| We were having lunch at Five Guys recently when I was struck by the urge to know more about these guys. Why is their business model and food so much better than other burger chains? In 1986, the first of Jerry and Janie Murrell’s five sons was preparing to head off to college but his parents sensed that he was having second thoughts about pursuing a degree. The parents suggested to their sons that they could use the family’s $70,000 college fund to start a burger restaurant. That year the first Five Guys location opened in Arlington, Virginia. Today, oldest son Jim is Chief Operating Officer while second son Matt supervises global expansion. Third son Chad supervises training across the 1400 locations while Ben runs Information Technology. Five Guys is one of the fastest growing franchises in the U.S. and has recently expanded to Spain, France, Holland, Kuwait, and Oman. Sales are over 1.5B w/annual revenue growth of 10%. The family exercises tight fisted control to insure quality and uniformity. Some franchisees have attempted to expand the menu with options such as chicken and coffee. After some trial and error, the family returned to the fundamentals- burgers and fries. One exception is the introduction of milkshakes in a growing number of stores which breaks the longstanding “no freezer” rule that was in place because of the chain’s dedication to fresh ingredients. It takes three hours to open a store for business because everything is prepared by hand. Every morning a team member performs precise calibrations on the fryolator to account for any variations in the potatoes or peanut oil. Each location uses the same ingredients including the buns that are baked fresh daily and trucked to restaurants under the supervision of the youngest son Tyler. Bacon is sourced from a smokehouse that was built in 1888. Crew members must follow a strict order of how the fifteen optional toppings are placed on the burger so that every burger across the world looks and tastes the same. Even the music played in every location is the same – “Five Guys Rock.” The packaging of the french fries is ingenious. A server fills a paper bucket with fries and puts it in a paper bag. A larger scoop of fries is then dumped into the bag. The customer thinks he got a special deal from his friendly server and starts planning a return trip. The average American child sees more than 10,000 food advertisements each year on television however he won’t see one from Five Guys. Rather than advertise, Five Guys invests in a secret shopper program that tests locations for quality service and food. Last year the company paid out 20M in bonuses to its hourly employees who were members of high performing teams. The company believes customer-focused crew members are the best advertisement. Fast Food Fun Facts Shaquille O’Neal owns 155 Five Guys franchises (10% percent of all franchises) He also owns seventeen Auntie Anne’s Pretzels stands. To balance things out, Shaq owns forty 24 Hour Fitness locations. Initial Investment in a Five Guys is a relative bargain with a range of $152,000-$360,300. The royalty fee is 6%. Americans’ spending on fast food has risen from $6B in 1970 to over 200B in 2018. Because of anti-German sentiment during World War I, restaurants searched for an alternative name for the product associated with Hamburg, Germany. Most settled on “salisbury steak, named after Dr. James Salisbury, who prescribed ground beef for patients suffering from anemia, asthma, and other illnesses. McDonald’s is the largest purchaser of beef, pork, and potatoes and the second largest purchaser of chicken in the world. 7.5% of America’s annual potato crop is turned into McDonald’s french fries. McDonald’s has more locations than Burger King, Wendy’s, Taco Bell, and Arby’s combined. 7,000 people were surveyed across six countries and 88% were able to identify the McDonald’s logo. Only 54% could identify the Christian cross. Hope those buzz-killing McDonalds’ factoids reduced your desire to rush out for a delicious yet unhealthy Five Guys meal. Have a great weekend. If you are looking for top-notch marketing support, contact ted@blackdotmessaging.com |
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