Five Guys is bucking the wider market trend when it comes to expansion - but does closer analysis show there is room for improvement on food quality and value for money? MCA market insight director Steve Gotham delves into the data. 

Five Guys recently celebrated their sixth anniversary in the UK. First opening in true US style on the 4th July 2013 in Covent Garden, the US burger business quickly set about establishing itself as one of the fastest growing restaurant chains in UK history. It reached the 50 landmark in 2016.

This rapid growth coincided with a halcyon period of restaurant expansion, but by the end of 2019, the business is expected to have opened another 50 outlets, demonstrating how the business has been able to buck some of the troubles that have led to numerous casualties in the wider restaurant market. So what are some of Five Guys’ special attributes?

Five Guys UK accounts show the business generated a turnover of £149.6m for the year ending December 2018. This increased by an impressive 23%, despite trading challenges from adverse weather conditions at the start of the year and some impact from the World Cup during the middle of it. The growth was of course helped by significant physical expansion and some maturing sales. During 2017 the business opened 20 sites (+34%) and in 2018 a further 9 (+11%) to reach 88 at December 2018.

The total turnover equates to average sales per week of £34,500. According to MCA’s Operator Data Index this is comparable with McDonald’s, and among large portfolio operators, is only surpassed by Nando’s, TGI Fridays, Wagamama and Wetherspoon.

Five Guys 2018 turnover growth will also have been helped with the widening uptake of delivery services, with Deliveroo widely available. Interestingly however, the business continues to refrain from entering the breakfast market, with stores typically opening at 11am. The UK business remains focused on high streets and shopping centres, with no apparent interest, yet, in trading from travel sites.

Five Guys’ management considers the success of the business (it has over 1,000 sites in the US and a growing global presence in 15 countries) to be primarily attributable to a core and unrelenting focus on three pillars: burgers and fries made fresh daily, spotlessly clean restaurants and amazing customer service. Now at this point, it is appropriate to see how UK consumers might regard the business on the key elements of freshness, cleanliness and friendly service. In truth, and for a business that management likes to regard as ‘premium’, the results could be better.

Against McDonald’s, MCA’s Eating Out Panel dinner day-part ratings are all slightly lower at Five Guys. Of perhaps greater concern, and this also applies to lunch, is how the Five Guys’ results for 2018 are all down on 2017 comparatives. Moreover, this trend also applies to perceptions of food quality, value for money and to the Net Promoter Scores.

There is a clear suggestion here that some disciplines and house standards weakened over the course of 2018 – and as it seems, into the first quarter of 2019 too. Without remedial attention, the growth potential of the UK business risks being undermined. With attention, there is no reason why this business cannot carve out a far greater share of the UK casual dining market. Nando’s successfully trades from 400 sites in the admittedly, much less competitive, premium chicken market. As such, it would not be an unreasonable prospect for Five Guys to be targeting at least 200. Indeed, last year the business secured a £100m bank facility from Goldman Sachs to both repay UK shareholder debt and to help fund UK and European expansion. So, don’t rule out the business celebrating a double century around 2025.