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AMA Five Guys Burgers and Fries AMA Five Guys Burgers and Fries

11-22-2014 , 09:57 AM
Quote:
Originally Posted by apocalypse_fives
What kind of sales increases are stores that do deliver experiencing? The founders were pretty clear in not wanting any delivery. Is it moving the needle at all?
Quote:
Originally Posted by IAMthepokerhack
I am not aware of any stores doing delivery-this is news to me
I wonder if he is talking about other chains that do deliver and if their sales will cause 5G to reconsider no delivery.

Last edited by Doc T River; 11-22-2014 at 09:58 AM. Reason: everything I've read says 5g doesn't do delivery.
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11-22-2014 , 02:54 PM
There are 5Gs in NYC that deliver, but from your reply I take it is not something other operators are asking for. Delivery is def a whole diff animal.
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11-22-2014 , 02:59 PM
Do they deliver or is it a third party?
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11-23-2014 , 12:52 PM
Quote:
Originally Posted by Booker Wolfbox
Do they deliver or is it a third party?
I never ordered delivery, but I doubt a third party is involved. You can order delivery online & I think 5Gs uses olo which I know integrates with POS like Radiant & Micros so that kind of points to them handling delivery in house. I don't know 100% tho.
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11-23-2014 , 06:43 PM
Quote:
Originally Posted by apocalypse_fives
I never ordered delivery, but I doubt a third party is involved. You can order delivery online & I think 5Gs uses olo which I know integrates with POS like Radiant & Micros so that kind of points to them handling delivery in house. I don't know 100% tho.
Apocalypse-which locations?-I have been on the app (yes it is olo)-and I can't find any locations that I can get delivery from-Your earlier comment about the family being against delivery is spot on-In our market there are a couple of third party delivery companies that order from us-I would guess that NYC has several that do the same-It is really expensive($5-$7), but it does happen. I don't think any stores are handling it directly.
AMA Five Guys Burgers and Fries Quote
11-23-2014 , 07:46 PM
I don't have the app loaded, but if you just look online through the website you will find delivery is avail from some manhattan & brooklyn locations. They seem to be handling it directly, but don't know for certain.

Last edited by apocalypse_fives; 11-23-2014 at 07:58 PM.
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11-23-2014 , 11:24 PM
Having gotten mcdonalds and waited to eat until I got home, i'd say reputation would definitely suffer for a place that prides itself on quality and I live less than five minutes from the mcdonalds. presumably, the delivery guys have some way to keep the food hotter compared to me though.

Not that I am comparing 5G to McD. Just talking about the problem of getting fries home in edible condition.

Last edited by Doc T River; 11-23-2014 at 11:48 PM.
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11-24-2014 , 03:31 PM
This may have been asked before so apologies if it has. What was your due diligence process like in choosing FG? Why not other franchises like McD, Dominos, Wendy's, 7-11 - franchises that have been around a long time and have an established brand. (I know nothing about the franchise/food service business)
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11-24-2014 , 04:20 PM
Quote:
Originally Posted by bdawg56kg
This may have been asked before so apologies if it has. What was your due diligence process like in choosing FG? Why not other franchises like McD, Dominos, Wendy's, 7-11 - franchises that have been around a long time and have an established brand. (I know nothing about the franchise/food service business)
If someone was looking for a chain that served quality, none of those you listed would do.

Just found out that a 5G is going in about seven minutes from my house.
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11-25-2014 , 01:15 AM
thx for this thread, i really enjoyed reading it !
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11-25-2014 , 06:13 PM
Interesting thread.

OP- I know you mentioned that you went from poker to FG franchising without any prior restaurant experience, but was wondering if you had any prior relevant business experience at all or came into it entirely green from poker? Once you become a franchisee of FG do they basically outline all the key financial indicators or numbers for your business that you have to focus on? I'm assuming they streamline all your POS integrations, bookkeeping, all systems/processes? Just am wondering how much of what you have learned in the business now came directly from FG and the assistance/information they provide as opposed to just having to learn it on your own.

This aspect interests me since I just launched my own gelato brand/business 7 months ago in East Africa without any prior experience whatsoever and the idea of coming into a franchise system where most of these things have already been figured out for me (procurement, production, logistics, marketing, suppliers, HR policies, etc) sounds like heaven. Just am curious how many of those things a franchise like FG would already have sorted out in large part for their franchisees vs how much you have to involve yourself in. Feels like I'm forced to reinvent the wheel and adapt it to third world conditions, in an entirely different market, with different rules, different culture, etc.

