What’s up guys! It’s Jason here and welcome to my YouTube channel,
Burger Insight. Just kidding! My YouTube channel is actually called Company Insight.
But since I love juicy, mouthwatering, tasty hamburgers that brings me to one
of my favorite Burger chains, Five Guys. Founded in 1986, Five Guys is named after the founders,
Janie and Jerry Merrell’s, original five guys --- their five sons, Jim, Matt, Chad, Ben, and Tyler.
The story of entrepreneurship couldn’t be more-pull-yourself up by your bootstraps,
American, if I wanted to make this up. Reportedly, the founders of Five Guys told their sons,
“Start a business or go to college.” Their sons decided to forego the college route,
so the family opened a take-out burger joint in Arlington, Virginia. Talk about entrepreneurial!
The rest, as they say, is history. In this video, I’ll run you through the secrets how
did Five Guys get so popular and what makes this burger joint so special. By the end, I guarantee
you’ll be a Five Guys burger connoisseur and want to head over to the Five Guys closest to you!
But first, I need a quick favor from you. If you wouldn’t mind just hitting that LIKE button
for the YouTube algorithm, it would help me out a ton. The more engagement a video like this gets,
the more likely the YouTube algorithm is to push it out to more people to enjoy. And as this is a
brand-new channel I started this year, it helps me out a ton and it’s free to do. If you enjoy
videos like this, be sure to subscribe and hit that notification bell for new videos each week.�
Thanks for doing that and now let us continue on with What Makes Five Guys burger so successful.
Success Stats: How did Five Guys Get so Popular?
Most Americans who eat fast food on even a semi-regular basis, are familiar with Five Guys,
or at least would be able to recognize the red and white, 1950s style logo in block letters.
By the numbers, just how successful is Five Guys? In around thirty-five years since its
first storefront, the business has opened more than 1,500 locations throughout not
only the United States, but Canada, Europe, Asia, and the Middle East.
Two-thirds of those locations are franchised and one-third are company-owned.
For business stats, do note that since Five Guys is a private company, we don’t have official
financials from them. In terms of revenue, as of 2019, Restaurant Business Online estimates
that Five Guys had revenue of about $1.7 billion in the United States. To put this in context,
with over 280 locations, in that same year, Shake Shack had $595 million in revenue as of 2019.
With 2,111 locations, Chick-fil-A had $3.8 billion of revenue as of 2019. So Five Guys is
not just five guys anymore (no pun intended!). They’re huge now! With their fast growth in
locations and revenue throughout the world, let’s examine the factors behind Five Guys’ success.
What’s so Special About Five Guys? Unique Menu The unique aspects of the Five Guys’ menu is a
point of contention between their fans and detractors. Five Guys uses only fresh ground
beef for their hamburgers and cheeseburgers, as well as kosher, Hebrew National all-beef
frankfurters for their hot dogs. Like their West Coast rival, In-N-Out Burger,
they also claim to not have any freezers on the premises. However, they do make use of coolers,
a testament to the freshness of their food. Their buns are typically make-or-break for
customers. For the detail-oriented foodie, the buns at Five Guys are noticeably different from
other fast food chains. Why? Because of their soft chewiness. I noticed this right
away myself whenever receiving my order at Five Guys. The buns tend to get squishy immediately.
That’s because the buns have almost twice as many eggs as buns at other chains. It’s that egg to bun
ratio! In addition to that egginess, the Five Guys buns might also be “healthier” because they are made
of ingredients that most of us would be able to recognize, including eggs, milk, flour, water,
sugar, salt, oil, and sesame seeds. The founders made a conscious decision to use that sweeter,
heartier bun because when they opened their first location, they enjoyed the breads that
a local Virginia bakery made. From the start, they enlisted that bakery to make their buns.
Jerry Murrell explained, "We make the same bun we started with. We hired the old guy who used
to bake our bread for the first store, and one of his partners. They work in the Virginia bakery.
We have 10 bakeries scattered around the nation. Our bread is baked daily, picked up by 3 p.m.,
and put on truck or plane so every store gets fresh bread every morning, even if they are
400 miles away from the nearest bakery." Another signature aspect of the bun is the charcoal look
and taste that Five Guys fans have come to love. It’s a result of the buns being grilled, rather
than put in a much faster bun toasted, precisely because it would lose that finishing touch.
