The Economics of Five Guys Essay
Sell a really good, juicy burger on a fresh bun. Make perfect French fries. Don't cut corners. That's been the business plan since Jerry Murrell and his sons opened their first burger joint in 1986. When they began selling franchises in 2002, the family had just five stores in northern Virginia. Today, there are 570 stores across the U.S. and Canada, with 2009 sales of $483 million. Overseeing the opening of about four new restaurants a week, the Murrells are proof that flipping burgers doesn't have to be a dead-end job.
Four years ago, before franchising, Five Guys was just a little family burger operation with five locations and a steady, if cultish …show more content…
The Murrells are self-described control freaks. No detail is too trivial. So they decided to limit the number of franchise owners so there wouldn't be too many people to control. Thus, you can't buy one Five Guys franchise. You have to buy at least five -- essentially filling up a small territory. The current price for each one is $45,000, plus 6 percent of annual sales. By comparison, a new McDonald's franchise fee is $45,000.
Requiring a large purchase of stores also, the Murrells said, attracts more professional owners. High-tech executives, former Marriott executives, and owners of fine restaurants have signed up. "They see something that's a good opportunity," said Moseley, who owns Five Guys franchises and works full time selling them for the company. "There's a better than even chance to be really successful in something that belongs to you."
The Five Guys franchising contract is rather specific, stipulating the number of bacon strips (two) and pickles (four) placed on burgers should those items be requested. The Murrells send in secret customers to make sure, for instance, that the hand-cut French fries are shaken 15 times after seasoning. The Murrells have found through extensive study that this tactic takes off just the right amount of grease.
In an age when everything seems to be mediated and staged, the tough love from Five Guys feels refreshingly real. The