How to build a cult following for your business

“We are pleased to announce that we are currently sold out in the United States and in Canada.” Five Guys Burgers and Fries

We bet they’re pleased. So how have they done it in just ten years? Why are both burger lovers and entrepreneurs now queuing up for Five Guys in Britain? And do Five Guys’ burgers live up to the hype?

Five guys is on a roll. And boy, what a roll. When they made the decision to start franchising in 2003, they had just five stores around the Washington DC area. Eighteen months later they had sold more than 300 franchised locations, catching the attention of the national restaurant industry. Now they not only have more than 1000 stores but a further 1500 under development. And they’ve just opened a store in London that had people queuing overnight and round the block before the opening, and announced a plan to open up to 300 stores over the next five years in the United Kingdom.

What are the secrets of Five Guys’ success?

Secret #1: Use franchising to expand your business

Five Guys’ founder Jerry Murrell was initially against franchising. “I just wasn’t sure I could get strangers to buy into our concept,” he said. But his sons—the ‘five guys’ in the business’s name—pushed him.

"I didn’t know what I had at first," Murrell said in the low-key way he has of talking. "Everything was telling me it was a good opportunity to be successful."

Secret #2: Hire champions

Once the decision had been made to franchise the business, Murrell enlisted the help of specialist franchise development company, Fransmart, and met Mark Moseley, a former American football star. Trying to prove he could make it big in business as well as sport, Moseley had suffered a string of business failures since retiring from football. Murrell recognised Moseley’s hunger for success, but he had no idea how successful he would be.

"Mark said he could sell 100 stores the first year,” Murrell says. “I’m thinking this is just another football player talking. I crossed out 100 [on the contract] and wrote 20. He sold something like 350. Mark’s been a really big asset for us. People trust him.”

Moseley hasn’t been Murrell’s only brilliant hire. One of his earliest employees was his director of franchise development for the North-East United States, a man who goes by the name of McGuire – just McGuire, one name like Sting and Madonna.

He is famous for dispensing free burgers at conferences and events, explaining that one bite into a Five Guys burger is a better sales pitch than anything he could say in words. He has been described as part of “this edge, the thing that sets Five Guys apart, that has fuelled its fast growth and its quick acceptance by burger-lovers in search of a mystique to call their own.”

Secret #3: Don’t deviate from the core

“The only thing we did right was stick to our guns,” says Jerry Murrell.

Five Guys is as famous for what they don’t do as what they do. They don’t do chicken burgers, only beef.

They don’t have drive-throughs because Murrell didn’t think they were suitable for an establishment that prides itself on hand-made burgers and “slow” fast food.

They don’t advertise.

They don’t use any other oil for frying but peanut oil, even though by doing so they eliminate as customers the one in every hundred people who have peanut allergies.

And they don’t deliver. even when requested, famously, by the White House. “When the President of the United States wanted to get Five Guys, he had to go get it himself,” Murrell says. You can bet Five Guys took full advantage of that photo opportunity.

Secret #4: Maintain control

The Five Guys franchise agreement is so tight that even Murrell says he isn’t sure he’d sign it. But that hasn’t put off Tim Horton, their largest franchisee with 75 stores and the rights to open a further 275, even though he says:

“They [Five Guys] maintain first right of refusal. If you make a deal to sell your operation to a guy who’s wearing green shoes, the Murrells can decide they don’t like green shoes and nix the deal.” The deciding factors for Horton were trying the product and liking it, and the quality of the investment.

Secret #5: Let the product sell the franchises for you

Despite criticism in some quarters of the greasiness of their patties and the unhealthiness of their menu in general, Five Guys has established itself as an American favourite, as the survey results in the next slide show.

“We believe the best salesperson we’ve got is the customer standing right in front of us,” Murrell says. “If we treat him right, then he’ll go out and tell everybody about it. That’s marketing to us.” And where customers go, franchisees will follow.

Secret #6: Buy back poor performing franchises

Five Guys’ franchisees tend to be raving fans of Five Guys, but despite this and the Murrells’ rigorous selection criteria, every now and again a franchisee will come on board who doesn’t quite click with the brand and fit with the culture.

Five Guys’ strategy is simply to buy them out. So far they’ve done that with around 75 stores. “It’s a whole lot easier just to run ’em yourself than to try to convince other people how to do it,” Jerry Murrell says.

Secret #7: Build the right culture

As we’ve seen, a major factor in Five Guys’ success has been motivated and engaged employees, and that’s as important on the shop floor as it is in management. To ensure employees are as motivated and engaged as they should be, Five Guys uses mystery

shoppers to audit every store’s performance . They reward exceptional customer experience with a bonus of $1000 per week per store, to be divided up amongst all the staff, so everyone is incentivised to perform.

Secret #8: Embrace the hottest concepts

Would Five Guys have been so successful if they hadn’t ridden on the back of two of the hottest trends in the food service industry today – the “better burgers” boom and the “fast casual” dining format ? We think not, no matter whether this happened by good luck or good management.

Secret #9: Sell multiple unit franchises You can’t buy a Five Guys franchise for a single store, only for a minimum of five stores, which provides individual franchisees with the opportunity for enormous growth – provided they have the required startup capital, access to credit and the right location.

Here’s an advertisement on the bizbuysell.com website in the United States: “Exclusive 22 store franchise territory with 4 established and profitable locations located in Western United States within a two county area. Purchaser must qualify to franchisor and be financially qualified to expand and develop territory in a strategic manner within a 5 year period. It is anticipated that a new store will open approximately every 5 months. Annual revenue $4,611,514 and owner cash flow $596,970. With the addition of 4 more stores between October 2012 and December 2013, it is anticipated that weekly revenue will double with a corresponding doubling of owner cash flow to approximately 1.1 million. All exclusive territories in North American currently have been sold and are being developed. Sellers liquidating to pursue other business ventures.”

Secret #10: To expand overseas, work with the locals

In keeping with its strategy of providing local franchisees with the opportunity to open multiple stores, but on a larger scale, Five Guys has an agreement with a British investment firm run by Sir

Charles Dunstone, the founder of British mobile phone retailer The Carphone Warehouse, to open 200 to 300 stores in Great Britain. They also have plans to enter the massive Chinese market and have had offers from Middle Eastern investors, but are treating Great Britain as a test case. “We’ll get our feet wet in England first,” says Morrell.

But has Five Guys got what it takes to make it in the UK?

The first British Five Guys restaurant opened on the fourth of July to queues of enthusiastic and patient Londoners, but critics have been lukewarm. “In a really crowded market, it’s branding and personality that separate

them [burger chains], so I think the interesting thing with Five Guys … is whether London will give a shit,” says Gavin Lucas, writer of burger reviews blog Burgerac.

The true test may be what Britons think of Five Guys’ famous burgers

In a review of several London burger establishments entitled “In search of the perfect burger”, Guardian writer Marina O'Loughlin had this to say about the Five Guys Cheeseburger:

Meat: Two grayish patties, granular and super-greasy. Cheap-tasting with a weird boiled quality. Bun: Clammy, sesame-topped – it looks like it came from Burger King. And then someone sat on it. Toppings: "There are over 250,000 ways to order," they crow. My sugary relish and gooey orange cheese means I'm not trying the remaining 249,999. USP: DC import brought to us by boss of Carphone Warehouse; queues of up to two hours for one of these foil-wrapped disappointments. Can only attribute it to mass hysteria. 1/5

Want a cult following for your business? We can help you with: • Business model review and generation • Strategy • Business development • Channel management strategy • Franchising and licensing • Marketing strategy and tactics

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