IS THERE A MARKET FOR A SU S T A INABLE HAMBURGER?
According to Forbes magazine, Burgerville does not just sell burgers; it sells good works. But, if you don’t live in Oregon or Washington, you may have never heard about Burgerville, a company founded in 1961 in Vancouver, Washington. Today, there are 39 Burgerville restaurants spanning those two states. In the 1990s, when Burgerville began losing sales to the national chains, Tom Mears, the chief executive, decided to differentiate his product, to sell “burgers with a soul.” Mears, the son-in-law of the founder, decided to combine good food with good works. The company began to build its strategy around three key words: “Fresh, Local, and Sustainable.” It pursued this strategy through partnerships with local businesses, farms, and producers. In 2003, Gourmet magazine recognized Burgerville as the home of the nation’s freshest fast food. According to the company website, “At Burgerville, doing business responsibly means doing business sustainably. One example of this is our commitment to purchasing 100% local wind power equal to the energy use of all our restaurants and corporate office.” The company purchases its electricity from local windmills. Burgerville uses “sustainable agriculture,” which means that their meat and produce are free from genetically modified seeds or livestock. In its cooking, the company avoids trans fats, and once the cooking oils are used up, they are converted into biodiesel. The company buys its antibiotic- and hormone-free beef locally. In addition to burgers, Burgerville offers a wild coho salmon and Oregon hazelnut salad. Meals for children often come with seeds and gardening tools rather than the usual cheap toys offered at the national chains. Burgerville extends its good works to its employees. The company pays 95 percent of the health insurance for its hundreds of workers. This adds $1.5 million to its annual compensation expense. To get its affordable healthcare, employees have to work a minimum of twenty hours a week for at least six months, a more generous arrangement than most stores. Being a good corporate citizen is expensive. Though the company won’t reveal its financial bottom line, one industry consultant estimated that its margin is close to 10 percent; in comparison, McDonald’s margin is 15 percent. Questions for Discussion
1. Is the world ready for a socially responsible hamburger? How much would you be willing to pay, assuming the burgers really taste good?
2. What tensions among its economic, legal, ethical, and philanthropic responsibilities do you think are most pressing to Burgerville?
3. Does Burgerville sound like a business that might work in Oregon and Washington, but maybe not elsewhere? What is the future of Burgerville?