I’m not sure about you, but I’m definitely getting hungry now.
Let’s continue… Peanuts have become a signature Five Guys
offering as well. Five Guys offers free peanuts for customers. According to a former employee,
the chain provides them at no cost in order to “distract customers so they don’t stare at us.�
Hunger-induced, angry stares at employees might be more common at Five Guys without the peanuts
for customers to munch on because of the chain’s commitment to not serving rare beef patties.
The patties are intentionally thin, and employees are trained to avoid pressing down on the patties
to preserve their juiciness and for food safety reasons --- no raw meat, e.coli, or salmonella
here. This cooking method takes more time. While Five Guys is not cheap with the peanuts
as they offer them on-site as all-you-can-eat, customers are prohibited from taking them out of
the store to reduce the chances that people with nut allergies will be exposed to them.
An important side-note to anyone with peanut allergies: besides the free peanuts,
Five Guys cooks their fries with peanut oil, so please avoid the chain if you are allergic!
The Ridiculous Number Of Ways You Can Customize A Five Guys Burger
For the customer who likes things their way, or the highway,
Five Guys may be just the burger joint for you. Just how many ways could customers reportedly
customize their burger? There’s an eye-popping more than 250,000 ways to order your burger,
primarily because of the different sizes offered --- regular and little,
as well as fifteen additional toppings that could be added for free. Five Guys is pretty methodical
about how employees are supposed to stack your mix-mash of toppings as well. Tomatoes
and pickles should go on top of the beef patty, while onions and bacon should go underneath.
Fans surmise that the toppings are organized according to warm and cold toppings, so that
they don’t mix for an unpleasant, mushy mess. While healthy items are far and few between
on the Five Guys menu, which is notoriously calorie-laden, if you’re looking to save a few
calories, you could order a Burger Bowl, that is a hamburger without the bun. To help you visualize,
it’s kinda like a Burrito bowl at Chipotle without the wrap! Fries can also be ordered well-done. For
In-N-Out fans anywhere except the West Coast who crave that chain’s “Animal Style” burger,
it can be done at Five Guys, complete with extra grilled onions, lettuce, pickles, tomato, cheese,
and a generous spread of mayo and relish. If you’re curious about what the typical Five Guys order may
cost you in terms of calories, here’s some food for thought: a hamburger is about 840 calories,
a regular fries is 950 calories, and a kosher style hot dog is 520 calories.
Five Guys Quality, Not Convenience Though fast food is pretty much interchangeable
with convenience and perhaps mediocre or subpar quality in exchange for that convenience,
Five Guys is a bit more focused on quality than convenience only. For instance, Five Guys does
not offer delivery. Jerry Murrell explained, “We’ve never had a delivery service. We don’t believe in
it. We think it cheapens the product.” It’s a very bold statement for an establishment that does not
exactly sell high-end products, but also doesn’t serve dirt cheap slop. Murrell further dug in his
heels by explaining that the family’s no-delivery policy was partially driven by a Pentagon employee
claiming that Five Guys wouldn’t be able to survive if it didn’t deliver. How did the Murrell family
respond? By putting up a huge banner in front of their original Arlington location that read,
“Absolutely No Delivery.” In a perfect illustration of the more exclusive, the better, after the
Murrell family put up the banner, business from the Pentagon actually increased by 20%.
In addition, even President Obama himself had to pick-up his own cheeseburger in 2009.
That high-profile visit was possibly the best free marketing that Five Guys could’ve gotten.
By the way, the no delivery policy did change with the whole COVID pandemic, but that’s a whole
different situation so it’s understandable. Are Five Guys fries good? Five Guys also does
not cut corners in terms of its ingredients, even though it might be more financially beneficial
to buy, for instance, potatoes from wherever is cheapest. Instead, the chain buys potatoes only
from north of the 42nd parallel in Idaho. They buy 5% of the state’s potato sales, in fact. Wow! Their
quality control goes so far as to ensure that they buy Idaho potatoes for 10 of 12 months,
every year, except during Idaho’s growing season, when they briefly buy potatoes from Washington
State. The obsession with Idaho potatoes is because of their “solid quality” that gives them
the crunchiness that customers love. Murrell explained, “Potatoes are like oak trees --- the
slower they grow, the more solid they are.” He added that, “It would be a lot easier and cheaper
if we got a California or Florida potato.” That quality control extends to how the fries should
be prepared. Five Guys is meticulous about how the fries should be prepared with hand-cutting,
a 3 minute wash to remove as much extra starch as possible, pre-cooking, cooling, and then
fried with exactly 15 shakes, unless ordered well done. There’s a method to the madness!
