Home-Grown Burger Chain P. Terry's Will Expand to Fourteen Locations

Beloved Austin burger chain P. Terry's has grown from a single, scrappy location at Barton Springs and South Lamar to ten stores stretched across the city. And owner Patrick Terry isn't done, either: stores eleven, twelve, thirteen, and fourteen are all in the works.

Eater recently spoke with Terry, who says the company is now at a key decision point: within the next six months, P. Terry's will make the call on further Texas expansion. For now, Terry is content to see what the future brings, and to continue his company's commitment to quality ingredients, better labor practices and affordability.

Let's talk about expansion. How many P. Terry's are in Austin now, and how many do you have planned?

We have ten open, number eleven is under construction, and we know where twelve, thirteen, and fourteen will be.

We just opened at Sixth and Congress. We're going to go over to East Oltorf and hope to open in five months. We're planning another location on North Lamar, another on 1-35 around Capital Plaza along the access road near Target. Those three locations we hope to do this year. We have one further out on 183 that we're working on for next year. That's fourteen in the works.

When you last spoke with Eater in 2011, you envisioned six to eight P. Terry's locations in Austin. What is the limit now?

Honestly, we're obviously starting to maximize our penetration in Austin. If we could cherry pick we might be able to do two to three more locations, but you don't always get to cherry pick.

Sometime this year we have to make a decision about what to do next. Whether we should start going into outlying cities, for instance. We haven't decided yet, and we're really thinking it over. We have a commissary where we produce everything fresh every morning and deliver it, so it's a question of maximizing that space.

Those three locations we hope to do this year.

Austin has been incredibly kind of us and we couldn't be more appreciative. We're just going to play it by ear for the next six months.

Torchy's growth suggests Austin brands could do well expanding across Texas.

I don't see the benefit of leaving the state any time soon. We have a lot of people in Texas. With our commissary and our business model of delivering fresh product every morning to our stores, it's not easy to just go somewhere else. Delivering fresh quality product is the whole basis for our business.

What comes out of your commissary every morning?

We bake the veggie burgers, bake cookies, squeeze lemons for lemonade, bake our own banana bread, grind our own coffee, prepare chicken -- there's a staff of about fifteen in that commissary and they're there seven days a week. The trucks leave at 6 A.M. before the stores open. It' s just not so simple to pack our bags and go somewhere else.

Delivering fresh quality product is the whole basis for our business.

We've always taken an approach that just because we serve fast food it doesn't mean we have to limit our quality. The great thing about Austin, Texas is people get that. They can tell the difference. It's not just another gimmick - that's what's allowed us to have all these stores.

Is that approach stretched by your rapid expansion recently?

We added to the commissary, so it's not stretched. We're more than capable of handling what we've got.

What's your take on the various chains descending on Austin, especially Shake Shack and In-N-Out?

We never look across the street and see who's there. We look for good properties. If there's a good property, we go in and lease or buy, however it's available. Then we find a restaurant size that will fit on that property. Some of our locations won't allow for full service, just drive thru. As we got better known, and more stores open, more people got comfortable approaching us, so the expansion feeds on itself.

When we opened our original location, no one knew who we were, and we weren't sure who we were. We opened across from McDonald's, Jack in the Box, Wendy's and Taco Cabana. I had people saying, You're crazy, you're going up against the titans in the industry. Frankly, we've never been bothered or intimidated by who's across the street from us. We keep our head down and do what we're supposed to do.

We never look across the street and see who's there.

Austinites also take an especial pride in supporting local chains.

As the city's grown, the percentage of people who feel that way has gotten a little bit smaller, since the population now has lots of people from out of town. But there's no question that Austinites have a sense of community. Part of that sense of community is endorsing or patronizing local places

Recently fast food works staged a new wave of protests to raise wages. How does P. Terry's address that issue?

People can't live on minimum wage. A business model that pays their people minimum wage is a flawed business model. We start people at nine dollars an hour, they get to $9.50 very quickly. Most people are at ten dollars an hour and past. From there, we give a Christmas bonus - we handed out over $65,000 to our employees this last Christmas, and that's people working the counter and the grills, not the managers or executives. We know that the people who work for us are living paycheck to paycheck, so we offer non-interest loans.

Would I like to pay even more? Absolutely. I'm competing against people who are paying less. I'm selling hamburgers against other competitors, and in many cases they're paying their people less. I have to be able to compete, and so what I would like to see  is the minimum wage raised. I want to see the playing field leveled.

How has the rise in beef prices affected your business?

It's a very scary thing. We literally monitor it weekly. It fluctuates greatly. On a few rare occasions, we've had to raise prices, but we can't pass it all on to the customer. That's too great an expense.

How do you determine your prices?

At the end of the day, we want to make a fair profit. Our margins are very thin, and we make it up on volume. I just don't believe in charging what I think I can get away with. I believe in charging what I think is a fair price.

When my wife and Kathy and I worked at the original location, we got to know our customers. I saw good customers, good people, digging through their pocket to get the last quarter to be able to buy a hamburger. You don't walk away from that without being affected. When we go up on prices, it's painful.

You can't do that selling a small hamburger for six bucks.

When you go into a P. Terry's, one of the things I'm most proud of is you will see a mix of people. You're in that downtown store right now, there is a guy standing in a twelve hundred dollar suit and guy behind him is wearing a construction helmet. You can't do that selling a small hamburger for six bucks. You're not going to get that construction guy on a budget. Our idea is to feed everyone and make everyone comfortable. Before you pat me on the back and tell me I'm a good guy, I would tell you it's a good business model.

Do you still eat at P. Terry's every day?

I'll be honest, I go in spurts now. I might take two or three days off and run home and have a tuna sandwich, but if I'm running around, I eat at P. Terry's pretty much every day.

I was at the Westlake store eating a chicken burger before you called. Yesterday I had a hamburger and fries. I'm arguing with myself whether I should get a cookie. I am my best customer.