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FIVE GUYS STICKS TO BURGER-AND-FRIES FORMULA

By Neil Janowitz

There isn’t much that is complicated about Five Guys Famous Burgers and Fries. The name is straightforward and utilitarian. The menu comprises a mere handful of old standards. Even the chain’s history is a simple, all-American tale.

In the mid-1980s, as Jerry Murell’s three eldest sons — Jim, Matt and Chad — approached high school graduation, he gave them a choice: They could go to college, or they could use the money to open a business. They took the cash and launched their first Five Guys (named to include younger brothers Ben and Tyler), in Arlington, Va., in 1986.

The brothers eschewed any ideas of a flashy storefront or a broad menu in favor of what their public relations manager, Molly Catalano, calls “an honest, solid burger.” The burgers, which are never frozen, are hand-patted from 80 percent lean ground beef. The French fries are cut and prepared daily. The buns are baked fresh, in-house. And aside from a handful of hot dog and grilled-cheese offerings, that is where they capped the menu.

It turns out they needed nothing else. Word spread, creating a cult following in northern Virginia and earning Five Guys numerous awards and the capital necessary to expand. The company opened restaurants in the Alexandria and Woodbridge areas and then set up franchises in the rest of Virginia and in Washington and Maryland. A regular burger rings up at around $4, but customers come through the doors in droves. “Sure, you can find a cheaper burger, and it takes longer for us to prepare the meal,” said Catalano. “But we appeal to people looking for freshness and higher-quality food.”

Because of the pricing, the stores are more successful in higher-income areas. The customer trend skews toward males, too. But Catalano says the no-frills restaurants appeal to everyone from teens to retirees. The company relies on word of mouth more than on conventional advertising; the immediate appeal of the product and the storefront goes a long way toward securing new customers and franchisees. “Anyone who wants a good burger in northern Virginia goes to Five Guys,” said Mike Hoover, a longtime state resident who opened a Five Guys franchise in College Point, N.Y., in the borough of Queens, in April. “And everyone was really excited to hear they were franchising.”

Before going into the restaurant business, Hoover was an information technology consultant and had made frequent trips to New York City. During one of those, he realized Five Guys could be as popular in New York as it had been in Virginia, and the wheels were set in motion.

Hoover says such touches as free peanuts, the prominent display of fresh potatoes and peanut oil, and the standard Five Guys open kitchen creates a welcoming atmosphere. The concept is equally attractive to landlords, some of whom have told Hoover they would rather have Five Guys’ clean, friendly storefronts and quality food in their centers and neighborhoods than a McDonald’s or a Burger King. That is precisely the type of mentality Five Guys will need to cultivate if it wants to remain successful, says Paul G.W. Fetscher, president of Great American Brokerage and RestaurantExpert.com. “In any category, you have two players,” Fetscher said. “In burgers, you have McDonald’s and Burger King, and even Wendy’s as a strong number three. Plus, in New York, you find a lot of trendy, upscale burger places. All of which means that Five Guys has an uphill battle.”

But Five Guys does boast one advantage, Fetscher says: the simplicity of its menu. “The big boys are constantly trying to entice customers with new products,” he said. “But often those products are gone within a couple years. When people come to these types of restaurants, they want a burger and fries, and they want them done well.” Five Guys’ success will vary according to location, says Fetscher. Any units in the Northeast, which face competition not just from finer restaurants but also from multicultural food concepts, will have to work harder, he says. But the mid-America stores, which he says will provide a far better burger than Applebee’s, Chili’s and the like, should do well.

The company intends to keep expanding. Currently, it has 163 units in 13 states, 23 of them company-owned. Catalano would not divulge sales figures, but the company is doing well enough to aim for about 70 new restaurants this year, in addition to the 30 that have opened since January 1. Altogether, the company has sold the rights to some 1,200 units.

The franchise fee is $45,000 per unit. The company requires a $10,000 deposit on stores that have not reached the planning stage. Franchise candidates are evaluated based on general business experience, their net worth and cash flow and the degree to which their personality fits with the company, as determined during interviews with Jerry and Ben Murell. The company encourages franchisees to look for 2,500-square-foot spaces in suburban or urban locations, and these can be in-line, corner or endcap spots, and freestanding buildings are an option too. Catalano says Target stores have proved to be effective anchors, and grocery stores, cinemas, educational facilities and other restaurants work too.

Additionally, throughout the process Five Guys provides a network of district managers to assist. “They have regional guys who are very hands-on and really helped with the construction and training,” said Hoover. “They’ve been a pleasure to work with.” In short, with this, as with the menu, the company makes things as simple as possible.