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Bus 508 Entreprenurial Leadership

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Entrepreneurial Leadership
Writing Assignment 1: Five Guys

Entrepreneurial Leadership
“Five Guys Burgers and Fries: Ingredients for Success”

Five Guys Burgers and Fries has become a major contender for the forefront of the fast food market. The Company was founded by the Murell brothers in 1986 in Washington D.C. They created a fast food chain that quickly grew to become one of the largest revenue producing chains and franchises in the country. Five Guys was created with a very simple plan that has helped to set it apart in the fast food business. The founders adopted a philosophy that at the time was a leader on the fast food market. They created the business on the philosophy of “Sell a really good, juicy burger on a fresh bun. Make perfect French fries. Don’t cut corners” (Boone, 2012) This philosophy was extremely simple and helped to guide the future of the business. Five Guys puts extreme emphasis on providing the highest quality of food possible for the customer. The company uses grass fed 80% lean beef for their burgers. They also never freeze the meat. Everything that is prepared at the restaurant is fresh. The company spends extra money on quality ingredients such as Idaho Potatoes, and even takes the extra effort to prepare them in a way as to minimize the amount of oil the fries absorb when being made. Five guys have also followed the mentality that the customer will be the company’s best salesperson. The typical fast food chain spends 3% of revenue on advertising. Five Guys does not put anything towards advertisements. The company feels that if you treat a customer extremely well, give them a high quality product, the will leave and become a great source of marketing.
Because the company does not spend money on advertising, they are able to take and put more money into quality of the food they prepare and let the satisfaction of customers be the avenue to which they market their product. The menu is simple, yet the company spends more on ensuring that no one leaves without being a satisfied customer. The extra money they put into the ingredients and time preparing the food fresh helps to maintain this “word of mouth” marketing strategy. Five Guys also ensures success by keeping a simple menu and ensuring that everything prepared in the restaurant is prepared fresh. The company’s website mentions “Five Guys does not currently have plans to add any items to our menu. We follow the philosophy of focusing on a few items, and serving them to the best of our ability. If we were to add to our menu, then you can guarantee that we would only do so if we could serve the highest quality product possible” (Fiveguys.com, 2012). Fresh food preparation costs more than it would to stock up and buy in bulk. The company even made the original bread maker a partner to ensure that the original bread recipe never changes. The stores get a shipment of fresh buns in everyday, and the location and distance from the bakery does not matter. To ensure quality within each store, the company completes third party audits weekly of each store. The store is graded on cleanliness, service, food quality, and food preparation. The other audit is kitchen and food safety. The company takes 1.5% of its overall revenue from each individual franchise and puts it to weekly bonuses for the employees who work there to ensure the scores are high. The company believes that the employees are taken care of and have a sense of accountability and ownership; they will be better motivated to ensure the standards are exceeded. This drives the “team” aspect. The company takes a weekly bonus of up to $1000 and divides it among the employees, the amount based off of the audit scores. The original start-up values for the company allowed the company to succeed in the market against the competition. The initial values that the five brothers set out to achieve had not been accomplished or even thought of at the time. Spending more money on ingredients and quality of service than the company did on advertising was unheard of. The first value is that the quality of food is what sells the business. The customer will leave satisfied because the customer has spent money on a high quality, fresh meal. The company puts its revenue into the food, and less on décor. Each store has very little in the way of looks. Red and white tile are all that a customer will see when they walk in. This is effective because the company focused on creating a high quality product for the customer and keeps to the simplistic is better line of thinking.
The company does not charge for extras and toppings, uses only the highest quality ingredients, and the service and cleanliness helps achieve the level of satisfaction for the customer. The customer is the most important to the company. The five guys mission statement states, “You the customer are the most important visitor on our premises. You are not dependent on us, we are dependent on you. You are not an outsider in our business; you are a part of it. We are not doing you a favor by serving you; you are doing us a favor by giving us the opportunity to do so” (Farfan, 2012). The company has not deviated from these initial goals today and has grown to become the most profitable fast food chain in the world today. Simplicity and quality are sometimes all a customer wants, and Five Guys understands this.
There are many factors that contributed to the success of Five Guys in such a short time. These factors had great effects on the company and the fast food industry. The first factor that led to success is the idea of serving high quality food and providing excellent service standards to the customer. At the time, the fast food industry was a myriad of companies all following pretty much the same business models. The food was bought in bulk, and was not very high quality. Five Guys realized that this was not the best approach to creating success. The company succeeded by creating a simple menu, but offering the highest quality product and service to customers, and used the customers and word of mouth marketing strategy to take advantage of the lacking fast food industry.
Another factor was that the company realized one of the best ways to make quality of service stand out is to get the employees to be accountable and have a sense of ownership in the store. The incentive program that was talked about earlier almost forced excellence. This helped the company provide its extremely high quality of service and product. Customers were not used to such high standards. According to an interview with Bob Dorfman, a Five guys franchise owner, “With a shift of five or six people splitting $900 for the week, you can see how that adds up; There’s a lot of peer pressure. A store can lose 20 points if the cashier doesn’t offer fries and a drink along with a burger or if someone didn’t get the proper greeting or a burger was overcooked. Stores are also graded on cleanliness and other factors. There’s so much money at stake, people work to earn it. It’s one of the ways Five Guys ensures that everything is done well” (Frumkin, 2012). 

Another factor that affected the market was at the time in the late 80’s to early 90’s; advertising was limited to mainly the television and radio. By ensuring the stores had the best quality service and product, customers would leave satisfied. The customers would then market for the company by word of mouth and this was extremely effective at the time due to the lack of advertising and competition. Today, this still holds true for Five Guys. They do not advertise still, and customers spread the word about the company.
The major factor that leads to the company’s success is that the company never strays from the original simplistic approach. In the late 80’s the cost to operate and open new stores was lower because the overall menu was minimal. The simple burger, hotdog, and fries combo was the staple of the service Five Guys provided. The minimal menu selections meant an easier time producing fresh food and purchasing high quality ingredients. This ideal helps Five Guys in todays market stay at the top of the competition. Just as it was cheaper to open and operate back in 1989, the simplicity that is still in place today allows a lower startup cost for a franchise.
Five Guys follows and sets multiple examples of ethical standards and social practices. The company itself strives on providing to the best of its ability, a high quality product and service to ensure that the customer gets the best product for their money without cutting corners. The company follows the ethical leadership principles by involving everyone at the company, managers and employees, ensuring that each have a place and ensure the best effort is given to customers and the quality of product is the best that can be offered. The example that Five Guys uses is the employee incentive bonus plan, the leadership ensuring the best service and product is provided, and promote teamwork and best efforts. The overall greater good is the ethical focus.
In an effort to provide for the overall greater good, Five Guys worries about the safety of its customers and strives to ensure that this is met to benefit the overall customer base. One of the audits that the company does on a weekly basis is the kitchen and food safety check. The inspection is to ensure that the highest cleanliness standards are met for food preparation, and the equipment being used is safe and in clean, good working order.
The company also has peanuts in buckets for the customers to snack on while waiting for their food to be cooked. The company realizes that there are people with peanut allergies. The company is aware and cares for the safety of its customer base, but also looks out for the customers who do not have the allergy and benefit from snacking on the peanuts. The company’s website states “We by no means want to exclude guests from our store, but at the same time we would not want to disappoint our peanut eating guests. We make sure that we have signage on our doors and in our restaurants about the fact that we serve peanuts in bulk containers as we would never want someone to risk their health by coming into our restaurants” (FiveGuys.com, 2012).
Five guys also follow the duty of loyalty to the laws and regulations that the company must adhere to. The company does not hire slaves or trafficked persons knowingly. The company even goes so far as to not allow any of its suppliers to do the same. Five Guys continually inspects its suppliers to ensure that they are adhering to the laws and policies of the country they are located in. This practice ensures that the company does everything in accordance with ethical and social responsibilities.
The company also signed a deal with Kraft Foods to create a program where Kraft will donate a meal every time a customer checks into the location for Face book and Foursquare social media sites. The donations go to Feeding America, a hunger-relief non-profit that operates a network of food banks across the U.S. The company knows that the customer is the reason they exist, and that giving back to the community is a good way to show that. Five Guys shows a great example of corporate social responsibility in this way.
Five Guys set a standard for the fast food industry by creating and maintaining a strict set of goals and utilizing a set of common simple philosophies that were thought not to be feasible in 1989. By providing and setting a standard of quality and excellence that other companies could not provide in the market, Five Guys quickly became a leading force in the fast food industry.

References
5 Reasons Why Five Guys is a Big Success | Inc.com. (n.d.). Small Business Ideas and Resources for Entrepreneurs. Retrieved October 20, 2012, from http://www.inc.com/ss/five-guys-burgers-and-fries#0
Farfan, B. (n.d.). Five Guys Restaurant Chain Mission Statement - Vision, Mission, Purpose, Headquarters, Founders Facts, and Trivia About Five Guys Burgers and Fries. Retail Industry - Retail Stores, Sales, Management, Marketing, Jobs, Companies, Trends and Analysis in the U.S. and Global Retail Industry. Retrieved October 20, 2012, from http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/Five-Guys-Mission-Statement.htm
Frequently Asked Questions | Five Guys Burgers and Fries. (n.d.). Home | Five Guys Burgers and Fries. Retrieved October 20, 2012, from http://www.fiveguys.com/about-us/faq.aspx
Frumkin, P. (n.d.). Five Guys strengthens support, infrastructure to keep up with rapid growth rate | Nation's Restaurant News. Nation's Restaurant News |. Retrieved October 20, 2012, from http://nrn.com/article/five-guys-strengthens-support-infrastructure-keep-rapid-growth-rate
Kurtz, B. (2012). Contemporary Business (14th/12 ed.). New York: Wiley, John & Sons, Incorporated.…...

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