What a lovely day Tosca Campbell and her daughter Angela Zier are having together. The women just had their nails done at Elizabeth Arden. Look at those nails, painted bright red. But truth be told, there is one more stop that will make their afternoon complete. They'd like a nice, juicy cheeseburger.
So off they go to main street in the stylish Kentlands development in Gaithersburg, bypassing 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. She is married to Bennett Zier, who heads Daniel Snyder's new Red Zebra Broadcasting venture.
"I mean, look at my mom -- she's just eaten that whole burger." And her nails still look fabulous.
Ingredients to success
Four years ago, before franchising, Five Guys was just 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 little bit of 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 the Kentlands franchise. "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."
Anyone can flip burgers. What the Murrells have is a singular obsession for flipping burgers, almost as an art form, and the ability to infuse that passion in their franchise owners. 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 that arguments have erupted over topics such as: Should the pickles go on top of the tomatoes or should the tomatoes go on top of the pickles?
"Me and Chad, we used to always argue about this," said Matt Murrell, at 37 the second-oldest son, who is in charge of store development. "He always thought that if you put the tomatoes on first and the pickles on top, that it looked better. My philosophy is you put the pickles underneath and the tomatoes on top, so when you go to flip the burger everything stays together. Who won? Me. The pickles go under the tomatoes."
The 'trading up' phenomenon
There is a little more to the growth story than resolutions about the orderliness of pickles and tomatoes. For starters, there is the fertile location of the chain's birth. The Washington area is densely populated, and lately a good chunk of that population is in the habit of coveting things that are slightly better than what everyone else has. People don't just want an iPod; they want the iPod Nano. They don't just want a hamburger; they want what Five Guys offers, two freshly formed patties grilled to order right in front of them. Price: $4.49.
"You could get a cup of coffee your whole life from home or from 7-11, but now you're not happy unless you go to Starbucks," said Dan Rowe, chief executive of Fransmart, a Virginia consulting firm that helped launch the Five Guys franchises. "You could get a sandwich at a million places, including Subway, but people go to Panera Bread instead."
Rowe is hinting at a phenomenon called "trading up," which is typically thought to include purchases of high-priced goods. But there is trading up at the other end of the price chain, including fast food. "The tide raises all boats," he said. "If you have an environment where people are trading up, it affects everything from cars to clothes and even to food. Think about what a simple indulgence it is to trade going from McDonald's to Five Guys."
And in this case, because the trade-up is so cheap -- a Five Guys cheeseburger is $1.50 more than a McDonald's quarter-pounder -- it can quickly become a must-have item. It is the burger as the great equalizer.
But places like the Hamburger Hamlet aren't exactly worried. Leon Hines, the manager of the Hamlet in the Rio Entertainment Center, didn't even know there was a Five Guys in the nearby Kentlands. Besides, he said, his restaurant offers a more traditional restaurant experience. "We're selling more than hamburgers," he said. "We've got salads. We've got steaks."
With their quick growth, the Murrells have made a lot of fans. Each has a story about someone bowing down before them, as if genuflecting to a burger deity. They've even been asked to cater weddings. But the Murrells are remarkably humble and private, franchise owners say, and talk about their fame makes them squirmy. They'd rather talk burgers.
The beginnings were indeed modest. Two decades ago, after Janie and Jerry Murrell made a nice pile of cash -- their phrase -- in the insurance and financial planning business, they decided to start their own business, in part to keep their family in one place. Thousands of people around the country at this very moment are batting around similar small business ideas, hoping to break free from the suit-and-tie world. In the Murrell's case, Jerry suggested a chuck wagon serving burgers and fries. "Oh my god, he's lost his mind," Matt thought.
But Jerry really wanted to sell burgers. He remembered a little burger joint from his childhood in Michigan. "Back where I came from, 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, who live in Northern Virginia, opened their first Five Guys on Columbia Pike and Glebe Road in Arlington. They made several fundamental decisions about the business then, most of which still remain. One of those was frying fries in peanut oil. Better taste, no cholesterol. So they went to the grocery store and bought 50 little bottles of peanut oil.
"We cleaned them off the shelves," Matt said.
Because they didn't make it in bulk?
"No," Matt said. "We didn't know they made it in bulk."
Lesson learned. More stores followed. Pretty soon, investors and even customers started begging them to franchise. One man even 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.
Self-described control freaks
Their reluctance eased a few years ago. 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 also been approached previously by Dan Rowe at Fransmart, who was working with former 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. No detail is too trivial. So they decided to limit the number of franchise owners so there wouldn't be too many people to control. Thus, you can't buy one Five Guys franchise. You have to buy at least five -- 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 also, the Murrells said, attracts more professional owners. High-tech executives, former Marriott executives, and owners of fine restaurants have signed up. "They see something that's a good opportunity," said Moseley, who owns Five Guys franchises and works full time selling them for the company. "There's a better than even chance to be really successful in something that belongs to you."
The Five Guys franchising contract is rather specific, stipulating the number of bacon strips (two) and pickles (four) placed on burgers should those items be requested. The Murrells send in secret customers to make sure, for instance, that the hand-cut French fries are shaken 15 times after seasoning. The Murrells have found through extensive study that this tactic takes off just the right amount of grease.
Also, after a burger is placed on the grill, it is to be flattened only once, so as not to squeeze out all the juice. Tyler Murrell was once a customer at a franchise store. He saw the grill man press down more than once on the meat. He leapt over the counter to stop him.
There is also a stipulation that franchises use Mount Olive pickles. "We have tasted every pickle that you could cut and slice and put in a jar," Matt Murrell said. "We have been using the Mount Olive pickle for the last 10 years. It's crunchy. If you eat pickles, you know there are sweet pickles, sour pickles, soft pickles, crunchy pickles. There's all kinds of pickles, but we like the Mount Olive pickles."
The Murrells, who bake the buns for all the stores, run the operation out of a warehouse in Lorton, with each son overseeing different parts of the business. They have hired an operations director, a dozen district managers, a developer of new stores, lawyers, accountants and a publicity director. They are spending most of their revenue on expanding the business -- and thus, their family.
The obvious question: Will they ever take the company public? They insist they won't. Jerry said, "We've already turned down a lot of money." And besides, Janie said: "We're having too much fun. We're a family and we've gone on this journey together."