Jerry Murrell, founder of Five Guys, discusses the rapid franchise expansion of the burger chain in the early 2000s after initially resisting the franchise model.
Disclosure
Five Guys targeted 30% food costs by raising prices, never cutting quality
“The kids didn't know why we were raising the prices, but we would always say food costs would stay around 30%. Whatever we gotta do, if we gotta raise prices, we raise prices. And we said, if we have to worry about price, we don't want to be in this business.”
Disclosure
Five Guys funded early expansion using gross revenue share agreements
“We'd say, give us 5000 dollars, we'll give you a certain percentage of the Gross. Not, never the profit, because there was always too many ways to get cheap people that way. So I said, we'll give you a certain percentage of the gross. We'll give you the money …”
Insight
Murrell: Hidden real estate locations proved genuine customer demand
“And we said, well, if we can put it where, you know, it's hard to find, but if we can get people coming there, then we know we got something.”
Disclosure
Murrell: Five Guys would rather raise prices than exceed 30% food costs
“We would always say, food costs would stay around 30%. Whatever we gotta do, if we gotta raise prices, we raise prices. And we said, if we have to worry about price, we don't want to be in this business.”
Insight
Murrell: Five Guys perfected operations for 17 years before franchising
“Most franchisers start off to franchise. We didn't start off to franchise. We had no idea we were going to do that. We started off to build a family business, and we put 17 years into it, and we figured out how to do it right. So when it came time to franchisi…”
Insight
Murrell tested food viability by picking hidden, low-rent locations
“Well, if we can put it where, you know, it's hard to find, but if we can get people coming there, then we know we got something.”