This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Five Guys Got Us Eating Its Burgers

"We're fortunate in the fact that we don't have to keep remaking ourselves. We've got the same menu since 1986," he says. That keeps it simple. "We're not doing any vertical integration. We don't have our own trucking company or our own meat companies. We're using big national companies that can do that for us."

There are plenty of players looking to make their mark in the better burger segment. Besides Five Guys and In-N-Out Burger, small establishments such as Smashburger, Elevation Burger and Mooyah are growing exponentially.

"We think there is room on a national level for two or three major players in the better burger category," Smashburger CEO Dave Prokupek says.

Smashburger has opened more than 100 units in 30 states in four years. The company plans to open another 80 stores this year. Prokupek says product aside (the company also emphasizes its freshness), the ability to open franchises efficiently will fuel the company's growth.

"There's not that many fast-casual food concepts whose build-out cost is $400,000 to $450,000," which includes smaller-square-footage stores and cost-effective marketing that incorporates a social media strategy, he says.

Investors are looking for ways to place bets on the segment, but at least one observer worries about the sustainability of growth at franchised companies such as Five Guys.

"Sometimes when you're getting in on a concept that is rapid growth, you're buying because other people are buying. It's kind of like the stock market. [Franchisees should] make sure they didn't just have some good stuff in the beginning," says Doug Schadle, a veteran to the franchise industry and CEO of Rhino 7 Franchise Development.

According to Murrell, Five Guys' stores average nearly $1.3 million in annual revenue, with some of the newer stores hitting more than $2.5 million per year.

Outside investors are encouraging the company to expand internationally, but they are also looking to back franchisees.

To expand in Europe or Asia, "we're not sure if we want to do it with another investor or if we want to do it on our own," Murrell says. "The nice thing about it is, we don't have to go. We've got enough room to expand in the U.S. for quite a while. We've only sold 3,000 franchised stores, and I think we can sell another 2,000."

Chatter around whether the company should go public is heating up. The idea, while not on the table, is not completely off, Murrell says.

"I would consider it if I could figure out a way to protect the franchisees and the brand," Murrell says.

-- Written by Laurie Kulikowski in New York.

To follow Laurie Kulikowski on Twitter, go to:!/LKulikowski

To submit a news tip, send an email to:


Follow on Twitter and become a fan on Facebook.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CMG $484.67 5.00%
MCD $118.07 1.10%
PNRA $198.75 3.90%
AAPL $93.97 0.29%
FB $103.01 1.10%


Chart of I:DJI
DOW 15,891.35 +231.17 1.48%
S&P 500 1,847.08 +18.00 0.98%
NASDAQ 4,291.0070 +24.17 0.57%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs