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.

First Lady at 5 Guys, Off to Burger U

Michelle Obama went with her "staff" to Five Guys - no picture, but a nice mention in the New York Times. Regardless of your politics, you have to admit it's a good sign when she could probably have taken them anywhere and ended up at Five Guys, especially since as a Chicago person she couldn't have known about them UNLESS SOMEONE REALLY RECOMMENDED IT TO HER. On top of that, she ordered a cheeseburger, fries and a soda, so she at least knows something about economic stimulus that works.

Tonight I am heading off to Lorton, VA for a couple of days at Five Guys Burger University (my words, not theirs.) I am ready with my red t-shirts and baseball cap. The red shirts connote that I will be a crew member, not a manager, and the main thing the cap will show people is that I have a small head and look ridiculous in a one-size-fits-all hat. That's entrepreneurship. My partner Marc is taking the 2nd half of the week; since we aren't going to be working in the stores ourselves, we don't have to complete the whole week of 8am-11pm days and the certification test on Friday. That said, our feeling is that if we are going to be owners, we need to have some basic understanding of what it's like to actually work in the business. I have done similar things in my tech business life (sitting on the customer support desk, etc.) I didn't have to buy work shoes for those gigs though.

I'm heading down with our manager (Rich Lanza) and our assistant manager (Doug Oelbaum). This past week was huge as we got them introduced and starting to talk about running the store, which we are very confident in their ability to do. Also, demolition started on our site, we had a big architectural breakthrough for our next site, we finalized our construction contract, and are generally working our way down the "punchlist"; the punchlist is the 5 Guys project plan, if you will, on how to open a store. It is OK and ever-changing, so we have had to figure out a lot on our own. Yet another reason to attend burger school to find out how these restaurants actually run.

More from Virginia after the first long day.

Best of What's New - Boston

Five Guys was named "Best of What's New" in Boston by the Globe -- here is the text of the article:

Five Guys Burgers and Fries

There's no better place to satisfy a burger craving than Five Guys, and (finally!) two have opened locally, in Dedham and Foxborough. Started in a suburb of Washington, D.C., the rapidly expanding fast-food franchise will quickly have you falling for the juicy, greasy stacks. Single and double burgers are made to order (but they're always well done), and you pick from 15 classic toppings."




There are many burger places around the Boston area, so this honor is a great accomplishment for Five Guys.

Our franchise group is looking forward to getting our first store open shortly -- construction starts next week -- and to getting our second store signed up. Looks like there will be another award sign we can put on the wall...

Ready to Start Construction

Tomorrow morning we are meeting with Brian Abbey from DCM, who will be our GC for our Marlborough store opening. Last week, Marc and I spent several hours with Five Guys' construction guru Brian Gill going through every inch of the architectural plans and kicking off ordering. Basically, we order the equipment and then Brian and his crew are responsible for receiving and of course installing it all.

The franchise-restaurant equipment list creation is pretty systematic and pretty painful, and that's even if your architect has labeled things very clearly on the drawings. Most don't. Basically, Brian (or your favorite frachisor) goes through the architectural blueprints inch by inch to come up with what we need to order. For us, this includes:

- grills
- fryers and fry baskets (one set for blanched fries -- blanching is key to great fries)
- walk in coolers
- refrigeration systems
- shelving
- tables and the "15 minute" chairs, thus named because you don't want to spend more than that sitting on them
- legs for the tables (yes, these are a separate order)
- soda dispensers and icemakers
- work stations
- kitchen utensils, including fry cutters and grill accessories
- ketchup dispensers
- POS (point of sale) system

If this doesn't sound fun, it's not. Each has its own set of vendors, none of which supply credit of any kind, in this or any other type of financing environment. 5 Guys has approved (or owns) most of these vendors, but in some cases, is changing its mind week-by-week on what constitutes an "approved" order. For example: we had to get approval for our fry basket order and were informed by 'corporate' that the certain type of fry basket we were instructed to by is actually NOT approved by TRAINING or OPERATIONS (their capitalization, not mine). And you thought the TSA was hard to deal with.

Luckily BB&T, our financing partner, is making paying for these items as simple as possible by pre-funding invoices as we send them. This is better than the usual standoff between waiting for things to arrive before they get funded, but not being able to order anything without 100% cash up front. How is someone supposed to run a business that way? It makes you wonder how anyone who doesn't already have credit can start a business in this environment.

So after a lot of hard work, we are ready to roll on construction. For posterity's sake, here are a few pictures of what the site looks like before we begin construction. I have also included a few pictures of the signage both on the strip center's main sign, and in the window.

Calorie counts

It's been reported recently that Massachusetts is considering having "major" chains post calorie information for their products. New York City does this already, which is why I know that the tasty Starbucks iced lemon loaf is really, really bad for you. I can wolf this thing down in about a minute, packing in 450 fat-rich calories and little or no nutrition.

In case you haven't seen it, here is a link to that article (sorry that it's pasted in - Blogger is giving me problems right now):
http://www.boston.com/news/local/massachusetts/articles/2009/01/08/state_readies_campaign_to_curb_obesity_epidemic/

In a related note, McDonald's apparently has been working behind the scenes to convince moms that its food actually isn't that bad for kids. Kids love McDonald's, obviously; my kids already know, even though they are only 5 and we never go to McDonald's, that their colors are red and yellow. Whenever we play Uno, they tell us so ("Dad! I only have McDonald's colors). But Moms are the so-called "gatekeeper" that prevent their kids from going to McDonald's, so the restaurant chain's challenge is to get them bought in. The Washington Post had this story on their front page earlier this week.

I don't know if Five Guys can be considered a "major' chain since in Massachusetts there are literally 2 stores open. But here's one thing I do know: Five Guys is not health food. We all know this. The difference between Five Guys and other chains, however, is that we don't pretend it is. I've heard our Director of Franchise Development (McGuire - he's the white-suited guy in the Phantom Gourmet clip) announce this at ICSC events to wild cheers. We don't serve 1,000 calorie Asian Chicken salads. We don't sell "all white meat" Chicken McNuggets that have even more saturated fat than a Big Mac. We sell burgers and fries and they are not going to help you lose weight.

However, they are high-quality, award-winning products with legions of loyal customers. Giving these customers visibility into calorie counts, if that's what we are asked to do, is a part of the privilege of winning their business. It doesn't worry me much. I know all about the Starbucks lemon loaf and ate one only this past Tuesday. And it was delicious.

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.