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Five Guys Essay

5271 words - 22 pages

COVER PAGE
Group 5
Strategic Management
Final Project Report - Five Guys
Table of Content
Five Guys’ Strategy Analysis - Final Report
Industry: Casual-fast restaurant in Canada
Company: Five Guys
Contact: Michael Oppedisano, from Asst. Controller at Bantam Restaurants
Part 1: Organizational Introduction
Five Guys has been a Washington, DC favorite since 1986 when Jerry and Janie Murrell
offered sage advice to the four young Murrell brothers: “Start a business or go to college.” The
business route won and the Murrell family opened a carry-out burger joint in Arlington, Virginia.
Their mission was to serve an unparalleled burger made with fresh ingredients, in a clean
environment ...view middle of the document...

The company excels in
one thing on the menu, hamburgers and fries and “the magic to their hamburgers is quality” as
Murrell says. The beef they use is 80% lean, never frozen, plants are kept meticulously clean and
the burgers are made to order, which is why Five Guys never has and never will have drivethru’s.
The Five Guys Company has always followed the functional organizational structure.
Father, Jerry Murrell is the CEO and the Murrell brothers each control a different department:
operations, employee training, finance, information technology, and food quality. Five Guys has
penetrated into the Canadian market through Bantam Restaurants and each location is strictly
controlled and operated under the international standards. Now, after almost 30 years since Five
Guys first opened, there are over 1400 locations in the United States and over 1500 units in
development. The company started growing in Canada three years ago and they are expected to
open on average 10 stores every year. On international grounds Five Guys has agreed to expand
to the UK with 200-300 to be opened in the next five years.
The seven Murrells each own equal shares of the company, which add up to 75% and
Miller Investments, a boutique Philadelphia firm, owns 20% of the company. The company is
worth an estimated $500 million, which puts the Murrells’ stake at approximately $375 million.
Banks have been trying to take Five Guys public and the company has met with private equity
firms that are interested in buying majority stake, but the family is more than happy to stay

private and in control for the time being. The company’s US gross revenue increased from $197
million in 2011 to $535 million in 2014 which shows the rapid growth of the franchisees. This
growth was reflected on to their net income as well, which increased from $7 million in 2011 to
$32 million in 2014 –the company almost doubled its profit annually. Five Guys is the most
successful example in the fast-casual segment of the retail food market and is continuing to grow
and challenge the fast-food industry leaders such as McDonald’s, Burger King and Wendy’s. To
summarize their recipe for success, the Murrells have perfected five ingredients: word-of-mouth
advertising, employee incentive plan, friendly service, focusing on only burgers and fries and
quality standardization.

Part 2: External Environment

Although Five Guys is present throughout North America, our main focus will be on the
fast-food industry within Canada. In particular, Five Guys competes in the fast-casual subsegment, which consists of restaurants that offer both the convenience of traditional quick
service restaurants (QSR) and the quality and experience of casual dining.
The Canadian fast-food market was valued at $7.6 billion in 2011, and expected to grow
by 16.2% to reach $8.8 billion in 2016 (MarketLine Advantage, 2011). Tim Horton’s,
McDonald’s, and Subway have remained the three major players in...

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