How Five Guys conquered the UK burger market

By Sophie Witts

- Last updated on GMT

How Five Guys conquered the UK burger market

Related tags Burgers QSR Restaurant US chain

When Five Guys was preparing to open its first UK restaurant in Covent Garden in 2013, it seemed to be facing an uphill battle.

Despite trading from over 1,000 restaurants in the US and Canada, the brand was lesser known in the UK. London’s ‘better burger’ market was booming, with the likes of Byron and Gourmet Burger Kitchen on the expansion trail, and the team was uncertain if there was appetite for another burger chain.

“I remember standing in the restaurant with no idea if anyone was going to show up,” says John Eckbert, Five Guys’ Florida-born UK CEO. “We don’t advertise, so I kept thinking, is anyone going to care about a new American brand?”

Adding to the pressure was Shake Shack, the New York-based burger chain created by hospitality entrepreneur Danny Meyer, which was set to make its own London debut just 24 hours later.

But Eckbert’s fears were unfounded. When Five Guys opened on 4 July 2013 the first customer showed up at 4am, and there was soon a queue around the block. It quickly became the number one Five Guys in the world.

Not just phoning it in

Launched in 1986 by Jerry and Janie Murrell and their sons – the original ‘five guys’ – in Arlington, Virginia, the chain now has over 1,500 restaurants worldwide. The UK business is backed by Carphone Warehouse mogul Sir Charles Dunstone, who believed it could thrive on a struggling high street. So far, his hunch has paid off.

Six years since its arrival, Five Guys' red and white branding has become almost as ubiquitous as Pret a Manger in some parts of London. The Covent Garden restaurant has been so successful that sites have opened all around it in Charing Cross, Oxford Circus, Piccadilly and Tottenham Court Road.

While Shake Shack has cautiously expanded to nine London restaurants and one in Cardiff, Five Guys has steamed ahead to 99 nationwide locations and will break the 100 mark by 2020. It initially expected to open 10 stores this year, but Eckbert says it could reach twice that.

“We’re confident enough to go at a faster flow, but we don’t want to be on every street corner,” he says.

fg covent garden
Five Guys in Covent Garden

The cost of opening so many sites has not come cheap. The company posted a pre-tax loss of £3.9m​ in the year to 31 December 2018, but operating profit rose to £5.8m in the UK. Eckbert describes the UK business as ‘essentially self-funding’. A £100m bank facility from Goldman Sachs, secured last year, is largely being used to support wider European expansion in to Germany, France and Spain.

“If you see same store sales falling maybe you’ve grown too fast,” he says. “Right now, we’re seeing meaningful like for like sales in our restaurants. Our oldest sites are growing quite robustly. To me that is a real indication of the health of the brand and encouraging that we’re doing the right thing.”

Challenges to growth

This burst of activity has come amid a malaise settling across parts of the UK casual dining market. Byron, a former sector success story, was sold to private equity firm Hutton Collins​ the same year Five Guys debuted in London but has since shuttered sites and is undergoing a rebrand. GBK and northern-based Handmade Burger Co have similarly closed several restaurants.

So why has Five Guys excelled where others have failed? Unconventionally for a fast food brand it has no freezers in its kitchens, litters stores with sacks of free peanuts for customers and doesn’t advertise. Eckbert says the best marketing strategy is a ‘happy customer’, and the Murell philosophy is to redirect ad budget in to sourcing ingredients. He claims less than 1% of beef in the UK meets the brand’s standards, which specifies meat must be grain fed, and fries are hand-cut in-store every day. Then there's the price. A regular-sized burger starts at £6.75 but is customisable with 15 free toppings.

“What Pret did for fresh sandwiches Five Guys has done for burgers,” says Eckbert. “The idea you can have a burger made exactly the way you want it is very American, but it’s becoming more important in the UK, particularly to millennials. We have 15 free toppings, so that’s 250,000 different combinations, but also 249,999 wrong ways to make your sandwich.”

