Tuesday, December 16, 2008

Phantom Gourmet on Five Guys

Our neighbor franchisee, Sean Olson, recently had the Phantom Gourmet visit his store to shoot a video and review the burgers. Here's that video, courtesy of Christine Dykes of Conviser Group (his real estate broker):

Take a look -- definitely worth the 4 minute time investment to get a sense of what the fuss is all about.


We are in the process of hiring our first General Manager, who we hope will become a partner in the business as it grows into what should be a $25M enterprise. This is not a post about that process (more on that when it's actually complete). It is a post on why we believe management matters and are willing to buy more than we need on day one.

First, an anecdote about getting our Marlborough store built. The process begins with architectural plans submitted to 5 Guys, who wants to make sure that we stuffed enough tables into the space and actually have a kitchen and bathrooms. Fair enough. This part was pain-free for us as we hired an architect who has done 5 Guys stores before and appears to be at the top of their game. Then, the plans are submitted along with a form to the Health Department in Marlborough, along with a check to cover the application fee.

That last piece is mundane, but think for a second about what has to happen there. They start the form. We have to finish the form, and someone has to write the check and mail it in. Mediocre management - which is inexpensive, easy-to-find, and retained by continuing to pay a salary - means they start the form, mail it to us, and then we mail it back to them along with a check, and then they mail it in to the town. This is how it's typically done, and it eats probably 7 business days.

Or, we could collaborate on filling it out, either electronically via email or over the phone, and then they could mail it in that day by writing the check themselves and billing us later. Thinking creatively about this is what good management gets you. Why does this matter? In 5 Guys world, getting open 7 days earlier equals thousands in cash flow. And cash flow is a linchpin of building a big fast-casual dining business.

Yes, great management is indeed more expensive, hard-to-find, and trickier to motivate and retain. But it is indispensable, which is why we are focused on hiring someone who can become a partner.

Friday, December 5, 2008

Don't look at this if you're already hungry

To balance out the business-focused post about George "My Hero" Naddaff of UFood, here is a link to a set of mouthwatering pictures from Detroit's Free Press today -- it's their photo gallery of Detroit's Best Burgers. It'll raise your cholesterol numbers just looking at it.

Thursday, December 4, 2008

Great advice from George Naddaff

I met with George Naddaff today -- he took Boston Chicken public and is currently the Chairman and CEO of UFoodGrill, which apparently combines taste with health. At 5 Guys, we don't exactly position ourselves that way. Five Guys' head of NE Franchise Development is named McGuire; legally he's Matt McGuire, but his business card has only one name it. I heard him tell an ICSC audience "We're not healthy", to which half the people in the darkened room stood up and cheered.

Anyway, George was very generous with his time and gave us some advice on making sure that our business is successful and that our customers are happy. Here are some of the highlights:

  • Burgers, chicken and pizza are forever
  • 5 Guys is a great concept - Most businesses never get to first base, but you just bought your way onto 3rd base. That's great. But it's not 5 Guys' job to get you to home plate. Follow their formula to the letter. Your job is locations and people.
  • Make sure the first store is a huge success - the cash from store #1 is what enables the buildout of store #2 and the ability to raise subsequent debt. It is easy to get excited about the challenge of opening so many stores in such a small amount of time, but don't. Get that store right before tackling too many others.
  • Hire really good food people - don't skimp on talent who knows the quick serve business. Get someone who knows how to train in languages other than English. I love the food business, and you seem like smart guys and are asking the right questions, but food is the hardest business in the world.
  • Don't pick free-standing spots - in your territory, most of them are abandoned gas stations anyway.
  • Rent should be no more than 10% of your sales, and preferably closer to 7%.
He then passed on a great candidate, offered help with real estate sites and selection, and offered personally to drive out and check out our first site. A real mensch, and if he can get over the fact that we're not going to lower his cholesterol, the burger and fries are on us.

Friday, November 21, 2008

Thank You Panera

A brief shout-out to Panera, without whose bottomless decaf and wireless access we would not have been able to interview our small army of GM candidates. If I were their landlord, I would be taking a hard look at their parking requirements because there were many others like me (and Marc last week) who camped out there for quite some time. I think the small-business-person-too-cheap-to-have-an-office contingent made up 1/3 of their traffic while I was there.

Thank you Panera.

Anyway, we are getting close to the end of this round of interviewing. As an entrepreneur, it is interesting to see how the caliber of people you interview can influence your ideas about the position you are hiring for. In the end, I think you get a better outcome being little flexible based on the talent walking in the door. The Five Guys concept is pretty compelling, and so is working for a growth business with a lot of career path and opportunity, so we have been fortunate to talk to some very, very good people this week.

Wednesday, November 19, 2008

A Good Burger is About More than Food

First of all, welcome to readers of A Hamburger Today, one of the best burger blogs I've found so far. There's a link to the blog on the side for anyone wants to check it out.

We are well into our search for our first store general manager. Through ads in the Boston Globe (semi-productive) and several online resources (much more productive - not a good omen for newspaper people), we found a number of good candidates and are starting to zero in on the right person.

