Sleepless nights befell Marcel Khan before the opening of the first UK Five Guys in London’s Covent Garden last summer. The statement site had been more than a year in the making and Khan, who had been with the company since October 2012, was seeking reassurance everything would go well.
“The evening before, I was really stressed out and Jerry [Murrell, the founder of Five Guys] noticed this and asked what I was worried about,” he says.
“I said, ‘what if we open the doors and nobody comes?’ I was genuinely freaked out by it. He said ‘well you are in a pretty prominent location, so you will get a couple of dozen people who, if you do everything right, will tell a couple more dozen people’. The emphasis was on ‘if you do everything right’. The biggest surprise was how popular it was from day one and how popular it remains.”
That’s no understatement. Covent Garden is now the busiest Five Guys in the world and is in double-digit growth, not that that gives Khan much comfort. “The popularity has blown me away,” he says. “However, with every new opening, I still get sleepless nights.”
Launched in 1986 by Janie and Jerry Murrell, and Jerry’s sons, Matt, Jim, Chad, Tyler and Ben, the original ‘five guys’, the group has grown to more than 1,200 locations in the US and currently has a 55% market share of the $2.5bn better-burger category. In the UK it is backed by Carphone Warehouse mogul Charles Dunstone, who believed the US brand had legs over here. So far he has proven to be right.
On the first day of the Covent Garden opening, members of the family and US head office team were in attendance to make sure it got off to the best possible start. Chief operating officer Sam Chamberlain acted as a host on the first shift, two of the Murrell brothers worked the grills and Janie handed out menus. Yet, even with such a stellar team, the company was not prepared for what Khan describes as “the carnage” of the first day.
“Five Guys doesn’t market,” says Eckbert. “There was no campaign to drive an opening, but we were so well received [from the outset] that at the end of the first day we flew in seven more trainers from the US to handle the demand.”
The ‘carnage’ hasn’t stopped. Not only was Covent Garden the number one-grossing restaurant of any Five Guys on its opening day, it has continued to build on this success. The company subsequently installed 16 more seats to meet demand and immediately saw a jump in revenue. Then, in August this year, the site broke the company’s best hour, day, week and month figures.
“The kitchen has reached a level of efficiency that we have not witnessed before,” says Eckbert. “The guys operating in Covent Garden have taken Five Guys to a totally different plain of productivity and efficiencies.”
At first, Five Guys had talked about matching the size of Nando’s in the UK, but Eckbert admits they now think a little differently about the brand’s potential here.
“I’d rather see 200 high-volume stores than 400 lower volume ones. We can build 175 to 200 stores that will average volumes we are now delivering, but it is going to take a while. We can adjust course as we get closer to those numbers.”
The group currently operates 12 UK sites with a further nine set to come on board before the year end, including several in Scotland. “We are looking at all the top 100 markets in the UK,” says Eckbert. “We prefer not to be in a run of restaurants, because we think the offer is distinct.”
However, despite the rapid rollout, the company has had to work hard to secure sites and change perceptions about the brand, which is still often spoken of in the same breath as fast food outlets such as McDonald’s and KFC.
“It is starting to get easier on sites,” says Khan. “It was really difficult at the start. Landlords didn’t get us at first. We are the stark opposite to, say, Bill’s or Chicken Shop. “That tide is starting to turn and for good reason. When we opened in Kingston, the cinema took its record week. We also anchored a real change of pace at Bluewater for its food operation. All those things translated into a different conversation about Five Guys. Combine that with how enthusiastic people are about the brand and suddenly you have landlords and property people taking note and leading to easier conversations about prospective sites.”
The company’s willingness to put its hand into its deep pockets when it comes to site selection has also helped its cause. It reportedly paid a whopping £2.3m premium for Covent Garden – it is rumoured to have forked out even more for the former Cape Town Fish Market site in Argyll Street, Soho, it has just signed on – leading some commentators to conclude that it is distorting the market. This is something Eckbert dismisses.
“When we have bought sites, we have paid market [price] for them. It is not like someone has said they are paying £100,000 and we have offered £150,000. The competition for sites is intense. One party doesn’t create a market, you have to have lots of good concepts that are growing and looking to roll out, and we are one of them at present.
“We have picked spots where we think we can do the best and where our brand will land strong and make a statement. Westfield London is a really good example, we thought we were a
great fit for Westfield, they didn’t. We had some really spirited conversations with them to explain what we are about and, to their credit, they didn’t have a closed mind about us and we came up with a location there that was a one-off. The result has been amazing for all of us. It is now churning out amazing numbers.”
