Arctic Circle fast food comes to hot-growth Utah suburb

Nation's Restaurant News, March 24, 2003 by Dina Berta

I confess: I really wanted to believe the hype. The press release sounded like a promising news story. Midvale, Utah-based Arctic Circle Restaurants Inc. had opened the first fast-food restaurant in Herriman, a small community some 20 miles southwest of Salt Lake City.

Settlers founded Herriman in the foothills of Salt Lake Valley in the late 1800s. The area remained an isolated rural community until almost the end of the 20th Century. The first library just opened last month. So, I conjured up images in my head of country farmers stroking their chins in amazement at the brightly colored Arctic Circle restaurant, with its indoor playground, Black Angus burgers and fruit-flavored shakes.

After a cursory investigation, however, my quaint notion was flattened like the dirt under the bulldozers that have been busy leveling farmland in Herriman for more subdivisions.

Granted, Herriman still has only about 6,300 people. But it's probably the fastest-growing municipality in Utah. About 1,400 homes have been built since the community incorporated in 1999. The population is expected to more than double in the next five years, according to the city's Web site. City officials so far have approved construction of an additional 5,790 homes.

Those aren't farmers moving in but commuters with jobs in Salt Lake City's metropolitan area who can afford the $204,000 average price of a Herriman house. And, this being Utah, it's usually traditional young families -- husband, wife and two children -- moving into those houses. The city puts the person-per-household index at 3.5. About 60 percent of the residents are under the age of 10.

I may have been disappointed with what I found out about the true Herriman, but it's turning into a great story for Arctic Circle.

"The Herriman store opened as the No.1 store in the chain," said Arctic Circle's president Gary Roberts. "People were waiting for something to come, and the response has been great."

Arctic Circle, a 53-year-old chain of 86 fast-food restaurants in eight states, did about $47 million in systemwide sales last year. Sales for the privately held company have been rising about 5 percent a year for the last five years, Roberts said. Average sales per unit are around $600,000.

Arctic Circle went into Herriman knowing the restaurant would immediately fill a void, he said.

A Chevron gas station was the only other business in the community before the restaurant opened in February. As they researched the location, they learned that the gas station's convenience store led the state in beer sales, Pepsi sales and hot-dog sales, Roberts said.

More businesses are headed into Herriman. A Smith's Food & Drug store has opened and the city is hoping to attract a big-box retailer, such as Home Depot or Wal-Mart, to help generate some sales-tax revenue.

Other restaurant concepts are coming, too. A Subway and a Wendy's restaurant should open any minute now, but Roberts is unfazed by the thought of new competitors cutting in on Arctic Circle's business.

Utah already is a competitive market when it comes to fast food. According to Roberts, Arctic Circle has 45 stores in the state, McDonald's has 55, Wendy's has been opening a store a month for the last couple of years, and Carl's Jr. has entered as well.

Arctic Circle, however, has managed to avoid the discount-pricing games that the larger fast-food companies have been playing.

Arctic Circle changed its menu three years ago and began making hamburgers out of Black Angus beef, which has a lower fat content and is slightly more expensive than regular ground beef. The company raised the price to about $2.14 for a quarter-pound hamburger and hasn't bothered with any 99-cent deals.

"Because we're perceived as a higher-quality product, we can justify the higher prices," Roberts said. "It was a gutsy move at the time, but it worked. We've been up in sales since we've done it."