Five guys vs McDonald’s That quality comes at a cost. McDonalds offers
a $1 $2 $3 menu that lets you get full for less than $5 potentially, with options ranging from
sausage sandwiches to hashbrowns to beverages such as caramel mocha and chicken nuggets. The sheer
scale of McDonalds’ operation, as well as their use of perhaps not so fresh ingredients, contributes
to their ability to offer dirt cheap prices. Five Guys, on the other hand, can feature different
prices depending on their location and depending on the change in food prices that they experience
themselves from suppliers. Murrell explained, “We do not base our price on anything but margins.
We raise our prices to reflect whatever our food costs are.” He went on to give the example that,
“About five years ago [2005], hurricanes killed the tomato crop in Florida, and prices went from $17
to $50 a case. So a few of my franchisees called and said, ‘We’re not using tomatoes. The prices are
too high.’ I suggested using one slice instead of two. My kids were furious, ‘It should be two!
Always!�” That anecdote illustrated just how easy it could be to let quality slip for the sake of
saving in the short-term. That epiphany made the Murrells stick with two slices, regardless of
the cost. It’s a testament to the higher than average quality Five Guys tries to deliver.
I’m not sure about you, but this is really respectable in my humble opinion.
Five Guys Takeaways With a winning formula, it made sense
for the family to start franchise opportunities as early as 2003. In about 18 months, the family
sold more than 300 franchises, setting a record as the fastest growing franchise at the time.
Franchisees can give their suggestions about new additions to the menu, but most suggestions
are refused by the Murrell family, who still control much of the company’s decision-making.
Every decision is highly scrutinized, with the addition of their now highly popular milkshake,
almost not making the cut. Milkshakes were only added in 2014 after much debate among the
family and persistence from franchisees who saw opportunity with the creamy and frothy drinks.
Five Guys makes 6% of its revenue from franchising fees. As of 2011,
the company makes $275 million from franchise fees and a cash flow of $50 million. The Murell family
are no longer the sole owners, though they do own 75%. Miller Investments, a boutique capital firm
in Philadelphia, owns 20% of the company, while several of Jerry Murrell’s school friends own 5%.
In 2011, that equated to the Murrell family owning around $375 million of the company.
Considering that they invested less than $70,000 to start the business,
that’s an astronomical return on investment. Remember when your family told you it’s best
to go to college? Well, they might be right, but they might also be wrong.
Some fun trivia -- Jerry Murrell actually used money he had saved for his kids’ college tuition
to open the first Five Guys after they declared they wanted to go the entrepreneur route.
That brings us to today. How much does it cost to open a five guys?
If you’re curious about how much it costs to be an entrepreneur without starting from scratch,
in other words becoming a Five Guys franchisee, here are some numbers. Typically, the initial
investment ranges from $152,000 to $360,000 and potential candidates are screened for $150,000 in
liquid assets. The annual royalty fee to Five Guys is 6%. It definitely isn’t for the faint of heart,
but it’s also a winning brand with a loyal following and quality ingredients. It might not be
a bad investment for business-minded individuals who have the cash, believe in the brand,
and want the independence of business ownership without all the associated start-up pains.
So with that said, thank you so much for watching my video. There was a significant
amount of research, production and hamburger eating that went into making this video possible.
As this is a brand-new YouTube channel I just started this year - if you enjoy videos like this,
please click the subscribe button and hit that notification bell! The
more subscribers we get the better and the more content I can continue making.
Have you tried In-N-Out before? How do you think it compares to Five guys? If you like
burgers and haven’t seen my In-N-Out video, you’ll love that one. I highly recommend it. As always,
stay happy and healthy and stay tuned for another episode of Company Insight next week.