Do you want to get off the subway at 72nd and Broadway and not even know you're in New York City?
Spot the ruinous business model.
Hello Scam Fam,
February! The worst, am I right? Other than the time Bill DeBlasio killed a groundhog and the Staten Island Zoo covered it up, this month has very little to offer those of us who like t-shirts and signs of life and not feeling like a piece of paper a week after it went through the dryer. I'm cold and I have been for some time. My extremities are ice. I hate it.
Back in January, another largely worthless month, I had a hangover (if you must know, I hosted a baby shower that got a little out of hand), and because it wasn't my first rodeo, I decided to treat it with a hamburger and French fries from this new burger place in my neighborhood that used to be a Tex-Mex spot. The consensus on the Tex-Mex spot was that it was terrible, but as I am a person who occasionally enjoys eating melted cheese out of a takeout container for dinner, I was pretty fond of it and was sorry to see it go.
If you haven't figured out that in addition to my commitment to processed dairy I am the kind of crank who has opinions and theories about the businesses in my neighborhood yet, well, cool, it was nice making such a mellow impression on you, prepare to question your judgment once again. My opinion and theory about the burger place, which is called Burgerim, and which you may know from your own neighborhood in whatever city or suburb you live, was that it sucked.
The strip-mall-ification of New York is old news that manages to stay relevant. I've recently been struck by how the pre-fab elements — blonde wood, neon signs, quippy marketing copy, vague claims of authenticity or beneficence, "color stories" — that make up a replicable business appear to have been manufactured in my very own backyard to appeal to my very own interests. It's like the algorithm swallowed the city and my brain along with it. (The section on bodega fetishism and really this entire essay about New York City on TV says all of this much better than I can.)
What bothers me is not that my impeccable rarefied snowflake taste has been clocked by people tryna get rich off me (I mean, I don't love that part either), but rather that any form of independence seems increasingly unsustainable. If it's not designed to scale, it has no future here.
When the slick, oversized Burgerim signage went up many months ago I assumed it was owned by private equity or funded by venture capital. It took forever to open, giving me ample opportunity to question what isn't a building block of an aspiring empire at this point? As I learned from OG member of the scam fam Sarah, I had the imperial part sort of right, but the business model all wrong. Burgerim is a ~franchisor~.
I find franchises fascinating and have often wondered if my life's purpose is to open a Wawa in midtown. I also find them quite confusing and I'm not the only one because rackets be thriving. As detailed in a three-part Restaurant Business (don't pretend you don't read it on the regular) investigation, The Burgerim Disaster, Burgerim was "once one of the hottest, fastest-growing brands in the U.S. Then its founder left the country, leaving behind a wreckage of unpaid workers, bankrupt franchisees and others struggling to make it work."
That founder Oren Loni aggressively targeted inexperienced restaurant operators with promises they could be their own bosses and would not struggle alone. According to Restaurant Business, the company would take its franchise fee, and then basically peace out, neither collecting royalties nor providing the pledged support. As Restaurant Business puts it,
Either by design or by accident, Burgerim operated much like a pyramid scheme. Because it didn’t collect royalties, it relied entirely on the franchise fee to pay for its own operations. And because it had so many units opening, those operations were put under a heavier amount of stress.
In short: Burgerim was built on a house of cards, and that house collapsed last year."
The company burned through cash: Despite generating $45 million in revenue through 2018, it finished that year with just $50,000 in cash on hand. Employees say financial problems started to hit in February of last year.
Those numbers! There's a chart in the story comparing the revenue and the profit that has a real baby's first spreadsheet vibe because the numbers are so bananas; it doesn't even look possible.
Meanwhile, franchisees floundered and regulation provided them little protection. Loni disappeared. Legal filings indicate he moved “overseas due to outstanding debts” without much more detail, a description I hope is one day applied to one or several of my aliases.
And in answer to the question I'm sure you've been screaming at whatever screen you're reading this on, the burgers — speaking of rackets, Burgerim's whole distinguishing gimmick is that the burgers are small, but the menu requires you to order at least two — were an ok hangover cure but nothing to write home about. The best part was that they let me combine fries and onion rings as a side.
Scam hungry and stay warm,
Ruthie
PS: For my fellow You've Got Mail stans, please read this perfect 2013 update if you haven't already.
My Week+ in Consumption
The aforementioned baby shower was catered by Damascus and the food was a real hit. It was also cheaper than every other option I considered, not that you care about such things.
I briefly escaped both January and February in Negril (highly recommend) where I read How to Love a Jamaican by Alexia Arthurs (also highly recommend).
Erica and Claire who used to run the only good company, Of a Kind (RIP, when I complain about us not being able to have small nice things, that is what I am talking about), still run one of the very best newsletters. Subscribe, subscribe, subscribe.
I met Erica at Details, where I worked from 2007 - 2010, and I reallllllly enjoyed this Styles story on our former boss and the general cursed spirit of that time. If you want my take — of course you want my take — I wrote perhaps my most crowd pleasing edition of this very newsletter on those years.