The Habit’s Secret Sauce
What Makes the Santa Barbara–Grown Burger Chain So Darn Successful?
My grandfather was a complicated man who loved simple things. One of them was to share a Charburger, fries, and chocolate shake from The Habit Burger Grill with my grandma, his wife of 70 years. After a Sunday visit to the art museum or hardware store, they’d hunker down at a shaded table on the patio of The Habit on Milpas Street and dig in. Grandma is the actress, but Jeffrey never lacked for drama. Every single burger, he’d declare with a satisfied sigh, was “the best.” He liked chatting with the workers, too.
Jeffrey died on Christmas Eve. As he lay in bed those last few hours, eyes closed and hands clasped on his chest, I told him all the things I wanted him to know before he left us. I wasn’t sure he could hear me, he lay so still. But when I promised to split Habit hamburgers with Grandma from now on, he smiled.
His love affair with the chain dates back to 1969 when what was then called The Hamburger Habit opened its doors on Hollister Avenue in Old Town Goleta. Some of his burgers may very well have been fired by a lanky, sandy-haired 16-year-old named Brent Reichard, who took a job as a cook there in 1976. A Dos Pueblos graduate, Reichard enrolled in Santa Barbara City College but left just a few semesters in when the owners of The Hamburger Habit sold the small fast-food joint to him and his brother, Bruce, who’d borrowed money from their mom to seal the deal.
A year later, the brothers changed the name to The Habit and for a while went different directions — Brent founded and sold Goleta restaurants Spike’s and California Taco, while Bruce worked in the sea urchin diving industry. They eventually reconvened to open a second Habit in Ventura in 1997, and then the Milpas location later that year. The regional chain expanded to 17 restaurants before the Reichards sold a majority of the company to a private equity firm in 2007 but kept control of the Santa Barbara spots. Since then, the brand and its reputation have grown in size at warp speed.
Now, more than 190 Habits blanket the United States, the vast majority of them in California and on the West Coast, but with a handful of outposts on the East Coast, as well. The chain sits in an interesting intersection of the restaurant business called “fast casual,” also occupied by places like Chipotle and Panera — franchise brands that aren’t as rip-and-run as McDonald’s or Subway, and not as full-service as Chili’s or Red Robin. But unlike many of its competitors in the fast-casual burger arena, including main rivals Five Guys and Shake Shack, The Habit offers a fuller menu of salads, sandwiches (albacore, chicken, tri-tip), and veggie options. That goes a long way with the customers and families, especially at dinner time. In fact, burgers account for only 60 percent of overall sales.
The Habit Burger Grill went public in 2014, raising $90 million on the first day, and soon afterward Consumer Reports called it the best burger in America. That further greased the skids. Last year, they signed their first international franchise deal that will open 50 new restaurants across the Middle East over the next decade. By the end of this year, the company will have opened 31-33 new locations with plans for an even higher number in 2018. Between 2010 and 2017, revenue exploded from a respectable $42 million to a whopping $330 million.
All the while, the Reichard brothers have maintained direct ownership of the Habits in Santa Barbara County, including the original spot and the ones at La Cumbre Plaza and on State Street. “We have so many great employees, some who’ve been with us for 32 years,” Brent said last year when The Habit won The ‘Izzy’ Lifetime Achievement Award during The Santa Barbara Independent’s annual Foodie Awards.
It’s those employees — and the 4,500 others across the country — who are the main ingredient in The Habit’s secret sauce of profit. “Our long-term success is directly attributable to the men and women who work in our restaurants,” said CEO Russ Bendel this week in a phone call from the company’s headquarters in Irvine. Bendel explained that Habit workers have always been paid above minimum wage, and will continue to be, even with California’s new $15/hour minimum-wage law.
Doing so invests in a town and the people who work there, and that keeps the shakes flowing and the patties flipping. “When you look at the most successful restaurant companies,” Bendel said, “they have always figured out how to include themselves in and embrace the communities where they do business.” It’s especially true for a place like Santa Barbara, he said, where the hospitality industry is king, and through which so many young individuals enter the workforce.
The added pay isn’t without consequence to the company’s bottom line. “Does it create challenges? Of course it does,” Bendel said. “But this is not the first time there has been a minimum-wage increase, and it won’t be the last. It’s a level playing field.” The Habit won’t be eliminating positions or replacing workers with robots, he promised.
That assurance stands in contrast to statements made by Andrew Puzder, former CEO of CKE Restaurants, Inc., the parent company of the Carl’s Jr. and Hardee’s restaurant chains. Puzder, a Montecito resident and nominee for U.S. labor secretary, has stated that robot workers are preferable to people because they never get sick and always up-sell. Bendel acknowledged Puzder’s contributions to their industry but stopped short of addressing his comments. The Habit prefers to play the part of Switzerland in political matters. “We’re here to serve everyone,” he said.
Bendel admitted The Habit isn’t a trendsetter. It doesn’t want to be. The company is “more about evolution than revolution when it comes to taste” and is happy to slowly adapt to changing customer preferences. So far, it’s worked like a charm, said Bendel, mainly because everything people want, The Habit has provided from its first order on Hollister Avenue. “Customers want better flavors, less processed ingredients, and the ability to customize their meal in their own way,” he said. “Those are all traits we’ve had for 40 years.”
