Jerry Murrell, the founder started the company with his wife and sons after the 2 oldest decided not to attend college. They started the company using money that had been saved towards their college tuition and after 16 years of running a handful of stores in the D.C. area, decided to expand as a franchise. By the end of 2012, at the rate of 5 stores being opened a week, they were expected to have about 1,000 stores open throughout the country and over $1 billion in sales. (Welch)
From the beginning, they wanted customers to know a lot of money goes into the quality of their food. They also understand that their best salespeople are their customers. Murrell personally believes that if customers are treated right, they’ll leave, tell others about the product which evidently leads to more sales. Today Five Guys serves over 250 thousand burgers daily with a choice of 15 free toppings which includes lettuce, tomato, mustard, ketchup, mayo, pickles, onion, grilled onions, grilled mushrooms, relish, jalapeño peppers, green peppers, A-1 sauce, BBQ sauce, and hot sauce. The menu also includes kosher-style hot dogs, cheese or bacon dog, bacon cheese dog, and a veggie or grilled cheese sandwich for vegetarians. The fries are cooked in pure, no cholesterol, and peanut oil with a choice of seasoned or regular.
The company believes it is important to know what you’re good at, master it and then stick to it; in this case - “burgers and fries”. Murrell believes “you can’t be everything to everyone”. In the beginning, customers wanted coffee and chicken sandwiches as part of the menu and Five Guys did began to serve coffee but they had to stop because it wasn’t successful as part of the menu.
The company has been able to provide a rather steady taste and flavor for customers and this has been a very significant element in their long-term success. Jeff Haden, an Inc.com columnist agrees, he wrote that “Five Guys is so successful because though it only sells burgers, it does that extremely well. They don't try to be all things to all people. He also noted that their success came from identifying a market big enough for their product – “people who want great burger”. (Joiner)
In Murrell’s own words, there is no “comparison shopping” and that is what ensures the high quality of their products. They have retained many of the same vendors they had since inception. Their success formula has always been fresh, made-to-order burgers. There is no intention of changing this method since it has worked for more than two decades, even if they could find cheaper products. An example would be their bacon which comes from Patrick Cudahy, a Wisconsin smokehouse that smokes the bacon with natural apple-wood chips and is even more expensive.
The company is a true believer in employee incentives, this goes a long way in ensuring success. Most companies put 3% of their profits toward advertisement and/or marketing but Five Guys takes 1.5% from all of its franchisees and give bonuses to the group that gets the highest scores on the weekly third-party audits. One year, they paid out between $7 million and $8 million; another year, it was a little over $11 million.
Entrepreneurship is an interesting journey with a variety of tough choices along the way and so business ethics is very important. The main emphasis for many startups is survival but this is also the phase when the business values are established. Ken Gaebler, a venture capitalist wrote on startupnation.com that in a “hyper-competitive economy, any hint of dishonesty can kill a new business.” Any venture capital firm…