Eckbert is keen to play up Five Guys' family-owned credentials and says this is partly why it has avoided the decline which has hit several restaurant chains backed by investment funds.

"We have a very different time frame to some of our competitors,” explains Eckbert. “If you’re owned by private equity you have a specific window to build, grow and sell, but we’re not constrained by that. Our objective is to build a business for the long term.”

five guys prep

He adds that Five Guys has not had it easy in the UK. “Essentially every aspect of the business has been challenged, from rate increases on property, rising minimum wage and currency pressures. But we seem to have gathered strength amid headwinds that have caught out other brands in the space.”

One obstacle in reaching 100 restaurants has not been finding sites, but enough staff to run them. “That was a big hurdle at the outset and still is today," says Eckbert. "Our restaurants are only as good as our in-store leadership.” The company is working on developing its future managers, and each store is mystery shopped twice a week. Five Guys says it pays out approximately £3.1m in incentives and rewards to staff in the best-performing sites each year.

American invasion

Since Five Guys landed seven years ago numerous other North American burger players have crossed the pond, but not all have lasted. Both Steak n Shake​ (over 500 US sites) and BurgerFi (around 100) have exited the UK​ less than three years after arriving. Smashburger opened in Milton Keynes in 2016​ boasting plans to launch 35 sites, and has so far reached seven, while Fatburger initially said it was targeting 15 restaurants when it landed on these shore but has launched just two since 2015​.

Even more US brands have arrived this year, with movie star Mark Walhberg’s Wahlburgers, Eggslut, Halal Guys and soon New York’s Sweet Chick hoping for a cut of the market. 

Eckbert believes many North American chains see the UK as a “friendly” launchpad to global expansion, as was the case with Five Guys, but points to the mixed success rate as a cautionary tale.

“It’s a risk to treat the UK as the 51st​ state in terms of expansion, without taking the time or effort to understand the market,” he says.

“There is a lot of pride and some arrogance mixed in there that is not helpful. Every aspect of the business has meaningful differences, if you think it will be the same or easy, you’ll be surprised.”

Growth plans

Going forwards, Five Guys is looking at growth beyond its high street sites. Delivery was not initially on the company radar due to a perception by the Murrells that it was associated with cheaper, lower-quality food in the US, but Eckbert says it is now a small but “increasingly important part of the business” and one he believes will “outpace the growth of the overall restaurant industry” going forwards.

Five Guys' partnership with Deliveroo also led to the introduction of a breakfast menu​ in student-heavy Bristol earlier this year. Available from 8am-11am, the range includes coffee, orange juice and burger buns with a combination of egg, cheese and bacon fillings priced from £3.95 to £6.45. Breakfast was previously trialled in a handful of UK locations a few years ago, but Eckbert says it could be rolled out to further sites in future.

Drink 01

“It is a narrower offer so I don’t think we’ve completely nailed the breakfast menu that Five Guys could do, but interestingly we end up selling a surprising number of burgers in the morning,” he says. “We have some great locations where we could definitely pull some breakfast customers in to the store.”

He will also not rule out Five Guys taking a spot in a Deliveroo Editions ‘dark kitchen’ and has seen opportunities to expand in to transport hubs under franchise but has resisted both over concerns around controlling kitchen standards. Five Guys' site at Paris' Gare du Nord - another location serving breakfast - has been "blowing the doors off", according to Eckbert, who still believes transport hubs can be a "great opportunity" for the brand. 

The future

So just how big can Five Guys get? Eckbert insists the company is not looking to ‘take over the world’, but how about the UK? He quotes a Savanta BrandVue survey of 4,711 people conducted between February and July this year that hints the chain is not even halfway towards its ambition.

“About 45% of the UK is familiar with Five Guys, and only a fraction of those have even gone in to a store,” says Eckbert. “We know there’s a massive opportunity for the UK to discover us. How big that can be I don’t know. I do know we’ll keep opening stores and feeding hungry customers. If we keep doing that, I think we’ll be alright.”

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