Prior to launching my own brand though I did shop around a bit trying to find other companies to franchise with but found none that had any interest in allowing a 27 year old with no prior business experience to help them open a branch in Africa. Decided that the time spent trying to convince a company to let me franchise, coupled with the added costs built into franchising with them, were not going to be justified in the grand scheme of things, especially since the market out here is so underdeveloped that even a top brand like Baskin Robbins wouldn't have that much more brand recognition than a newly created brand. Nonetheless, would still be a huge weight off my shoulders having the bulk of the systems/processes already established.
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11-25-2014 , 06:40 PM
Quote:
Originally Posted by bdawg56kg
This may have been asked before so apologies if it has. What was your due diligence process like in choosing FG? Why not other franchises like McD, Dominos, Wendy's, 7-11 - franchises that have been around a long time and have an established brand. (I know nothing about the franchise/food service business)
This is a long story-and I think an important part of this, but I have been busy with the stores and will give you a better answer sometime over the weekend-
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11-25-2014 , 06:41 PM
Quote:
Originally Posted by Doc T River
If someone was looking for a chain that served quality, none of those you listed would do.

Just found out that a 5G is going in about seven minutes from my house.
Thats a big part of it-definetly

cool-hope you enjoy it!
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11-25-2014 , 06:47 PM
Quote:
Originally Posted by Flawless_CED
Interesting thread.

OP- I know you mentioned that you went from poker to FG franchising without any prior restaurant experience, but was wondering if you had any prior relevant business experience at all or came into it entirely green from poker? Once you become a franchisee of FG do they basically outline all the key financial indicators or numbers for your business that you have to focus on? I'm assuming they streamline all your POS integrations, bookkeeping, all systems/processes? Just am wondering how much of what you have learned in the business now came directly from FG and the assistance/information they provide as opposed to just having to learn it on your own.

This aspect interests me since I just launched my own gelato brand/business 7 months ago in East Africa without any prior experience whatsoever and the idea of coming into a franchise system where most of these things have already been figured out for me (procurement, production, logistics, marketing, suppliers, HR policies, etc) sounds like heaven. Just am curious how many of those things a franchise like FG would already have sorted out in large part for their franchisees vs how much you have to involve yourself in. Feels like I'm forced to reinvent the wheel and adapt it to third world conditions, in an entirely different market, with different rules, different culture, etc.

Prior to launching my own brand though I did shop around a bit trying to find other companies to franchise with but found none that had any interest in allowing a 27 year old with no prior business experience to help them open a branch in Africa. Decided that the time spent trying to convince a company to let me franchise, coupled with the added costs built into franchising with them, were not going to be justified in the grand scheme of things, especially since the market out here is so underdeveloped that even a top brand like Baskin Robbins wouldn't have that much more brand recognition than a newly created brand. Nonetheless, would still be a huge weight off my shoulders having the bulk of the systems/processes already established.
This is also a very long answer that I will have to get back to you on this weekend-but the short answer is that while the franchisor provides some of those things you list, some of them they never want to be involved with (like HR)
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11-25-2014 , 09:30 PM
Flawless, where in East Africa? How is that going so far?
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11-26-2014 , 12:22 AM
Quote:
Originally Posted by Flawless_CED
Interesting thread.

OP- I know you mentioned that you went from poker to FG franchising without any prior restaurant experience, but was wondering if you had any prior relevant business experience at all or came into it entirely green from poker? Once you become a franchisee of FG do they basically outline all the key financial indicators or numbers for your business that you have to focus on? I'm assuming they streamline all your POS integrations, bookkeeping, all systems/processes? Just am wondering how much of what you have learned in the business now came directly from FG and the assistance/information they provide as opposed to just having to learn it on your own.

This aspect interests me since I just launched my own gelato brand/business 7 months ago in East Africa without any prior experience whatsoever and the idea of coming into a franchise system where most of these things have already been figured out for me (procurement, production, logistics, marketing, suppliers, HR policies, etc) sounds like heaven. Just am curious how many of those things a franchise like FG would already have sorted out in large part for their franchisees vs how much you have to involve yourself in. Feels like I'm forced to reinvent the wheel and adapt it to third world conditions, in an entirely different market, with different rules, different culture, etc.

Prior to launching my own brand though I did shop around a bit trying to find other companies to franchise with but found none that had any interest in allowing a 27 year old with no prior business experience to help them open a branch in Africa. Decided that the time spent trying to convince a company to let me franchise, coupled with the added costs built into franchising with them, were not going to be justified in the grand scheme of things, especially since the market out here is so underdeveloped that even a top brand like Baskin Robbins wouldn't have that much more brand recognition than a newly created brand. Nonetheless, would still be a huge weight off my shoulders having the bulk of the systems/processes already established.
Setting up a new business in East Africa with no experience? Why don't you pick something hard next time.

