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Franchise Chatter News Roundup: 5 Must-Read News Stories About the Five Guys Burgers and Fries Franchise

by Franchise Chatter on October 11, 2014

in Franchise Chatter Guides, Franchise Chatter News Roundup, Hamburger Franchise



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Five Guys Burgers Franchise Photo by Lodigs

When it became apparent that none of Jerry Murrell’s sons were interested in going to college, the family made the decision to use the tuition money they had saved up to start a business. Murrell remembered a burger joint in Michigan that had a devoted following because the burgers were really good. In 1986, he and his 4 sons launched Five Guys Burgers and Fries as well as the whole “better burger” movement that has seen rapid growth in the last decade.

The first location was just outside the nation’s capital in Alexandria, VA. By 2001, they had opened five different locations in the Washington DC metro area, but realized they lacked the capital to expand further, which led to the start of franchising in 2003.

A fifth son was born in 1988, and while Jerry is the CEO, the current 5 guys of the chain’s name are all five sons: Matt and Jim handle site visits around the country, Chad heads up training, Ben does franchisee selection, and Tyler oversees bakery operations.

The chain now boasts 1,000 locations nationwide with more than 1,500 more in development.

Here are (naturally) 5 must-read news stories about the Five Guys Burgers and Fries franchise:

Keeping it Simple, Focusing on Quality

The Five Guys Burgers and Fries name really says it all, or at least almost all. The menu really is made up basically of just burgers and fries, with hot dogs thrown in for variety. The only real nod to non-meat eaters is a grilled cheese offering, as well as an egg sandwich served on a Five Guys bun for breakfast in some locations.

Of course there are beverages as well in the form of Coke products. Back in 2011, Five Guys was the largest chain to go with Coca Cola’s cutting-edge Coke Freestyle drink dispenser in all of its locations (Thrillist.com).

The simplicity of their approach is what allows them to focus on what they consider to be the lynchpin of their success – the quality of the food. Five Guys even turned down a lucrative offer from the private-equity firm Carlyle Group, who wanted a controlling stake in the rapidly growing chain. The Murrell’s declined because they were afraid someone else in charge might start cutting corners that would lower quality. It’s one of the reasons why the family isn’t interested in going public (USA Today).

Their focus on quality is also why they don’t offer milkshakes, considered an essential menu item in most burger chains. The idea of a milkshake coming out of a machine makes the Murrells shudder. Besides, all their food is so fresh, their restaurants don’t even have freezers.

Building a Better Burger

The Five Guys approach to building a better burger is pretty simple. Cook it to order every single time on a grill clearly visible to customers. Make it from fresh (never frozen) ground beef. To be more specific, as the company explains on its website: “Five Guys uses 80/20 ground chuck-high quality ground beef containing only steer and heifer meat, which does not include any cow meat or fatty trimmings. We do not use ammoniated procedures to treat our ground beef. This means that there is NO ‘pink slime’ in our burgers. Our beef comes from the percentage of companies that do NOT use these methods” (Five Guys FAQ).

Cook it until it’s juicily well done on a grill. Serve it on a bun that’s toasted on the grill (the only way to get that “caramelized” taste), and don’t charge extra for whatever combination of 15 different toppings a customer wants (Inc.com).

The Perfect Fries

According to Jerry Murrell and training director Chad Murrell, getting the fries right is a whole lot harder than the burgers. It begins with sourcing the right potatoes – they need to be good and solid, which means they have to be grown as far north as possible, so Five Guys gets most of their potatoes from Idaho, even though it would be cheaper to get them from California or Florida growers.

It’s part of their commitment to quality. Whereas many chains use dehydrated frozen fries, Five Guys cuts the fries fresh in the store (which is why you see bags of potatoes stacked all over their restaurants, a quirky décor feature), soaks them in water, pre-fries them to get the water out and form a seal so that when they are fried the second time they don’t absorb oil or come out greasy (Inc.com).

A “fry calibration” training session can last two days to get the right mix of starch, water and temperature needed for perfect fries – no timers allowed in Five Guys restaurants because they believe good cooking is about developing a feel for it (Forbes). The fries are served Five Guys Style (salted) or Cajun Style (seasoned).

All This Without Advertising?

Yes, you read that correctly. The Five Guys chain, the fastest-growing restaurant chain in 2012 (Forbes) and winner of Zagat’s Best Burger award in both 2010 and 2011 (Huffington Post) does no paid advertising. From the beginning, they wanted the quality of their food to be so good that all their advertising needs would be met through mere word of mouth. So far, it seems to be working (Huffington Post).

It also helps that Five Guys treats their employees really well. Whereas many companies put as much as 3% of their revenues towards marketing and advertising, Five Guys collects 1.5% from all their franchisees and distributes bonuses to those crews that score the highest on the company’s weekly third-party audits. A typical crew is five or six people, which means they could be splitting an extra $1,000 among themselves on top of their base pay of $8-$9 per hour. This year those payouts will amount to $11 or $12 million (Inc.com).

Don’t mistake the chain’s lack of advertising as a sign of not paying attention to business basics, though. Given that the chain makes all burgers to order, which means no drive-thru service, it has a particular challenge in keeping up with the quick service customers expect from this segment of the restaurant industry. Phone ahead orders are essential, but they were seeing a lot of no-shows.

The company partnered with digital ordering company Olo that integrates mobile ordering and prepayment, which tends to make people want to show up to get what they’ve already paid for (not to mention skipping the line). The results? Mobile orders are 25% bigger than regular phone orders, the app has been downloaded more than a million times, and repeat users have quadrupled, with 3 out of 4 returning to place more orders (Olo.com)

Not the Healthiest Burger on the Block

The one thing that could derail the Five Guys journey to quick-serve domination is something many better burger chains face – the rising concerns about the health of people and the planet. The Five Guys Burgers and Fries franchise isn’t going to win any healthy choice awards. Its basic 2-patty burger packs 700 calories with no toppings, whereas the McDonald’s Big Mac weighs in at 540 calories and its Quarter Pounder at 410 calories, and both figures include all toppings. The Five Guys Bacon Cheeseburger packs a 920-calorie punch that delivers a day-and-a-half worth of saturated fat (30 grams).

Everyone wants fries with that burger, so add in another 620 calories for a regular order or 1,460 for a large, which is like three large orders of McDonald’s fries (CSPINet.org). Add in a large soda and burger fixings and you’re looking at a meal that delivers more calories than many people consume during an entire day. And unlike most burger chains, they don’t offer a non-meat patty.

On top of that, there’s a growing wave of awareness about beef’s substantial negative environmental impact. Beef production in the US contributes as much heat-trapping global warming gases as 24 million cars or 33 average-sized coal-fired power plants (Union of Concerned Scientists). Put those two together and what you end up with is a slowing burger trend along with the rise of healthy quick-serve restaurants (Dallas Observer).

Conclusion

Jerry Murrell jokes how his mother used to say to him, “If you don’t study, you’ll be flipping burgers” (Inc.com). Little did she know that flipping burgers would wind up being her son’s pathway to astounding levels of success. However, the fast-casual better burger segment is both maturing and getting crowded with competitors. Five Guys is the granddaddy of the segment, but with sales growth of only 5% in 2013 compared with 14% in 2012 (Technomic), their rapidly rising competitors may soon catch up to their $1.1 billion in sales.




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