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The Honolulu Advertiser
Posted on: Wednesday, April 12, 2006

Five Guys = lots of success

By Michael S. Rosenwald
Washington Post

WASHINGTON — What a lovely day Tosca Campbell and her daughter Angela Zier are having together. They just had their nails done at Elizabeth Arden. There is one more stop that will make their afternoon complete.

They bypass the Thai place, the 1950s-style diner, Latin American food, Indian, sushi, Greek, even Starbucks. Their destination: Five Guys Famous Burgers and Fries, a little joint with all the charm of an RFK Stadium bathroom. The walls are tiled red and white. The floor is a cement slab, covered with peanut shells. The music — Kiss — is too loud. And the burgers are flying off the grill, wrapped in aluminum foil, stuffed in greasy brown bags and handed to real estate agents, bankers, UPS drivers, physical therapists, cops, lawyers and women with freshly painted nails.

"This is a good old-fashioned American hamburger, like the kind my mom used to make," said Zier, pausing between bites of her cheeseburger. "I mean, look at my mom — she's just eaten that whole burger."

Four years ago, before franchising, Five Guys was a little family burger operation with five locations and a steady, if cultish, following in Northern Virginia. Today the business is by some estimates heading toward $1 billion in value. Five Guys has 87 locations. Most are in the Washington region, but a hundred more will open along the East Coast this year, and another thousand are being phased in. Each store, the company says, pulls in about $1 million a year.

How Janie and Jerry Murrell and their five sons, the Five Guys, so quickly bit into the nation's $58-billion-a-year burger business is a burger whodunit. The Murrells can be gregarious, but they are given to moments of silence when asked how their business grew so big.

Their success probably includes a combination of ingredients, though: keeping the business strategy simple (sell burgers and fries) while implementing quick and crucial cooking procedures (press down on the burger just once) that result in a quickly delivered, but juicier, more upscale burger than McDonald's.

"We are the burger alternative to fast food," said Todd Stallings, an owner of a franchise in Gaithersburg, Md. "At McDonald's, the food waits for you. Here you wait for the burger. By doing that, the burger is just coming off the grill. People just appreciate that kind of special quality."

The Murrells have a singular obsession for flipping burgers, almost as an art form. All five sons bypassed college to work in the business; the two youngest, Tyler, 19, and Ben, 23, were born into it.

Their passion is so strong, arguments have erupted over topics such as: Should the pickles go on top of the tomatoes or vice versa? (For the answer, see the photo above. The rationale is that everything must stay together when the burger is flipped.)

Two decades ago, after Janie and Jerry Murrell made a nice pile of cash — their phrase — in insurance and financial planning, they decided to start their own business, in part to keep their family in one place. Jerry suggested a chuck wagon serving burgers and fries. "Oh, my God, he's lost his mind," second-oldest son Matt thought.

But Jerry remembered a little burger joint from his childhood in Michigan. "I knew a guy who did nothing but sell hamburgers," he said. "He always had a good business. I just always thought that if you sold hamburgers, you would do all right."

The Murrells opened their first Five Guys in Arlington, Va. They made several fundamental decisions then, most of which remain. One was using peanut oil for fries. Better taste, no cholesterol. They bought 50 bottles of peanut oil at a store. "We didn't know they made it in bulk," Matt said.

Lesson learned. More stores followed. Investors and even customers started begging them to franchise. One man leaned over the counter and told Matt, "I've got $30,000 I'll give you if you want to open another store." The Murrells always said no, fearing the business would suffer. They worried about pressure to expand the menu beyond burgers, fries, hot dogs and grilled cheese. "We didn't want to compromise on what we had going," Janie said.

They made the decision to franchise after — true story — Matt gave his father the book "Franchising for Dummies," which is co-authored by Wendy's founder Dave Thomas. They had been approached previously by Dan Rowe at Fransmart, who was working with former Washington Redskins kicker Mark Moseley. Rowe and Moseley convinced the Murrells they could make it work on their terms.

The Murrells are self-described control freaks. They limited the number of franchise owners so there wouldn't be too many people to control. You have to buy at least five Five Guys franchises — 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, the Murrells said, attracts more professional owners. "They see something that's a good opportunity," said Moseley, who owns Five Guys franchises and works full time selling them. "There's a better-than-even chance to be really successful in something that belongs to you."