All kidding aside, you have guts and my hat is off to you.
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11-26-2014 , 02:29 AM
Background on Flawless: http://forumserver.twoplustwo.com/30...ration-480305/

(he is OP, outs himself later, one of the best threads on 2p2 and short).

OP: Just wanna say I am a huge fiveguys fan. I am your perfect demographic, young and sometimes lazy sometimes busy who likes quality food and doesn't care that much about price, but wants something quick and convenient. I totally hate mcdonalds type chains but love 5G. And I agree you are better quality than all of your competitors (Dallas has a ton of fast food/fast casual chains and 5G is my favorite). Keep up the good work!
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11-26-2014 , 03:20 PM
Quote:
Originally Posted by Doc T River
Setting up a new business in East Africa with no experience? Why don't you pick something hard next time.

All kidding aside, you have guts and my hat is off to you.
Well, I actually came out here since I thought it would be easier in a lot of ways. Even though getting the businesses off the ground entails obstacles/challenges you'd never encounter in developed countries, that's easily offset by the fact that there's not any real competition here if you are able to create something that's average quality of which you'd find elsewhere.

Quote:
Originally Posted by ChipsAhoya
Flawless, where in East Africa? How is that going so far?
Tanzania. The link the other poster posted sort of has the buildup story to how I ended up out here, I'll probably post an update in that thread sometime in the near future, wouldn't wanna derail this thread much more.
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11-30-2014 , 03:15 PM
Quote:
Originally Posted by bdawg56kg
This may have been asked before so apologies if it has. What was your due diligence process like in choosing FG? Why not other franchises like McD, Dominos, Wendy's, 7-11 - franchises that have been around a long time and have an established brand. (I know nothing about the franchise/food service business)
This is a really important question, and really the reason we chose FG:

My partner and I were not really looking to go into this business-and then decided on FG as the brand we wanted-

We became passionate about FG and chose to go into this business as a result. We feel that this is a product that we can be proud of serving, and it is a model that is scaleable without sacrificing quality.

This is a very important thing to consider when you choose a franchised business-if you do not believe strongly that the brand you are buying brings significant value to the equation, you should pick something else. We have had a discussion in this thread about the relative strength of the brand, and the relative weaknesses or vulnerabilities of FG, and some of it is yet to be seen, as the long term viability and strength of FG will only be proven out over the next 15-20 years. I have stated repeatedly that I believe that product is the key to this equation, and we believe that the quality burger segment will continue to gain share in the burger market overall.

I am not speaking for anyone else when I say this, but I believe that several of the brands that have been invented to try and take part in this trend but focus too much on the non-product side of the business like nifty designs and trendy menu items will come and go-I think that the eventual segment winners will be brands like FG, In-n-Out, and Shake Shack-product focused brands.....there are others, but these come top of mind.

Due diligence is much different with a new brand, and we spent significant time in established FG locations and did traffic counts and sales estimates (I think we surveyed 6 locations is 3 cities)-as we would be taking the brand to a new market and would not be buying established locations. The requisite financial reviews need to be made, both from what the franchisor will share, and by speaking with established franchisees.
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11-30-2014 , 04:06 PM
Quote:
Originally Posted by Flawless_CED
Interesting thread.

OP- I know you mentioned that you went from poker to FG franchising without any prior restaurant experience, but was wondering if you had any prior relevant business experience at all or came into it entirely green from poker? Once you become a franchisee of FG do they basically outline all the key financial indicators or numbers for your business that you have to focus on? I'm assuming they streamline all your POS integrations, bookkeeping, all systems/processes? Just am wondering how much of what you have learned in the business now came directly from FG and the assistance/information they provide as opposed to just having to learn it on your own.

This aspect interests me since I just launched my own gelato brand/business 7 months ago in East Africa without any prior experience whatsoever and the idea of coming into a franchise system where most of these things have already been figured out for me (procurement, production, logistics, marketing, suppliers, HR policies, etc) sounds like heaven. Just am curious how many of those things a franchise like FG would already have sorted out in large part for their franchisees vs how much you have to involve yourself in. Feels like I'm forced to reinvent the wheel and adapt it to third world conditions, in an entirely different market, with different rules, different culture, etc.

Prior to launching my own brand though I did shop around a bit trying to find other companies to franchise with but found none that had any interest in allowing a 27 year old with no prior business experience to help them open a branch in Africa. Decided that the time spent trying to convince a company to let me franchise, coupled with the added costs built into franchising with them, were not going to be justified in the grand scheme of things, especially since the market out here is so underdeveloped that even a top brand like Baskin Robbins wouldn't have that much more brand recognition than a newly created brand. Nonetheless, would still be a huge weight off my shoulders having the bulk of the systems/processes already established.

