First New York, then the nation

I am back from Five Guys' corporate training and wanted to pass along an amazing story about buns. More on the training experience in a later post.

First of all, 5 Guys' buns are great, which I did not expect. I spent a decent time behind the grill over the past couple of days and can tell you that the smell as they're grilled is pretty intoxicating. They hold up well to the patties and toppings, and actually stay more solid than you would think after being wrapped with meat and toppings in foil for 10 minutes or more. They are also expensive; how expensive they are is apparently a trade secret, but I will say that it's more than you pay at the grocery store. 5 Guys is about a great burger and fries experience, not low price, so it makes sense for franchisees to pay a little extra for a better quality product.

The buns are 100% trans-fat free. The interesting story for me is that this is true because Five Guys expanded into New York City, which restricts "trans fats" in restaurants. This regulation forced Five Guys to alter their recipe to gain entry to that very lucrative market. It's not really feasible to have one recipe for NYC and another for the nation, so as a result, the bun recipe changed everywhere. So, now every Five Guys in the nation has trans-fat free buns.

As I mentioned in an earlier post, Five Guys is not health food and shouldn't be confused for that. That said, I found it amazing that New York passing a law changes how buns are served in Colorado, Utah, South Carolina, Virginia, and everywhere else.

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.

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.

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.