In 2014, a company linked to Subway co-founder Fred DeLuca bought into BurgerFuel with an option to take half the business - the kind of US partner most NZ franchise brands never get. By 2016 the partnership was over. In 2017 BurgerFuel opened a single company-owned store in Indianapolis. By 2018 the board had decided the US was not viable. In 2020 the store closed. A teardown of why a franchise brand cannot enter the US one flagship at a time.
"Our initial entry into the USA was in an exploratory capacity to establish the viability of the BurgerFuel concept in this large market... the Board have reviewed the ongoing investment costs required in America and made the decision to exit the market in a developer and store owner capacity."
- BurgerFuel Worldwide CEO Josef Roberts, 2018
BurgerFuel opened its first store on Ponsonby Road in Auckland in the mid-1990s, founded by Chris Mason. It built one of New Zealand's most distinctive fast-food brands: gourmet burgers, car culture, custom murals, its own radio station, and a tone of voice that is loud, cheeky and very Kiwi. It listed on the NZX as BurgerFuel Worldwide and grew as a franchisor, with stores in New Zealand, Australia and the Middle East.
The brand worked at home. The company said so repeatedly, even as its offshore markets struggled. But outside New Zealand the record was harder. Australia never reached reasonable margins, and BurgerFuel closed all its franchised stores there in 2018. The Middle East master franchisees were closing sites. The US was meant to be the market that changed the story.
The US ambition had a credible foundation. In 2014, Franchise Brands - a US company associated with Subway co-founder Fred DeLuca - bought 10% of BurgerFuel for $5.9 million, with an option to increase its holding to 50% over eight years.
For a New Zealand franchise brand, it is hard to imagine a better US partner. Subway is one of the largest franchise systems ever built. A partner connected to its founder brought exactly what a foreign franchisor lacks in the US: franchisee recruitment, site selection, supply chain, and credibility with the people who invest in new franchise concepts.
Then DeLuca died in September 2015. BurgerFuel ended its collaboration agreement with Franchise Brands in August 2016. The company later described global expansion since that loss as "an expensive and risky proposition."
BurgerFuel decided to go it alone. On 29 May 2017 it opened its first US store, company-owned, on a large standalone site in Broad Ripple, Indianapolis, hot off the back of the Indy 500. The company likened Broad Ripple to Ponsonby: bars, clubs, eateries and universities nearby. Its worldwide marketing manager told local press the location was chosen for its eclectic atmosphere and artistic vibe.
The launch was pure BurgerFuel. A resident artist painted murals in the store and around the neighbourhood. Radio BurgerFuel broadcast live. Two custom 1968 muscle cars drove the streets. CEO Josef Roberts said the company had its "sights set firmly on further expansion in the USA."
Local reviewers were mixed. The Indianapolis Business Journal praised the ingredients and community touches but found the space cramped, some burgers buried under toppings, and drinks pricey - organic New Zealand sodas instead of fountain drinks. It noted the store would benefit from the lack of similar burger joints in the immediate area.
In 2018, about a year after opening, the board concluded the ongoing US investment was not justified. BurgerFuel sold the US master licence and the Indianapolis store to its founder, Chris Mason, who stepped down from the board but kept his roughly 11% stake. The rights would revert to BurgerFuel in three years if the US failed. BurgerFuel reported a net loss of $463,062 for the 2018 financial year. By December 2018, it said the one US store's sales had declined in the 12 months since opening, and it had hired KPMG to run a full strategic review.
In October 2020, BurgerFuel announced the single US store would close. As part of the deal, the company acquired 1,538,461 of its own shares from the Mason family trust to settle debt relating to the US venture.
BurgerFuel did not fail in the US because Americans did not like the burgers. A single store's performance says very little either way. It failed because the company lost the one thing its US entry depended on - and then entered anyway, with a model that could not answer the question the US market was asking.
BurgerFuel's US plan was never really about a store. It was about Franchise Brands. The partner's value was access to the US franchise machine: investors, operators, sites, supply chain. That is what turns a Kiwi concept into a US system.
When the partnership ended, the company kept the goal and dropped the method. It replaced a US franchise partner with a single company-owned store run from a New Zealand head office. That is not a smaller version of the same plan. It is a different plan - one where BurgerFuel had to be the developer, operator and franchise salesman at once, in a market where it had no network.
The company's own words in 2018 say it plainly. Passing the licence to Mason, Roberts said the aim was "ultimately, to find a US partner which we all believe will be essential to succeed in this market." The board had worked out that the partner was essential. It had just worked it out after opening the store.
The Indianapolis store was chosen and designed to express the brand: murals, music, cars, a Ponsonby-like neighbourhood. That makes sense for a flagship. But a franchisor does not grow in the US by having a great flagship. It grows by convincing US operators to invest their own money in multiple units.
