If you’ve ever bitten into a burger and thought, “Mm! What a burger!” then you might have had the good fortune of eating a Whataburger sandwich. That’s the kind of experience that generally prompts someone to wonder how to open a franchise and what the Whataburger franchise cost might be.
If you're asking to buy a Whataburger franchise, it's a trick question, as the company owns over 85% of its 820 locations. Things may change since the founding family sold to a major Chicago capital firm in June 2019.
In 1950, this San Antonio-based chain was founded by Harmon Dobson and Paul Burton, and until June 2019, it was family owned. Now, its majority ownership is held by Chicago-based BDT Capital Partners, but the Dobson family remains involved. In the seven decades this company has been slinging out burgers, they’ve built an empire of over 820 stores and over $2.4 billion in annual sales, making it the 31st-largest chain in the United States — bigger than In-N-Out Burger and Five Guys.
It’s surprising, then, that the company owns more than 85% of its locations. It's possible that they put the brakes on franchising and expansion after some operators proved unable to keep the lean margins that franchises need for success. In Arizona, their franchises gained three separate groups of investors after each consecutive group bowed out over financial hardships.
However, those family-run stores were getting it done, and the chain enjoyed a compound annual growth rate of 8.7% compared to the national average of 2.2% for its competitors between 2014 and 2019. Until now, Whataburger has been primarily based in Texas, where 670 of its 820 locations are found, with the others being in Alabama, Arizona, Arkansas, Florida, Georgia, Louisiana, Mississippi, New Mexico and Oklahoma.
The trouble with being a family-run business is that you often need to be family to be in the business. This is true of this burger chain too, as back in 2001, a man named Theldon Branch made headlines because he was the first franchisee to open a Whataburger in over a decade. Searching the internet to learn more about franchising under Whataburger may leave you stymied for that reason alone because the information just isn’t public.
Some websites will tell you that it will cost you $1.2 million to start a Whataburger franchise, but that’s just speculation because you’ll notice that the royalty fee is missing and so is the advertising fee, the term of agreement, the renewal fee and both the initial investment and the initial franchise fee. In franchising, these are all staple costs. Royalty and advertising fees are often in the 4-to-5% ballpark, for example.
If none of these variables are known and the original family-owned restaurants total over 85% of the ownership, then the company may have shut the door on the franchising opportunity.
Things could be changing since experts speculate that the majority ownership bid by BDT means franchising might be around the corner. Expansion is planned, but franchising? A growing trend with such big brick-and-mortar companies is that they franchise out the already-established locations. That may mean you could soon hear about Whataburger franchises for sale.
They may wish to fuel a franchise-based expansion push into the other 40-some states in the union. With such strong returns on tightly run shops, who knows — maybe Whataburger will soon take a franchising bite out of the Big Apple.
Don’t confuse Whataburger with What-a-Burger because the latter is in Virginia and the Carolinas. Both started in 1950 three months apart, neither seemed to know of the other until the 1970s and no legal action was taken until 2002-2003. The result? Both companies kept their names. What a burger, indeed!