P. Terry's: a 500-square-foot burger stand that now does $150 million to $200 million a year
Patrick and Kathy Terry opened a tiny burger stand in Austin three months after their wedding. Ten locations in, someone offered up to $100 million. They said no. Here is how they built it, the numbers, and what you can copy.
Overview
Patrick Terry grew up in Abilene, Texas, where his dad built the local CBS station from scratch. He always had something going: a Kool-Aid stand at five, a tennis camp at 19 where he drove 30 kids around in rented vans. He studied advertising at the University of Texas while working in the student union food court, then worked at an ad agency in Dallas on accounts like Frito-Lay.
Kathy grew up in Midland. Her dad ran an industrial laundry and she spent weekends helping him. She worked at a law firm while finishing an accounting degree, and later, as a paralegal, quit her firm and told them they could hire her back the next day at her own rate. She gave herself a 500% raise.
They met at a gym in downtown Austin. Patrick had just sold a pizza restaurant and was dabbling in real estate. He kept talking about opening a burger stand like the one he loved as a kid in Abilene, Mack Eplen's Drivateria, where everything was fresh and cheap. Kathy did not take it seriously. Then, three months after their wedding, he told her: "I got that location I've been wanting for my burger stand." Her reaction: "Oh, cute. Go for it."
How it really started
- The lot. A tiny 527-square-foot building at Barton Springs and Lamar in Austin. The landlord, Anne Williams, picked Patrick over offers from Valero and Goodwill. He never talked money with her. He talked about what he wanted to build.
- The book. Kathy handed Patrick Fast Food Nation and said: "If you're going to do this, you should do it right." So the beef was fresh, never frozen, and the fries were cut from Idaho potatoes.
- The name. At a friend's party there were two Patricks, and someone said goodbye with "Bye, P. Terry." Kathy said, "That's the name." Patrick did not like it at first. He later called it "the best thing that's ever happened."
- The first day. It opened on July 5, 2005, with a drive-through and a walk-up window, selling $1.60 hamburgers.
- The first year. About $600,000 in sales, and still a loss once the costs of the building and equipment were counted. Kathy kept the books. Patrick refused to run it by the numbers. The rule was quality food at a low price, and they trusted that to pay.
What did not work
- Making money in year one. They did not. Year two went over $1 million in sales.
- Opening a second store quickly. Patrick looked for one and could not find it. The second store took about four years. Kathy now calls that delay "a gift."
- Keeping no money for themselves. For years every dollar went back into the business. A friend finally sat Patrick down and told him a man with a wife and two kids cannot have nothing in his account. Around 2016 they took out just under $10 million, the only money they have ever taken out.
- Growing into new cities alone. To expand into San Antonio in 2019, Patrick decided he needed help. They hired a CEO and raised a small friends-and-family round, about 10%, to fund it.
The small things they still do
- Kathy baked and delivered employee birthday cakes herself for nine years. Now there is a full-time baker, the only employee with a company car.
- A "french fry queen" tests the sugar level of the potatoes every four days.
- Every quarter since 2006, one Saturday's profits go to Texas nonprofits. That has raised over $2 million.
- Over $900,000 in interest-free loans to hourly staff, with about $5,000 never paid back. One employee who got help with a car payment after a 2011 accident is now vice president of operations.
"I like to think that we're in the human connection business. We just happen to sell really good burgers." Kathy Terry
Timeline
| Year | What happened |
|---|---|
| 2005 | Opens a 500-square-foot burger stand in South Austin, three months after the wedding. About $600,000 in sales the first year, a loss after depreciation |
| 2006 | Year two: over $1 million in sales |
| 2009 | Second location opens, four years after the first. Patrick had been looking earlier. Kathy calls not finding one sooner "a gift" |
| 2009 to 2016 | Grow on the business's own profits plus bank loans, no outside investors |
| 2005 to about 2016 | Kathy takes almost no salary for 10 to 12 years |
| 2016 | Ten locations. An offer of $70 million to $100 million. They say no |
| 2016 | They take just under $10 million out, the only money they have ever taken out in 21 years |
| 2019 | Expand to San Antonio. Hire a CEO and raise a small friends-and-family round, about 10%, so he has capital to grow |
| 2026 | 37 locations, 1,800 employees, $150 million to $200 million a year in sales |
| 2026 | Start handing the company to an Employee Ownership Trust for their employees |
| Early 2027 | Profit sharing starts: 5% of profit for everyone with 2+ years, aiming for 20% within five years |
The numbers
| Figure | Number |
|---|---|
| Net worth | About $200 million, almost all of it the business |
| Cash they ever took out | About $10 million, once |
| Offer turned down (2016) | $70 million to $100 million |
| Sales today | $150 million to $200 million a year, growing 20% to 25% a year |
| Locations | 37, all company-owned |
| Employees | 1,800 |
| First-year sales (2005) | About $600,000 from 500 square feet |
| Sales per store | $3 million to $6 million a year |
| Cost to build a new store | Over $3 million. They build two a year |
| Overhead | Corporate about 16%, admin under 6% |
| Interest-free loans to staff | Over $900,000 lent, about $5,000 never repaid |
| Starting burger price | $1.60 |
How it makes money
P. Terry's sells burgers, fries and shakes from its own restaurants. There are no franchises. Every store is owned by the company.
How one stand became 37: slowly. The second store came four years after the first. For years they grew only on their own profits and bank loans, with no outside investors. Patrick deliberately did not run the place by the numbers: the rule was quality food at a low price, and they trusted that to pay. In 2019, to move into a new city, they hired a CEO and took a small friends-and-family round of about 10%.
- Simple menu, low price, high quality. That was the rule from the first stand.
- Big stores. Each one does $3 million to $6 million a year.
- Low overhead. Admin costs stay under 6% of sales, which pays for two new $3 million stores a year without selling the company.
What they did right
1. They started small and simple
500 square feet, one window and a drive-through, a menu nobody argues about. The first year lost money. They kept going.
2. They lived lean
Kathy took almost no salary for 10 to 12 years. In 21 years they have pulled out about $10 million once. Everything else went back into the business.
3. They knew what the money was for
When up to $100 million was on the table, it "felt like nothing." "There's no dollar amount, no dollar figure on relevancy. What this business has allowed us to do is feel significant, feel relevant," Kathy says.
4. They took care of their people
Over $900,000 in interest-free loans to hourly staff, with about $5,000 never paid back. Now the company is going to the employees instead of a private equity buyer.
Do what they did: step by step
1. Start with something simple people already buy.
Burgers, fries, shakes. No education needed for the customer.
Do this: list three things people in your town already pay for every week. Pick the one you could make better or cheaper.
2. Start smaller than feels serious.
Their first store was 500 square feet. Small means cheap, and cheap means you survive the first year even if it loses money.
Do this: find the smallest version of your idea you could open this month: a stall, a stand, a single product page.
3. Set one rule and never break it.
Theirs: quality food at a low price.
Do this: write your one rule in a single sentence and check every decision against it.
4. Leave the money in.
They took money out once in 21 years.
Do this: decide now what you will live on, and put everything above that back into the business.
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Sources
- The Alcalde (Texas Exes), "How Two Longhorns Built a Texas Burger Empire," October 2025
- KUT News (Austin NPR), P. Terry's employee ownership and profit sharing, June 2026
- Hampton, Moneywise with Daniel Berk, "Patrick & Kathy Terry Net Worth: $200 Million, and Why They Said No to a $100M Offer" (interview and full transcript), September 2026