Those operators want proof that a unit makes money in their market: average unit volumes, food and labour costs, payback period, and ideally a record across several locations. One store, in a neighbourhood picked for its atmosphere, cannot produce that proof. A strong result could be put down to the site. A weak one kills the story.
This is the NZ franchise trap. At home, the founder's energy and the brand's personality sell the franchise, because everyone knows the brand. In the US, nobody knows the brand, and the franchise is sold on numbers.
BurgerFuel's edge in New Zealand is attitude. Its tone is built on local references and humour that New Zealanders already get. In the US, a gourmet burger is not a novelty, and a single store had no way to explain why a Kiwi brand should matter.
The details show it. The IBJ reviewer had to ask for an explanation of the charity-coin system, and the review stopped to explain what "doofers" were. The drinks were organic New Zealand sodas at a premium. The reviewer's closing thought was that the store would do well because there was no similar burger place nearby - which means it was competing on location, not on brand.
A New Zealand brand's personality is an asset in the US only if it translates. Otherwise it is a cost: every customer needs educating, and one store cannot fund the education.
THE US FOOTPRINT
BurgerFuel's total US footprint, from opening in May 2017 to closure in 2020
A franchise system cannot be proven with one company-owned store. It can only be tested for atmosphere. The US question - will American operators invest in this concept? - was never asked at a scale that could answer it.
FAILURE DIMENSION ANALYSIS - BURGERFUEL
The moment the US story turned was not the store opening. It was the board deciding, around a year later, that it would no longer fund the US as a developer and store owner.
That was a sound capital allocation call. But the exit did not fully close the chapter. The founder took on the licence and the store, and debt relating to the US venture stayed unresolved between him and the company. The US did not stop being BurgerFuel's problem until 2020, when the company settled that debt by taking back more than 1.5 million of its own shares from the Mason family trust. By then the brand had been in the US for three and a half years with one location.
BurgerFuel's US attempt shows the difference between a partnership-led entry and a founder-led one. With Franchise Brands, BurgerFuel had a real US architecture: a partner with the network to recruit franchisees and a staged path to 50% ownership. Without it, the company had a store, a brand and a lot of energy.
The honest conclusion - which BurgerFuel's own board reached - is that the partner was essential. The mistake was not ending the partnership, or even opening the store. It was treating a single flagship as a substitute for the thing that had left.
Know what your US plan actually depends on. If your entry rests on a partner, their network is the plan. If that partner leaves, stop and redesign before committing capital. Do not keep the timeline and swap in a weaker method.
For a franchise brand, prove the numbers, not the vibe. Before recruiting US franchisees, you need unit economics they can underwrite. That usually means several company-owned units in one market, run long enough to produce credible data - or a US operator partner who will fund that proof.
Test whether your brand translates. A tone built on Kiwi references and humour needs to be tested with US customers before you build a store around it. If it needs explaining, budget for the explaining.
Structure the exit so it actually ends the risk. Handing a failing market to an insider can keep the liabilities inside the family for years. A clean exit is cheaper than a slow one.
BurgerFuel had something most NZ consumer brands never get: a US partner with franchise pedigree and a path to a real US system. When that partnership ended, the right move was to ask a hard question before opening anything: without a US partner, what would it actually take to build a franchise system in America, and are we willing to fund it?
A pre-entry architecture would have answered with specifics. How many company-owned units, in which single metro, over what period, to produce unit economics a US franchisee would invest in? What does that cost? And if we are not willing to spend it, is the right answer to wait until we find the next partner rather than open one store and hope?
BurgerFuel's board reached the answer in 2018: a US partner was essential. A structured entry plan would have reached the same answer in 2016, before the lease in Broad Ripple was signed.
When your US plan depends on a partner and the partner leaves, you do not have a smaller version of the plan. You have no plan. Rebuild it before you spend.
- PIVOTAL CATALYST VERDICT
FREQUENTLY ASKED
Why did BurgerFuel leave the US?
BurgerFuel's board decided in 2018 that the ongoing investment needed to develop the US as a store owner was not justified, and sold the US master licence and its single Indianapolis store to founder Chris Mason. The store's sales declined in its first year, and it closed in 2020, with BurgerFuel settling debt related to the US venture by acquiring shares from the Mason family trust.
What happened to BurgerFuel's partnership with the Subway founder's company?
Franchise Brands, a US company associated with Subway co-founder Fred DeLuca, bought 10% of BurgerFuel in 2014 with an option to reach 50% over eight years. After DeLuca's death in 2015, BurgerFuel ended the collaboration agreement in August 2016 and later described global expansion without that partner as expensive and risky.
How should a New Zealand franchise brand enter the US?
Prove unit economics before recruiting franchisees. That usually means several company-owned units concentrated in one metro, operated long enough to generate data US operators trust, or a US partner who already recruits and supports franchisees. A single flagship can test the brand's appeal, but not whether the system can scale.
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