Flawless-this is very involved, and really you have questions on 2 subjects:

What does the franchisor really supply to the franchisee in terms of business support and structure?

and

Would it be a benefit to franchise a brand in a foreign market?

I will answer a couple of the basic questions about our experience, before we move on to the bigger questions: First, I am quite a bit older than you are, and worked for many years in the corporate world. I gained significant experience in other aspects of business (construction, both commercial and residential, balance sheet responsibilities and compensation based on such, and extensive customer service success in sales) BEFORE I became a professional poker player. I also had partners that added to our skill set as a team that made us attractive to FG as a franchisee-so although I had been a grinder for a couple of years before this venture-we did bring a business background to the table-(but I don't think this would have helped us open a single unit in a foreign market-more on this a little later)

To answer your question about the overall structure and financial guidance you receive when you buy a franchised business, it is important to know what the franchisor is interested in what they want nothing to do with:

The franchisor is interested in making sure you constantly and reliably supply the brand experience to all customers. As such they will supply you with very rigid structure about the product and procedures you use to reach this goal.(procurement is included in this)

The franchisor is interested in making sure they get their correct franchise fee on your sales. As such they pick a required POS system that they are in control of that allows them to accurately monitor sales (you will buy it and pay the monthly fees)

The franchisor does not want to be involved in the day to day running of your business As such you are responsible for your own processes like accounting, managing relationships with your suppliers (even though they pick the suppliers-you establish your own credit relationships), and with your employees. You will responsible for pricing and payroll. The franchisor will want NOTHING to do with your HR.

The second part of your question really centers on the relative value of franchising in a foreign market, both to you a franchisee and to the franchisor. I think it is important to remember that most of your problems getting a brand to partner with in your market is more about the challenges of the franchisor to support you than a personal slight. Unless you were coming to a brand with a desire to open a significant amount of locations(read >100) it would be difficult for them to provide you with the support you would desire to be able to recreate the brand in your market. This also speaks to the question of the value a brand would bring to a single location in a foreign market. Unless there is a significant ex-pat community with ties to the brand, I think you will have the same success building your own brand, if you have the skill set to provide the level of product you desire.
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11-30-2014 , 10:45 PM
Fun fact about Five Guys: their franchising director won the NFL MVP in the early 80s as a...kicker.
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12-01-2014 , 12:40 AM
Went to one for first time after reading thread. Was better than expected overall. Buns were less than expected though.
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12-01-2014 , 02:21 AM
My girlfriend has a soy / soybean allergy, so Five Guys is the only "fast food" place she can go when she wants french fries (due to the use of peanut oil instead of vegetable oil for frying). She can't eat the bun, but still loves the burgers in a wrap. The thought of any other fast food burger in a lettuce wrap is disgusting to me, but with 5G it works thanks to the burger's innate quality. Great restaurant.
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12-05-2014 , 12:43 PM
Quote:
Originally Posted by IAMthepokerhack
What makes you think the family is in such bad financial shape? The FGO (company owned stores) system does pretty close the AUV for the system-yes i think they have some underperforming stores, but I think they have as a whole a strong system.

Let's look at what it cost them to get to these 400(we know this to be high but it makes the math simple) stores-lets use estimates because I don't know the exact breakouts and assume that the system was 1/2 built and 1/2 acquired(i think they have built a higher percentage of the total-but for the purpose of this exercise lets use 1/2). Lets also assume for the sake of discussion that each built store cost them 350k (more than I am spending, and I think more than they are-but again this is an estimate for discussion) and each purchased store cost 500k(I am using this number because I have no idea what they paid-I have been offered stores for from 5 to 7 times net-so this would be in the range for an average unit-you have stated that you believe they were purchased for low multiples-but for the sake of discussion-lets use this number). This would put them at $170M right? We have already established that they have received $75M in development fees-and 1000 stores built by franchisees would produce another $25M in revenue-so they would only be 70% into the $100M credit line if they have not paid anything on the note (which is improbable)

What is the need for the other financing tools? The system produces approximately $78M(6% of 1.3B) in annual revenue from franchise fees and then the additional $32M(8% of $400M) or so from FGO. Lets estimate that they are spending 40 million a year running the company(again this number is grossly high--they are a very small organization probably less than 150 at FGE) that still leaves $70M for debt service annually
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12-05-2014 , 12:56 PM
re: paper bag branding

5G cups have branding on them (or at least they do at my local 5G). I'd have to think that's significantly more expensive than having a simple logo on the paper bag?
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