* Millennials feed $5 billion business
* Cattle herd growth helps hamburger supply
By Theopolis Waters
CHICAGO, June 1 (Reuters) - As U.S. consumers, especially
millennials, look for hamburgers with more flavor and fresher
beef, more restaurants are catering to the taste for "better
burgers," a market where one expert said sales could double in
five years.
Sales at companies offering gourmet or "better burgers,"
which typically use fresh meat rather than frozen and often
include exotic ingredients, jumped 15 percent last year over
2014 to $5 billion, according to Technomic, a research firm
based in Chicago, home of the world's largest livestock futures
trading market.
While that is still a small part of the $80 billion in total
revenues for quick-serve restaurants, Technomic President Darren
Tristano said revenues for top-end burgers could double to $10
billion by 2021, outpacing growth in regular burgers.
As millennials grow older, "they will think of these brands,
and not McDonald's the way the baby boomers have," said
Tristano. Millennials are generally defined as the generation
that came of age in the new century.
Shake Shack (NYSE:SHAK) SHAK.N plans to open a further 16 "Shacks" -
its trademark trendy restaurants - domestically this year, while
Chipotle Mexican Grill (NYSE:CMG) CMG.N has applied to trademark "Better
Burger" for its new brand of burger chains. Chipotle declined to
say when it planned to launch burger chains.
Cargill Foods CARGIL.UL , one of the country's largest beef
suppliers, said the popularity of premium gourmet hamburgers was
one of the factors prompting its purchase of a South Carolina
ground beef processing plant in March.
The United States is already the biggest consumer of beef
burgers, with servings of 30 per capita in 2015, compared with
24 per capita in No. 2 consumer Australia, according to New
York-based NPD Group, a leading consumer research firm.
Restaurants are reaching out to new customers, who are
willing to pay more for better-tasting, healthier burgers.
A double cheeseburger at Shake Shack costs about $8,
compared with about $2 at McDonald's in downtown Chicago. A
gourmet burger with Wagyu beef, truffle and foie gras offered by
Fleur restaurant at the Mandalay Bay Casino in Las Vegas costs
$65.
Even McDonald's MCD.N has been tempted to consider fresh
beef instead of frozen for its burgers. The company is testing
fresh beef in 14 restaurants in the Dallas area, spokeswoman
Lisa McComb told Reuters, instead of flash-frozen beef.
The market offers ample room for growth. The most prominent
better-burger stores such as Five Guys and Smashburger total
fewer than 2,500 globally, compared with more than 50,000
outlets collectively operated by McDonald's MCD.N and Burger
King BKCBK.UL .
BIGGER HERD, MORE BEEF
The rising demand from the shifting trends is unlikely to
drain supplies any time soon, meat industry experts said.
Commercial U.S. beef production should rise to just over
24.6 billion pounds or 4 percent above 2015's 23.7 billion
pounds, according to Colorado-based Livestock Marketing
Information Center.
The increase comes as U.S. ranchers build up herds that had
been depleted by several years of drought to a 63-year low in
2014. Ranchers are producing heavier cattle now that water
supplies have been replenished.
"When you add it all up, it's not that much. I think the
increase in supply is plenty to take care of the demand," said
John Nalivka, president and owner of Sterling Marketing, an
industry analytics and consulting firm.