Morgan Belski had a seated dinner at her wedding, but knew she wanted her guests to end a night of dancing and celebration with Whataburger.
Just after 10 p.m., servers handed out Honey Butter Chicken Biscuits in the orange and white parchment paper recognizable to any regular of the fast-food chain.
“It’s a quintessential nightcap in Texas,” said Belski, 25, of Sugar Land, a city on the outskirts of Houston. “If your night ends without Whataburger, you’re doing it wrong.”
That kind of fervor has kept Whataburger in business for 69 years and sparked a social-media firestorm this summer when Byron Trott’s Chicago-based BDT Capital Partners bought a majority stake. Locals fretted about the future of an institution whose burgers, spicy ketchup and A-frame restaurants are so beloved in the Lone Star State that when Belski asked her wedding coordinator about getting Whataburger catered as a late-night snack, she responded, “Don’t worry — I have a contact.”
The BDT deal, which valued the chain at $4.7 billion, underscores the desirability of such brands in the hyper-competitive world of burger joints. The Dobson clan — who founded the company and retain a minority stake — have a $2 billion fortune, according to estimates by the Bloomberg Billionaires Index. The Dobsons declined to comment on their net worth.
The big challenge
Justifying that price tag will require expanding the business without diluting the brand.
“The big challenge will be how they can take that and move it into other areas and still get that emotional attachment,” said John Bowen, a professor at the Conrad N. Hilton College of Hotel & Restaurant Management at the University of Houston.
Customers at a Houston branch were certainly wary of change on a recent weekend.
“I don’t want them to take it away from Texas,” said Sandra Perez, 37, after finishing dinner with her family. “We’re going to have to move to Chicago,” her brother, Julian Frausto, 43, said jokingly.
BDT and Whataburger said new ownership means business as usual above all else.
“Our partnership with BDT has been a natural fit because they respect the brand we’ve built,” Whataburger President Ed Nelson said in a statement.
Tiffany Hagge, the BDT Capital Partners managing director who led the investment, said her firm will support Whataburger and help it explore expansion plans.
“We have no intention to change a winning formula that’s clearly working,” she said.
Such patience is enabled by the deep pockets of other wealthy clans that Trott, a former Goldman Sachs banker, has cultivated to invest in family and founder-led companies. Trott built his reputation advising clients such as Warren Buffett, the Kochs, as well as the Mars and Walton families, who have also invested with him.
An appetizing prize
Burger chains are an appetizing prize. The size of the market in the U.S. was $114 billion in 2018, according to Euromonitor International, and there are plenty of such ventures that generate juicy returns.
In California, another regional favorite, In-N-Out Burger, has made Lynsi Snyder one of the world’s youngest female billionaires. Then there’s New York’s Danny Meyer, who made his name with high-end Manhattan restaurants before launching Shake Shack Inc., which is now worth $3.5 billion, comprises the bulk of his fortune. Even Hollywood star Mark Wahlberg has gotten in on the act with his Wahlburgers franchise.
It doesn’t stop at burgers. Dan and Bubba Cathy both appear on the 500-member Bloomberg Billionaires Index thanks to the success of Chick-fil-A.
“With a fast-casual concept you can build it out, you can make a lot of money,” said Bob Goldin, co-founder of Pentallect, a food industry consulting firm. “You don’t need chefs, you don’t need wait staff. It’s a much simpler concept you can operationalize.”
There’s certainly room for Whataburger to expand. The chain, with about $2 billion of annual sales, has more than 800 locations in Texas and nine other states. McDonald’s Corp., by comparison, has about 38,000 locations in over 100 countries.
Not that chains like Whataburger or Chick-fil-A are necessarily looking to go toe-to-toe with the likes of McDonald’s or Burger King parent Restaurant Brands International Inc. Their relative scarcity is part of the appeal.
“It’s about being selective enough that they can maintain this exclusivity,” said Miranda Lambert, a research analyst at Euromonitor. “People want it 10 times more — not necessarily because it is so great but because they can’t get it.”
Such a delicate balance is now no longer the sole concern of the Dobsons. They’re expected to focus more on philanthropy and investing through investment firm, Las Aguilas.
Still, for all of their wealth, don’t expect to hear or read too much about this particular burger dynasty.
“The company in general, and the family in particular, keep a very low profile,” Goldin said. “The limelight isn’t for everyone.”