“I’ve heard rumours of what we have paid and most of these have been grossly overstated,” adds Khan. “Our property guys know the market. We have lost sites to people where we have been outbid, sometimes by huge margins. The lucky thing for us is that we are small enough to really consider each site and debate it thoroughly. We don’t have a preconception of where we belong. Is it a high street, shopping centre, transport hub or leisure park? These are questions we haven’t answered yet and are very much at the start of that journey on the British high street.”
Eckbert believes that one advantage for the brand is that “you can’t demographically stereotype Five Guys. If you go into any of our stores, you will see guys in business suits, families and people in uniform. You can’t say you are looking for the posh area when it comes to sites, or the cool late-night hangout area, or where the students are. Five Guys has a broad appeal.”
With the UK expansion drive well under way, the joint venture’s attention will, during the next 12 to 18 months, turn to launching on the Continent. Although the company is yet to establish exactly how it intends to grow, it is looking at France, Germany and Spain as possible future markets, with Germany the most likely to be the first it enters.
“But if a Covent Garden equivalent site became available in Paris, it would be hard to pass up,” adds Eckbert.
No changes needed
While other concepts have tailored their offer to the UK market, Five Guys has stayed true to what has made it a success in the US, with only a couple of minor alterations. Its ordering process, whereby customers have to specify everything that goes into the burger, from the ketchup upwards, might seem laborious and overwhelming to a Five Guy first timer used to choosing from a rigid menu, but it decided to stick with it for the UK.
“The way that a customer orders and we serve the offer is a different process to most restaurants, so we were asking people to learn to be Five Guys customers” says Eckbert. “We didn’t know how they would respond to that.”
The beef used is grain fed, also like in the US. “We tried the best grass-fed beef we could find, but it didn’t match up to a Five Guys burger. There were a lot of adjustments we were asking UK consumers to make,” he adds.
The one change it did make was to open without the hot dog, because the recipe wasn’t right, and Five Guys also changed its minds over its drinks offer. “One of the ideas at the start was to launch with a load of UK craft beers, but that didn’t really work,” says Khan. “Consumers have 15 burger toppings to choose from, so when it got to selecting a beer it was almost like they had decision fatigue. We stripped that back to just three beers. Other than that the offer hasn’t changed.”
In some US sites Five Guys serves a breakfast option and Eckbert says that this will be introduced to the UK eventually, most likely in sites in transport hubs and those locations with especially high levels of footfall.
Beyond the turf war
Despite the launch of Five Guys precipitating a new ‘burger war’ when it launched on UK soil, and the fact that it goes head to head with a growing number of burger operators, the group views its competition as being broader than its immediate peer set.
“Whenever I do an induction process I have an exercise where I tape £20 to the bottom of one seat,” says Khan. “I ask a question in that session and talk about when someone comes into a Five Guys they could have spent that money on anything. The cinema is our competition or iTunes. Everyone values their £20 so much.
“You have to respect that as a brand and understand the infinite choices people have to spend that money. If you don’t acknowledge and understand that with every transaction you do, then you are missing the biggest trick of all.”
“There is always competition within the burger segment and outside,” adds Eckbert. “We’ve found that if we stick to our knitting, we do well. Five Guys has been doing things the same way since 1986 and we have succeeded by not being distracted by trends and fads. We have stayed true to making a good burger and making sure you only get what you want and how you want it. Part of this is being the tortoise in the race. We are never going to be the sexiest, most glamorous burger place.”
A quality sell
Indeed, it is quality rather than glamour that Five Guys wants to project, something that it says it hasn’t been very good at up until now, but acknowledges that it needs to.
“Having pioneered the better burger category, we haven’t done a very good job of telling people who we are, how we behave and what our principles are,” admits Eckbert. “We have basically said ‘give us a try, we hope you like it because we think it is the best burger we can do’. We make a bun that is outrageously expensive (Five Guys says its burger bun costs 10 times as much as a McDonald’s bun), has no preservatives and is delivered at Covent Garden every day of the week. It’s baked bespoke to our specification and it took us forever to get that recipe right and now we have to get it up to Scotland in a timely manner.
“We haven’t told people we don’t have any freezers. When you walk into a Pret a Manger you can’t miss the ‘made on-site’ signs and its use of fresh ingredients – everywhere you look it screams fresh.
“There is no restaurant where that is truer than Five Guys. Everything is hand-made on site the day it is served. Our principles for delivering the best product we can are as compelling as the taste of the burger itself.”