Almost... there...

A lot of you have asked when our opening day will be; rather than reply one at a time, I thought I would post an entry instead to give you the inside story.

The short answer: it's looking more and more like early April, and we are working really hard to get it as early as possible.

The longer answer: we still have a few things left to do before we can open the doors. They fall into a couple of categories.

First is finishing construction, especially completing the grease trap installation. Grease traps are usually tricky items because they are very expensive, subject to many town regulations (for good reason, obviously), bulky and difficult to handle, and can require ripping up the parking lot. Once this is done, and the final touches are put on the place, we can get our "certificate of occupancy", or CO, from the town, which basically is their seal of approval on our buildout. We have done everything we can to position ourselves well here, but there's no such thing as a sure thing. Even once we have the CO, we have to put on the finishing touches like hanging the signs and building the chairs and tables. Yes, we have to put those together ourselves.

Second is hiring and training the staff. We are currently hiring for all spots, or rather, our management team of General Manager Rich Lanza, and two AM's, Doug Oelbaum and Matt Eidelman, are working on that. We have received at least 50 applications over the web and even more in the store. But we need to hire a lot of people and even in this economy, that takes time. Training is a multi-step process that involves the managers visiting Five Guys' training program at headquarters in Lorton, VA, and then completing at least 2 weeks working in a nearby store. This part is basically done.

Then once the staff is hired, Five Guys send corporate trainers to train the newly-hired staff, and help run the store once it opens. This part is left to do. Five Guys takes this part very seriously as they not only want to help us be successful, but really want to protect their brand. Because they don't do any advertising, word-of-mouth on the brand is crucial so they take no chances here.

Finally, there are a few systems left to install as well, most notably the "Point-of-Sale" system, or POS. The POS is the brains of the operation and can't be installed until the CO is done. Once it's installed, we have to enter all of the employees and further customize it, which also takes time. We also are putting in a camera security system which will enable us to watch the store via the Internet.

So that's the deal. When we have an official date, we'll let people know, but for now, we're still on target to hit sometime in early April.

Starting to look like a Five Guys - Marlborough pictures

We're getting there -- I took these pictures at our Marlborough store this morning.   The DCM guys were laying tile (and they were perfectionists about it) when we got there around 10am.  The progress in the last 2 weeks has been pretty incredible.

This is a shot from the front of the restaurant - you're looking at what will be the seating area as seen from the front, and on the left is the counter.  If you've seen the Dedham store, it's basically the same layout.

This is the grill area -- no sizzling yet, but there will be.  The guys were also working on some of the ventilation/duct work behind it while we were there this morning.

Fries, anyone?  One thing's for certain: we have plenty of baskets.  We paid up for the higher volume units (4, not 3) in anticipation of more hungry customers than the average store in the chain.

 

Our walk-in cooler.  For some reason, this piece of hardware made it feel like a restaurant more than any other that we had installed.

 

Getting there...

Well, we are hard at work getting ready to open in Marlborough. It's starting to look more like April than May, and maybe even in the earlier part of April. Some of you have written me asking for firm date, but as yet, I don't have that. Believe me, when I know, you'll know.

Here's why: hard as opening a store is, opening our first one (for us, anyway) is especially hard. The beauty of a franchise, of course, is that we don't also have to invent the operating model. That's done for us. But there is much, much more that's involved.

To give you a bit of an idea of what goes on behind the scenes, here are some of the things it entails:

• Dealing with vendors: we are simultaneously signing up for gas, electric, linens, pest control, cleaning chemicals, cable/telephone, point-of-sale, credit card processing, security systems, 3 or 4 kinds of insurance, payroll, music (Five Guys always plays specific Sirius channels in their stores), bread, syrup, and of course meat and other food, among other vendors I am leaving out. None of them have ever heard of us before and some want to run personal credit checks even though we have a corporation set up. In this world, they all want to get paid up front for everything. They all have 5 friends who run other businesses targeting small business and those 5 friends all call to pitch something.

• Hiring: we have rounded out the management team for our first store, and are very proud of the group we have assembled. You're only as good as your people, so we spent a ton of time on this. Next, we/they will have to hire almost 50 people by opening day.

• Construction/equipment: add to all the vendors above the massive project of design, construction, and equipment ordering. Our construction company has done fantastic work so far, although Marc has spent countless hours chasing down vendors for grills, walk-in coolers, shelving, work tables, etc. At the same time, Five Guys is constantly optimizing how stores should be built. For example: should there be shelving above the fryers? If so, how much and what kind? This affects the bill-of-materials (BOM), and in more than one instance for us, changes it even since we placed the original orders 5 weeks ago.

• Marketing: this one is easy. Five Guys doesn't do any - they let the product speak for itself. This pays huge dividends in moments like the one I had yesterday with my daughters' babysitter. She's from Alabama, and when I mentioned that we were opening a Five Guys nearby, she went off on a 5-minute tirade about how much she loves Five Guys and that everyone from her high school goes there after basketball games. That said, we will be working closely with the Marlborough Chamber of Commerce, getting involved in local charities and with the schools, and plugging ourselves into the local business community.

• Banking/lending: this one has also turned out to be easy, which I know is unusual in these times. Our bankers at BB&T (out of Virgina - 13 out of 13 lenders in Mass. turned us down) fund requests the same day, always get back to us quickly, and have been fantastic partners.
  

Did I mention that we are simultaneously developing pipeline for up to 19 more stores? We actually have a "letter-of-intent" for the second one, which is a description of high-level lease terms but is not legally binding until we sign the actual lease. Of course, before then, we have to form the organization, negotiate the lease, fund a new bank account...

We love what we're doing and are very excited about the first store. But there are definitely days that are excited to run the business, not just build the foundation.

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.

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.

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.

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.