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How Five Guys Got Us Eating Its Burgers

The ability of Five Guys to offer a simple and consistent menu throughout their stores, engage customers as they wait for their order (think of all those shells to clean up from the complimentary while-you-wait peanuts) and "play into the trend of people wanting to know where their food comes from" adds to the company's success, says Valerie Killifer, senior editor of FastCasual.com.

Murrell's perspective exemplifies the demand for more offerings in the fast-casual restaurant industry, specifically the so-called better burger.

"As customers traded down to the fast-casual from casual, the recession really opened the door to the gourmet better burger" in restaurant categories, Killifer says.

Typical fast-casual establishments include bakery cafes such as Panera Bread (PNRA) and so-called Fresh-Mex places such as Chipotle (CMG) and Qdoba Mexican Grill.

The better burger segment particularly plays to the baby boomer consumer "who grew up at diners with burgers and milkshakes. They were looking and asking for that experience, but just in a higher-quality menu item" and with more control over their dining experience, Killifer says.

"That part of the fast-casual restaurant category is not saturated -- not yet. But time will tell. It will take a couple of years to see who the big players really are," she says.

Annual sales last year for fast-casual burger chains jumped 16%, while unit growth totaled 17%, as opposed to 1.6% growth by burger chains in the so-called limited-service category and a 0.2% unit decline, according to Killifer and the Technomic report.

Hudson Riehle, senior vice president of research at the National Restaurant Association, agrees that the recession contributed to the rise of the better burger.

"In an environment where consumer confidence remains fragile and there is less cash on hand, the ability for a fast-casual hamburger operator to deliver a good price-value experience taps into that consumer pent-up demand for restaurant usage," Riehle says. "Americans have always had a love affair with hamburgers."

Another important aspect Murrell believes contributes to Five Guy's success is the decision to stick to what it knows best -- making hamburgers and fries.

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