Five Guys and its 13 UAE stores: Why is this American franchise so successful?

August 30, 2022 | By RetailME Bureau

The story of a not-so-fast, yet-so-fresh food joint that is bringing a bit of America to the UAE, one burger at a time.

We live in a world where flashy billboards, loud ads, in-your-face colours and marketing slogans are viewed as the only way to be seen and heard. The rat race is even more prominent in the digital domain with brands trying really hard to compete for the attention of potential customers whose content retention levels are very low.

Some brand campaigns and advertisements, however, have been far more effective (memorable) than others. Who doesn’t know about the McDonalds v Burger King rivalry? While the ads have entertained us and encouraged some healthy competition, its not just fun and games for these companies. According to Statista, McDonald’s spent approximately $459.9 million on advertising worldwide in 2021 and Burger King spent $287 million in the US alone in 2020. In fact, marketing and advertising has played a huge role in the brands’ overall success and global performance. McDonald’s was the first fast-food chain to spend 1% of its overall sales on advertising, something that was unheard of in the 1960s.

Today, exorbitant marketing expenditures are a norm, a rule. The ones who don’t indulge in marketing activities are the exception and one rather successful exception in the QSR space has been Five Guys.

Started by five guys (four Murrell brothers and their father) and a lady (their mother) in 1986 in Arlington Virginia, USA, as a carry-out burger joint, Five Guys started offering franchise opportunities within a few years of its launch. In just under 18 months, Five Guys Enterprises sold options for more than 300 units and there’s been no stopping them ever since. Today, there are more than 1,700 locations across the United States, Canada, United Kingdom, Europe, Asia and the Middle East.

Shamal Holding bought the franchise rights to bring Five Guys to the UAE in 2015. Its first store was opened in The Dubai Mall, and now, seven years later, there are 12 stores spread across Dubai and Abu Dhabi with the 13th one scheduled to open in Sharjah soon.

As much as Five Guys is a burger joint, there are certain distinctive factors that make it starkly different from the majority of the fast food chains we know. Sudhin Siva, Vice President – Commercial Operations at Shamal Holding notes three facts about the brand. One is that everything is freshly made. Second, they don’t necessarily consider themselves fast food. And third, a customer can have a different burger experience every time they go, considering they can choose upto 250,000 variations of burger toppings.

“Our burgers are made by hand and the patties are made in store. We don’t believe in timers, freezers or microwaves. So calling it fast food wouldn’t be accurate as it would take atleast 10 minutes to make a burger,” he said. “One of the strong points about Five Guys is that everything is freshly made. So there was an existing perception of a high quality product and we brought that to Dubai. The loyalty factor plays a huge role in our business and that happens only because of the quality.”

Five Guys solely relies on three components – Product, Customer, and Staff – for the success of the business. Right from its inception, they haven’t relied on extravagant marketing gimmicks or high-end innovations to attract customers. There is a simplicity in approach, which translates to how the group operates across the world.

“We have always believed that our best marketers are our customers, and word-of-mouth goes a long way. As we expand, it continues to show us that we don’t need to go all out from a marketing perspective,” he explained. “And the second element is our colleagues. So together, our customers and colleagues, with word of mouth, help us increase our brand awareness and ensure returning customers.”

Moreover, Sudhin says, the Five Guys concept has always been about the food, which is why all the company’s energies have been focussed on ensuring consistency in the food quality.

“When it comes to the ingredients, the meat is 100% American and it comes from a single source and that’s the case with all stores across the world. The bread and vegetables are locally produced,” he said.

Now, as ideal as that might sound, the obvious question then is how did they manage to navigate the supply chain hurdles of the last couple of years, when a lot of their ingredients are supplied from as far as America.

Despite being franchised, Five Guys (the parent brand) controls every aspect of the supply chain, including logistics, purchasing, production and distribution. Considering the experience is authentically American, they are very strict on sourcing in order to ensure the highest quality while saving money by reducing wastage.

Considering ‘fresh food’ is priority for Five Guys, stock has shorter shelf lives, which means technology would play an important role in efficient inventory management.

“Technology forms a big part of our supply chain efficiencies. Volume anticipation, customer flow (depending on time of day and day of week), and in-store and delivery demand is predicted quite accurately, which is then conveyed to our partners,” he explained.

And then, he said something I hadn’t heard from any retailer since 2020. “Because of our strong ties with our supply chain partners we have never faced any logistics issues.”

When probed, he simply said that the fact that they managed to open four outlets this year in the UAE, with the fifth on its way shows that 2022 has been a good year for the chain.

He attributes a lot of this success to the dark kitchens and deliveries they started before the pandemic. “In July 2019, we opened our first cloud kitchen and that eased any impact we could’ve had in 2020. So the in-store customers we lost out on due to the restrictions, we managed to secure them through our dark kitchens,” he said.

“In essence, 2020 wasn’t that bad of a year for us. We just changed servicing our customers’ in-store to deliveries. That was a good model and we continue to do that. So 2021-22 were better than pre-pandemic for us,” he added.

Deliveroo is their exclusive delivery partners in the region and quick delivery (within 20 minutes) in order to assure freshness is a priority for them. In fact, the potential of dark kitchens to help Five Guys tap into the unexplored parts of the UAE is what Sudhin is most excited about.

“It (dark kitchens) gives us access to new locations and cater to communities we do not serve now. Currently, we have two brick-and-mortar outlets in Abu Dhabi, ten in Dubai, and one scheduled to open in Sharjah. Depending on the volume of orders or demand we receive online, we can make an informed choice about opening a new store,” he said.

Sudhin is looking forward to hitting the sweet spot of 20 stores in the UAE. “We don’t want to over serve the UAE but at the same time we want to reach as many residential communities as possible, and cater to the tourists as well. Putting those two together is how we determine where the next Five Guys locations will be,” he concluded.

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