Five Guys: An Honest Business Built on Simplicity Reyna Haynes-Smith Professor Barry Adkins Contemporary Business BUS 508 October 19, 2012

Food. It’s a major topic of discussion today. What’s healthy, what’s not. What’s filling, what’s worth the money. There are many factors that contribute to the reason consumers choose one business over another. Most choose fast food options because they don’t have the time for a sit down meal. Time is short and many want a meal that is filling but also want something healthy. Enter Five Guys Burgers and Fries. Five Guys was founded in 1986 by Jerry and Janie Murrell in Washington DC. They wanted to give their sons the opportunity to either build a business or go to college. The business route won and the family opened a carry out burger joint in Alexandria, VA. Their premise was to concentrate on the quality of their product and the satisfaction of their customer. From that a simple yet beneficial business was born. The “Keep it simple” mindset has brought Five Guys tremendous success. “Now, over 20 years after Five Guys first opened, there are over 1,000 locations nationwide and over 1500 units in development. Five Guys continues to receive media attention and has grown a cult-like following around the world”. Five Guys took many years to perfect their business practices. Many of their practices differed from those of other businesses that also offered similar menu items but Five Guys didn’t consider them competition. They wanted to create something that they believed highly in. They didn’t waste time on fancy items but wanted to focus on perfecting the few menu items that were offered. All of their menu items were fresh, never frozen. Their burgers are made of 80% lean meat and all burgers are made to order, never pre-cooked. Their fries are made from potatoes grown in N. Idaho where they grow slowly but guarantee a solid and tasty result. California and Florida grown potatoes were options where the potatoes grow faster and are cheaper but that was not an option. Their potatoes are soaked in water and pre-fried to seal them and then fried a 2nd time, which ensures that they are never greasy. Cutting corners does not give the customer quality products and their 1st priority is always the customer. Their potatoes are soaked in water and pre-fried to seal in moisture and they are fried a second time to ensure they are crisp and never greasy. These simple business practices aid in giving the customer the best product for their money. There were 3 factors that contributed to the success of Five Guys Burgers and Fries in such a short period of time. They focused on the quality of their product, they understood what makes a loyal customer, and they were able to provide an easy to understand menu. I believe there were other factors as well. Jerry Murrell refused to spend money on the decorations of his locations. He wanted the food to be the focus and speak for itself. Decoration in any Five Guys store is the same, red and white tile on the walls and bags of potatoes lined up in the front of the store. Not only did he not believe in spending money on décor, he wouldn’t spend it on advertising either. He believed that “their salesman is their customer. If they’re treated right, they’ll walk out the door and sell for you”. There are other “better burger” chains that are growing fast as well, including Smashburger, “which had 100 stores as of July 2011 but is expanding in markets including Miami and Los Angeles”(Magee, 2011). Chipotle Mexican Grill is “growing quickly for the same reasons the “better burger chains are thriving. Most people are choosing healthier food options and fresh ingredients and can get this quickly. Once owned by McDonalds, but went off on its own years ago, Chipotle, based in Denver, Colorado, develops and operates fast, casual, fresh, Mexican food restaurants in the U. S.” (Magee, 2011). In 2010 Gilbert reports, “I am looking to find this edge, the thing that sets Five Guys apart, that has fueled its fast growth and its quick acceptance by burger-lovers in search of a mystique to call their own”(Gilbert, 2010). There are so many better burger chains popping up and they all appear to be competing with each other. What seems to be advantageous about this is the fact that most of these businesses are limited to a certain part of the country. Though the food is the most important focus, there is a factor that contributes to a businesses success that most businesses seem to forget; its employees. Having a group of people happy to be at work makes a world of difference. Employees want to be appreciated by their employer and Five Guys Burgers and Fries shows them just how much their work is a large part of The Five Guys success. This does not mean that their employees don’t work for this though. “Five Guys Burger and Fries implements a strategy that service oriented companies in every industry should emulate”. Every week, the company sends secret shopping teams into its stores in order to evaluate factors such as cleanliness, product quality, and service standards. The hourly employees of a restaurant team that score above a 95 receive a bonus that is spread among the entire hourly restaurant team. “The bonus plan ensures that each team member holds other team members accountable for his or her performance. Surprisingly, most other restaurant brands in the fast-casual niche have copied the Five Guys bonus structure”(Flatbush, 2010). “One of the elementary methods for motivating employees at work is to relate employee goals with the goals established by the company. Employees must understand that they are vital to the financial success of the company”(Flatbush, 2010). Mr. Murrell says it is important to make employees feel a sense of ownership and accountability. To motivate the crew, if they get a good score during the audits, they receive $1000 to divide amongst them (usually 5 or 6 people per crew). “So while many companies put 3% of their revenue towards marketing and advertising, Five Guys Burger and Fries collects 1.5% for all franchisees, which they use for the bonuses they give their employees”(Flatbush, 2010). In 2010, Joiners article on Five Guys reports that the biggest factor that contributed to The Five Guys success is the fact that they haven’t changed what they’ve done since day one. For example, they use the same baker to make the buns and at some point made him partner. They then hired him to travel and train at other locations to make sure that everyone gets the same great experience. Five Guys believes that there is no need to be all things to all people. They believe that if you do what you do well, your product will speak for you. In the “Race to the Top” video, Mr. Murrell also explains that because the business was such a simple one, they had to concentrate on being good to all people; from their customers to their vendors to those they looked to for loans. Most banks wouldn’t lend to them because their business was such a small one so they had to look to venture capitalists to help them in their time of need. Their practice was always to treat them well and pay them on time. They were able to borrow small amounts from 150 people to get the money they needed. Everything Five Guys does appears to be simple and on a small scale but the end result appears to be large. Their practice is one we should all take heed. Treat all people well and they will be loyal to you, your business, and your way of life.

Reference

Flatbush, Jimmy(June 28, 2010) Managers: How to motivate your employees at work, retrieved from http://www.helium.com/items/1865758-how-to-motivate-your-employees-at-work.

Gilbert,Sarah (August 18, 2010), What Makes Five Guys the New Burger Masters, retrieved from http://www.dailyfinance.com/2010/08/18/FIVE-GUYS-NEW-BURGER-MASTERS/

Joincer, Lottie L. (Aug 2, 2010) Five Guys Simple Recipe for Success, retrieved from http://usatoday30.usatoday.com/money/economy/story/2012-07-29/five-guys-ceo-jerry-murrell/56541886/1

Magee, David (July 01, 2011) The Better Burger Facort: Why Five Guys, Chipotle Are on the Rise, retrieved from http://www.ibtimes.com/print/better-burger-factor-why-five-guys-chipotle-are-rise-295375

About Us (2010) About Us:The Five Guys Story, retrieved from , http://www.fiveguys.com/about-us.aspx