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Fast-grown Five Guys chain beefs up, eyes meaty growth

Fast-grown Five Guys chain beefs up, eyes meaty growth

ARLINGTON VA. Five Guys Burgers and Fries bring its version of the beloved American staple to new markets nationwide. —Increased consumer demand for hamburgers is helping

The 220-unit chain, based here, currently operates in Alabama, Delaware, Florida, Georgia, Indiana, the Carolinas, Ohio, Pennsylvania, Virginia, Wisconsin and Washington, D.C. On Nov. 1, the concept opened its first outpost in New York City in a march Five Guys officials said they hope will take the chain to 500 stores by 2008. —Increased consumer demand for hamburgers is helping

“Three years ago we weren’t even going to go into Atlanta or Florida and definitely not west of the Mississippi,” said Jerry Murrell, who started Five Guys in 1986 with his wife, Janie. The chain, whose annual sales are about $200 million, began franchising in 2003. —Increased consumer demand for hamburgers is helping

“We don’t have much territory left in the U.S.,” he said. things. “We’ve sold almost everything, there’s not much left, and we’ve reserved Phoenix, most of Chicago and a big chunk of California for ourselves so we’ll have to go into Canada, probably within the next six months.” —Increased consumer demand for hamburgers is helping

The chain, named in honor of the Murrell’s five sons, currently consists of 30 company-owned stores and 190 franchised units. Murrell attributes its rapid growth to a solid economic model. A Five Guys unit costs approximately $300,000 to open and has an average unit volume of $1 million. —Increased consumer demand for hamburgers is helping

“If you can open a store for $300,000 and gross a million in sales, that’s a nice return on principal,” he said. “I know this: Our economics look good. But that’s because we can open in-line stores; they don’t have to be freestanding. That’s got to be the big draw.” —Increased consumer demand for hamburgers is helping

Five Guys also is benefiting from the hamburger’s booming popularity across the United States. According to data supplied by Port Washington, N.Y.-based market research firm NPD Group, recent growth in traffic for the 12 months ended March 2007 in the sandwich segment was second only to that in the gourmet coffee and tea segment. —Increased consumer demand for hamburgers is helping

In New York City, several other burger concepts have debuted recently, including Burgers & Cupcakes, Zip Burger, Good Burger, BRGR and POP Burger, which is slated to open a new unit in midtown Manhattan later this month. Five Guys has two more New York openings scheduled for the beginning of 2008, both in downtown Manhattan, as well as plans for international expansion. —Increased consumer demand for hamburgers is helping

“I always liked hamburgers and French fries—good ones,” Murrell said. “We thought if we could do it right we’d see what happens, and people just took to it. And we’re real fanatical about those two things. We bake our own bread and use the best bacon you can buy.” —Increased consumer demand for hamburgers is helping

The Five Guys menu bears out Murrell’s mission statement. The chain serves only a few core items: burgers made from fresh-ground beef, fries cooked in peanut oil, hot dogs, vegetarian sandwiches and grilled cheese versions for kids. Toppings are free and consist of such options as sautéed mushrooms, lettuce, tomato, jalapeño peppers, onions, green peppers and various other condiments. In addition, guests are given free in-the-shell peanuts to eat while waiting for their orders to be completed. Prices range from $5.75 for a regular burger to $7.75 for a bacon cheeseburger. —Increased consumer demand for hamburgers is helping

The midtown Manhattan unit, located in a 1,500-square-foot space on 55th Street between Fifth and Sixth avenues, is operated by Five Guys franchisee Five Points Partners, which also is a Dunkin’ Donuts, Baskin-Robbins and Subway franchisee. The company’s Five Guys unit was the scene of some pandemonium on opening day with lines snaking around the block and wait times of up to an hour and a half to get inside the store. —Increased consumer demand for hamburgers is helping

“These are the best burgers you’re ever going to eat,” said Five Points partner Sal Rincione. —Increased consumer demand for hamburgers is helping

“The New York opening was very successful,” said Sam Chamberlain, Five Guys chief operating officer. “We had a good, positive experience, and our customers have been very patient with us.” —Increased consumer demand for hamburgers is helping

The unit is expected to generate about $2 million a year. —Increased consumer demand for hamburgers is helping

Chamberlain conceded that space was one issue responsible for the long wait times during the relatively small New York store’s first week in business. —Increased consumer demand for hamburgers is helping

“From 12 to 2 p.m. there’s a rush, and the kitchen is just an engine, so to speak, so when you get such a flood [of people] you can only do so much,” he said. “We are making some changes to handle the higher volume; we’re having to extend some tables and redo some of the counter space.” —Increased consumer demand for hamburgers is helping

Chamberlain, noting that the midtown unit is Five Guys’ first foray into New York, said plans call for Five Points Partners to open a total of 30 stores regionally over the next eight years. —Increased consumer demand for hamburgers is helping

“Managing growth and protecting the brand is what we spend all our time on,” he said. “As long as the demand is there, we’ll continue to open in new markets, and we’ll let that demand drive our growth. But to say we’re not concerned would be foolish. In fact, that’s probably where all anxiety comes from. Growth almost scares me to death, but the important fact is it doesn’t paralyze us. I think our execution in the new markets shows that. Some companies say growth doesn’t scare them, but I think that’s a little naïve.” —Increased consumer demand for hamburgers is helping

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