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Mon, Jul 02, 2007 - Page 10 News List

Five Guys rides popularity wave

AFP, WASHINGTON

The US' hundred billion-dollar fast food market is already crowded and battling to retain health-conscious customers, but one company has people lining up to feast on its hamburgers and fries.

Unlike most of corporate America, its owners shun publicity -- they politely declined an interview request -- and even more remarkably do not believe in advertising, but Five Guys is riding a wave of popularity.

Jerry and Janie Murrell opened the first Five Guys restaurant in 1986 in the Washington suburb of Alexandria, Virginia. The brand name relates to the Murrell's five sons, who have since grown up and help manage the expanding burger and fries chain.

Shoot forward 20 years and the family formula of cooking customers' burgers while they wait, cooking fries in peanut oil and offering mostly free toppings, is raking in fatter profits from tens of thousands of customers.

Chalkboards propped up in Five Guys' red and white-tiled restaurants inform diners of the source of the potatoes sliced for frying.

In 2003, Five Guys operated just five restaurants in the Alexandria area; by the end of 2005 the chain had grown to some 75 outlets along the East Coast.

The privately held firm's empire has grown since then at a much faster clip, to a current 176 restaurants stretching from Florida to New York. The company says it has also sold franchise rights for 1,200 new outlets which are expected to open during the next decade, as the company expands into the Midwest.

Each outlet generates average sales of over US$1 million annually, and last year's combined sales grew to US$106 million, according to Technomic, a Chicago-based food service industry consulting firm.

Five Guys has climbed to 229th place in Technomic's annual ranking of the 500 largest US restaurant chains and has developed a "cult following," the consultancy said.

Five Guys sizzling growth comes as other, larger and more established fast food rivals vie to shore up their market share.

National burger chain Wendy's said on June 18 it was exploring a possible sale of the company as it seeks to maintain sales volumes. It has retained JP Morgan and Lehman Brothers to help it find potential suitors.

McDonald's, which reported a first-quarter net profit of US$762 million, controls the US hamburger and fries scene, and has been vying to promote more healthy menu options.

Five Guys is still small compared with the world's biggest restaurant chain: McDonald's has over 30,000 outlets serving about 50 million hungry customers every day in over 119 countries.

But McDonald's, which also started out as a modest family firm, and other rivals like Burger King are likely to be keeping a close eye on any firm trying to beat them at their own game.

Five Guys generally prices its burgers and fries higher than its rivals, and bills average US$6 per customer, Technomic said.

Although co-founder Jerry Murrell declined to be interviewed, a Five Guys spokeswoman, Molly Catalano, said its success had stemmed from the family's obsession with its menu.

"The Murrells are fanatical about every detail, from the bread to the bacon to the potatoes; even items like pickles and lettuce. Five Guys will never short-change the customer by trying to cut food costs," Catalano said.

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