Who is the right person?

Marc and I have a certain business philosophy, which is that no matter what product you buy, the service is a key point. We leave perfecting the burger concoctions to the experts: Five Guys and the customer. Among many other things, the manager's job is to make sure that the environment in which you experience the burger is the best it can be. Here are a few things about what that means:

The store is clean
This is so obvious that it seems strange to write it. However, it is actually difficult to achieve. This is especially true in a store that is physically too small -- so, as partners we are nervous about stores with small footprint. But when a candidate notices the crumbs on the radiator at Panera (our "office" while we conduct interviews), that stands out because we want our management to be obsessed with this. Tables should be cleaned. Trash should not be full. And yes, this philosophy extends to clean bathrooms.

Orders come consistently
Five Guys is *not* a fast-food restaurant. Even so, it has a standard for how many minutes (7) one is supposed to wait for an order, even at busy times. What's almost as important as how quickly it comes is consistency of order turnaround time. Most people would more happily wait 8 minutes every time than 5 minutes most times, but 13 minutes other times. The same applies for almost anything, by the way - human beings like consistency.

Staff is professional and polite
Starbucks is a great business (their real estate overexpansion notwithstanding) in large part because they have figured out that customer experience depends on their "associates" who interact with customers. Five Guys is not a coffeehouse (thank goodness), but applies many of the same principles. Check out sign they post on the front of the soda dispenser next time you are in a store and you will see what I mean. How a manager plans to work with staff to reduce turnover, keep people properly trained, deal proactively with disciplinary issues, and run a smooth-flowing line - and how they have done so successfully in the past - is something that we are watching closely.

There are many other attributes, but fundamentally, you want your experience to be about the food, not why the store was out of straws. That's management. If that's solid, you'll rave about the burgers -- of that, we are confident.

Friday, November 14, 2008

Patriot Place Five Guys is open!!

We visited our neighbor franchisee's new store in Patriot Place today; that's the shopping center complex recently opened near the Patriots' stadium in Foxborough, MA. A colleague of mine described the place as a "man mall" because of stores like Bass Pro.

Sean Olson opened very recently and was doing a great lunchtime business. A couple of pics I took from my Blackberry (they're not the best, I know) are below:

Marc and I brought our partner, Tom Donnelly for lunch -- burgers and fries were good and the service was very fast considering how new the store was. We got some good ideas for our Marlborough store in terms of layout (good) and looked at slightly-more-expensive-than-we-thought-they-would-be proposals from sign vendors (less good, but still OK).

Congratulations Sean!!

Wednesday, November 12, 2008

First store plans approved!

A huge day for us at Mass Burgers -- we got approval for our Marlborough store architectural plans from 5 Guys and are ready to bid them out and get rolling on permitting. We had been told by a number of other franchisees that we'd talked to that this can be a hassle and had planned a pretty long contingency.

All in all, things have been fairly smooth for this store opening so far. Marc had a great phone call with the head of the Marlborough Chamber of Commerce yesterday, our progress in looking for a GM and assistants hasn't hit snags yet, and our lender is moving quickly on our financing requests. And, on top of that, our legal bills actually came in below budget (a sentence I don't think I've ever written before).

So in a turbulent economy and in a business that we know will have challenges, it is always gratifying to have a day that is 100% good.

Monday, November 10, 2008

How We Got Started

Welcome to the Six Guys blog! The 6 of us (4 founders, 2 additional investors) are one of the nation's largest franchisees of Five Guys Famous Burgers and Fries. We plan to use this blog to keep followers informed on our progress as we the build the business. It turns out that there is a lot to do, which we plan to chronicle on this blog.

One question we frequently get is: how did you get into this business anyway? Here goes...

The 4 of us all connect through Peter Weber, one of our founders who is based in D.C. He and Bill Ranney have worked together, most recently in an IT startup business called SevenSpace, which Peter and crew sold to Sun Microsystems for a tidy profit. Peter Biro (based in Wellesley, MA) helped Peter and Bill in their venture by working with them on acquisitions for their business. Peter Weber and Marc Magerman (based in Franklin, MA) are old friends from college. Peter Weber introduced Marc to Peter Biro; Biro and Magerman then partnered up and almost bought a small business together. Peter and Marc had been looking for a business to buy together, and Peter Weber and Bill Ranney had been looking at franchise concepts and live in the Five Guys epicenter. Voila.

Weber approached Five Guys in the spring of 2007 about an area franchise in Virginia, but none was available. They recommended that he look elsewhere, like maybe Massachusetts. Together with Bill, Peter called his old friend Marc Magerman, who then called his would-be business partner Peter Biro. Peter and Marc drove to visit a Five Guys in West Avon, CT and after one taste, we were hooked. Marc brought in 2 more investors, also successful business owners. Almost one year and a lot of legal bills later, we closed our area deal with Five Guys, our Series A equity round, our debt financing, our deal with Restaurant Sites (our real estate broker) and our group's partnership, which we very imaginatively called Massachusetts Burger Enterprises, LLC. And then the work began...

We will continue to keep followers posted.