Germany’s gourmet burger chain Hans im Glück is splitting into two parts.
Following a spat between the two senior managers at the company, one has left in order to set up a rival chain.
The division followed a dispute between Hans im Glück’s chief executive Thomas Hirschberger and one of his biggest franchise holders Patrick Junge, whose restaurants had contributed up to 30 percent of total sales.
The spat may be the first shot in a long-distance duel over dominance in the sizzling industry.
Mr. Hirschberger claims to eat burgers five times a week, sometimes in his own restaurants, sometimes in a competitor’s.
Hans im Glück has found a recipe for success in Germany, with fresh burgers, evening cocktails and friendly atmosphere.
Five years after its launch, the company grew to achieve €90 million ($99 million) in sales, while U.S. chains Burger King and McDonald’s both lost market share. The chain’s standard decor, featuring birch trees, has since become a well-known trademark.
Right now, Mr. Junge is applying the axe to the birch trees at his 12 restaurants, and putting in real wooden floors.
He is spending €200,000 to remodel each restaurant, and plans to open under his own brand, Peter Pane, in competition with Hans im Glück.
The look and feel of the products at his restaurants matter to Mr. Junge, who is eager to break away from the uniformity of the original chain.
Mr. Hirschberger complained that Mr. Junge was selling products like cake and yogurt and was deviating from the general marketing line.
“That got on the nerves of the other franchise holders something fierce,” Mr. Hirschberger said. “He no longer fitted in with the family. I am personally disappointed.”
Mr. Junge counters that he kept to agreements as a franchise member, but said he doesn’t want to air dirty laundry in public.
Mr. Hirschberger is determined in the near future to more than compensate for splitting from Mr. Junge, who operated restaurants in some prestigious locations like Friedrichstrasse in the heart of Berlin.
“We will step up growth even more,” he told Handelsblatt.
By the end of the year, he hopes to add 50 locations, for a total of more than 80 branches. Mr. Hirschberger sees potential in Germany for up to 500 restaurants. “That could be the range for us,” he said.
Mr. Hirschberger also has his sights on expanding outside Germany. He plans to open his first restaurant in Austria, in the city of Kufstein. More restaurants are planned in German-speaking and English-speaking countries in cooperation with local partners.
He is convinced the hamburger will always be popular. Even in his Sausalitos Mexican food chain, burgers are the best-selling product.
“The hamburger was never gone,” said Mr. Hirschberger, who claims to eat burgers five times a week, sometimes in his own restaurants, sometimes in a competitor’s.
Should his growth plans pan out, Hans im Glück would establish itself among the largest chain caterers in the food service industry in Germany. According to the industry magazine, Food Service, the clear market leader is McDonald’s with around €3 billion in sales, despite growth problems.
An industry expert said Mr. Hirschberger’s growth plans were “ambitious,” but noted that the Hans im Glück brand is strong.
Chain breakaways like Peter Pane, on the other hand, are seldom successful because they lack the established brand.
Mr. Junge said he plans to focus on quality, including free-range poultry from Lower Saxony and Angus beef from Germany.
In addition, he wants to offer a wider range to appeal more to women: more salads, vegetarian burgers and vegan mayonnaise. Baked goods are to come in the mid-term from the Junge family’s 170 bakery shops.
Mr. Junge expects to open five to six Peter Pane restaurants a year, and perhaps two more annually with franchise partners. “That’s our pace,” he said. “Everything we do is geared to the long term.”
Meanwhile, Mr. Hirschberger doesn’t believe his ambitious growth plans will damage quality at Hans im Glück. Speed isn’t decisive in quality control, he said, but rather due care. “The promise of quality also applies to the next 1,000 shops,” he said.
Helping in this area are suppliers like the Hamburg meat expert Block House.
Mr. Hirschberger and Mr. Junge both agree on one thing. Their main burger competitor isn’t McDonald’s.
“There’s a world of difference between us,” said the Hans im Glück founder. He said his chain offers gourmet burgers and stands for “slow food,” as opposed to fast food.
The world leader McDonald’s is having growth problems now, Mr. Hirschberger noted, but has made its mark. “McDonald’s will be a market participant for the next 100 years,” he said.
Another uniting factor for the two rivals is their determination to stay at the helm as captains.
There have been repeated offers from private equity firms, said Mr. Hirschberger, but he doesn’t want to sell in the foreseeable future. “It’s fun for me,” he said.
Mr. Junge, who managed the new start from his Lübeck headquarters, in a short time and with a lot of energy, is also having a good time.
Both are experienced businessmen. Mr. Hirschberger first made his Sausalitos Mexican restaurant chain into a German-wide success. Mr. Junge helped make his family bakery fit to compete with cheap chains.
Perhaps their conflict boils down to a simple root cause: they are just too alike.
Axel Höpner is the head of Handelsblatt’s Munich office, focusing in particular on Allianz and Siemens. Christoph Kapalschinski covers consumer goods, textiles and food for Handelsblatt. To contact the authors: email@example.com, firstname.lastname@example.org