The only kind of publicity that Jerry Murrell wants is free publicity, and this week, there's been plenty of that. Last week, NBC's Brian Williams followed President Barack Obama into a Five Guys burger restaurant in Washington, DC, as the chief ordered lunch for the White House staff -- and left a bitter press pool locked in their SUVs. The show was so highly rated that NBC re-ran it, and that inspired a glowing portrait in USA Today. "I get tears in my eyes thinking about it, that they made such a big deal about Five Guys," Murrell told the paper.
Murrell, 65, has helmed Five Guys Burger since 1986, when he started the burger slinger at a single store in Arlington, VA, as a way occupy his family. But to suggest that Murrell has only just entered the big time would be to ignore the numbers. He's been big for a while. Since 2003, when he took franchising national, his little local joint has mushroomed, if that's the word, into a fast food champ. The chain is now huge, with some 436 locations in 32 states, plus expansion into Canada next month.
Despite spreading far beyond its humble origins, Five Guys hasn't lost its cult appeal. Its largest Facebook fan page has nearly 60,000 members. It also hasn't tweaked its menu much beyond its original, greasy simplicity of burgers, dogs, and fresh-cut fries. There are still no milkshakes. Customers still shell peanuts out of barrels while they wait for their burgers to be cooked to order. No freezers are used.
There are technically six guys at Five Guys: Jerry and his five sons. And that's the way Murrell wants it. He says he's turned down an investment offer from the politically well-placed investment firm the Carlyle Group. He didn't want to lose control of the empire to a company that would turn his baby into a by-the-book junk food machine. When he starts testifying to his principles, Murrell can sound like the Gordon Ramsay of the deep fryer set. "If you're not throwing food away, you're not running a good shop," he has said.
He's also a little like J.D. Salinger: Murrell doesn't do much press. In fact, this photo, taken in May, is the only one of him that he allows to be released to the media. But despite his publicity shyness, we were able to convince him to sit down and share a few of his financial secrets. Turns out the recipe for a burger triumph includes stubbornness, steering clear of credit, and a dash of good old-fashioned bribery to keep the staff smiling:
When it comes to keeping expenses down, is there a cardinal rule?
No. This might sound a little strange, but actually I don't worry about food expenses. I worry about labor expenses. I was thinking about this today. If one of my suppliers comes to me and says, "We're gonna charge you twice as much for bacon as we used to," I'd have to say, "Well, okay." We don't shop around. We know what we want. We watch our hours and stuff. That you gotta do. But for us, it's just a matter of management. We try to keep our labor around 20 percent and our management around 7 or 8 percent.
Is it true that franchise owners have to be worth at least a million dollars to open a location?
I think, personally, that a million dollars net worth is not high enough. That's my opinion. It depends on the [applicant]. If he's got a great credit rating and a great relationship with the banks, then it's a different story. But I caution my franchisees not to jump into this and lose their money. We were getting all kinds of financing a year ago. Everyone wanted to do it. Right now, most of the people coming in are pretty well off financially. They've got a pretty good balance sheet. What we told our franchisees was, "Don't get in trouble with your creative financing."
It sounds as if you're saying the financial principles that work around the kitchen table could also work when you're trying to run a business.
Right. I'm telling people right now that if they need the banks to come in, then they shouldn't get in.
You've still managed to expand like crazy despite the recession and despite the fact Americans claim they want to eat more healthy foods.
Five Guys, we've never had any trans fats. When they [banned trans fats] in New York, we were way ahead of that game. We cook in peanut oil, which is a non-hydrogenated oil. And the way we cook our fries the same way the French do it so they absorb very little oil. We don't brag about those things too much. But probably as far as fast food burgers and fries go, we've always been pretty health conscious. We just don't push that too much.
You also don't make the customer pay for every little thing. They can pick all the toppings they want for free, without lots of micro-charges.
Drives me crazy when someone does that to me, you know? I just don't like it.
The airlines have pretty much made it their business model now.
With the airlines I don't mind it so much. If some guy is gonna lug on two big bags and I've just got a little overnight bag, I'm trying to play by the rules and he's trying to break them.
But when it comes to pickles?
[Laughs.] Yeah, right. You get your hamburger the way you want it. A lot of people thought customers would mess with us over that, but no one ever does.
You're kind of like the In-N-Out Burger of the East Coast in that you're a family-run burger restaurant with a limited menu, super-fresh ingredients, loyal employees, and a simple red-and-white decor like a '50s diner. Have you ever had an In-N-Out burger?
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I was in my first In-N-Out Burger in Las Vegas about five years ago and I was very impressed with them. I just read their book recently. Their book came out about a year ago. They were very employee-conscious. They really treat their employees nice. That was the main reason for them wanting to grow was to give their employees a chance to move up in the organization. They're very loyal. The people who started [In-N-Out] were very concerned about their employees. Everybody's dead in that [founding] family except the daughter, and she doesn't seem like she's got too much interest in it. But In-N-Out Burger controls their product. They have their own butcher shops and bakeries and so they're limited in how far they can expand. But we go right directly to the manufacturer. Like, we go right directly to Heinz ketchup and say, "This is what we want."
How do you keep your employees in such a good mood in an industry where workers can be notoriously cranky? I was at a Five Guys in New York City the day before the NBC show aired, and the guy behind the counter wanted to strike up a conversation with me. He even came over after I'd eaten to ask how I liked it. What's the secret?
We have a lot of secret shoppers.
Ah, fear!
No, just the opposite. When the secret shopper gives a really good score, that shift gets a thousand bucks. We give about six million bucks a year in bonuses to employees. [Our entry level wage is] a couple bucks above minimum wage, but if a shift can get a thousand bucks because they smile and they're keeping the place clean, that's a lot of money for them. We spend a lot of money on secret shoppers. If a shift is doing good, those shift workers get it and don't have to split it with the whole store. We take all of our advertising money and that's where it goes.
So you don't advertise?
We get a lot of free press, like this. But we don't buy any.
I suppose you don't need to. You were on prime-time TV twice last week starring the President.
And then we were in USA Today, and that was nice.
So you've been in this business for more than 20 years. What have you learned?
I can say this: If you're going to sell a product, try to make your product good enough that you don't have to worry about price. So if your costs are too high, the way to control costs is by raising the price, versus cutting back on product. I think Mercedes-Benz is built that way. They put the best components in it and then figure out what they ought to charge for it. When you start getting into price consciousness and start cutting what you're putting into your product, then I think you've got problems and you're building a cheap product. There's a market for cheap product. Well, I don't wanna be in that market.
It's true that there are a lot of $18 burgers out there that I wouldn't want to eat twice.
They're using advertising to sell it. If word of mouth doesn't do it, then we just don't do it, you know?
How big can you possibly get using just word of mouth? Given the last few years, I guess, pretty big.
[Laughs] Seems like it. Our busiest store is in Portland, Oregon. And nobody knows us out there.
