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Fatburger CEO: We'll Survive the Better-Burger Shakeout

Stocks in this article: DIN MCD WEN BK

The question is: Will there be room for all of these burger competitors?

Wiederhorn says no.

"There'll be a shakeout in the better-burger and gourmet-burger segment like there always is in an industry where you have new or a lot of competition that comes in at once," he says.

"The players who have been long-standing participants, like Fatburger, Five Guys or In-N-Out, will always command a customer following and loyalty, because those customers know what the original burger experience was like, and they'll continue to follow it," Wiederhorn says. " Of the new ideas that come into play, a lot of those ideas don't have a financial model that really supports it, so they can't scale it. It might work in a big city in a high-profile location, but it doesn't work in average locations or in Middle America."

Smashburger CEO Dave Prokupek agrees.

"I don't know that everyone can survive, but I do see two to three national players and, of course, there's going to be a lot of chains that have nice regional businesses along the way as well," Prokupek says.

Fatburger's Wiederhorn spoke with TheStreet earlier this week to share how the burger chain is staking its ground in the fiercely competitive better-burger category.

What does Fatburger stand for?

Wiederhorn: Fatburger started here in L.A., and it's a brand that's been frequented by celebrities for years and years, both because of the availability of a Fatburger around L.A. and also because of the burger experience. Think of it as the original Hollywood homemade hamburger and that translates into real authenticity and simplicity. We're serving the same burger, the same recipe from meat, the same bun, the same toppings and things that we've been serving for 60 years, and that really in itself differentiates us from everybody else because you have all the competitors that have come into the "better burger" sector. We're fast-casual, so it's not fast food.

As we've expanded both domestically and internationally, people want the burger that started here in L.A. that celebrities eat often, that the Angelenos' and the Hollywood crowd has eaten forever. Celebrities are eating it because they like it. It's their burger. It's not because there's some other cache to eating a Fatburger. This is the place you go late at night, middle of the day, whenever, when you really want a good hamburger.

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