully chosen franchisers with a goal of rolling out over 125 restaurants in the next few years.

Restaurants have been particularly hard hit during this economic slide. So when I sat down with Weinstein this week while he was in New York City, we talked about where his fast-growing business is today, and how the recession was impacting his plans for future growth

While the chain is now in some two dozen locations, including Ireland and Australia, Weinstein told me that he’s recalibrated his expansionist ambitions. The Counter’s 26 franchise groups, which he had forecasted opening at least one new store a year, has been revised down to about 12 to 15 in total. Six months ago, he said the phones had virtually stopped ringing from potential franchisers in tandem with the credit crunch. While Weinstein says the situation is loosening up a bit in recent weeks, the slowdown has given him the opportunity to take his company’s temperature. “And that’s not a bad thing.”

When I first wrote about Weinstein three years ago, one of the main challenges he had in expanding The Counter’s footprint across the country was maintaining its unique culture. Weinstein had attracted a large customer base mostly through word-of-mouth. He was offering more than just a high-end burger at moderate prices – he had also created an eating experience. Back then, he told me: “We have the mentality to zig and zag when we need to. Most [businesses] forget to act like a small company. That is who we are. I go to work every day in jeans and sneakers. That is who I am."

Today, Weinstein sounds a bit more practical. “We did a good job trying to get the pixie dust sprinkled across all of the restaurants,” he says. “We worked hard with training programs and to make sure we all speak the same language.” But last year he really took a good hard look at his business. “I felt like we were losing something,” he admits. It wasn’t long after Starbucks CEO Howard Schultz issued his now-famous memo impugning what he called “The Commoditization of the Starbucks Experience.”

Weinstein took that as something of a rallying cry. He went back to the original store and had serious discussions with his employees--everyone from the bus boys to the managers – those who had been with The Counter from day one. Weinstein wanted to find out “how do you hold onto the culture?” He asked his employees what made them stay, what made them want to leave. “I said, ‘tell me what sucks.’” And then he put together their responses in a small pamphlet that he calls “The Clipboard a Guide to Culture.” It was an honest assessment of what was going on and how to disseminate the basic integrity of the place.

Of course, as Weinstein was working to recapture The Counter’s best elements, the economy took a nosedive. Having stepped back once, Weinstein says, “This is the time to focus on execution. We are packaging an experience, a mood. When I started we made it ok to eat a burger as a meal; McDonald’s had turned it into a snack. 56% of our sales are dinner. That is unusual for a burger joint. In this economy, we didn’t lose our customer base because people are trading down. People will spend $12 to $15 for an experience--they don’t want to spend $40. We haven’t seen a dip; it’s just been steady, and that was probably good for us.”

And Weinstein’s learned another lesson: “We’re not curing cancer,” he says. “I have to remember to step back and have fun. We’re making burgers.”