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.

Management

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.

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.

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.