It has been less than a year since its UK launch, but US better burger chain Five Guys has already made plenty of waves across the country’s eating-out sector. Many have questioned whether it can maintain its rate of progress and the prices it has been paying for sites, but it is starting to put in place foundations for its continued long-term success here. At the same time, the company may want to take a leaf out of KFC’s book when it comes to hiring and training people, as the fast-food chain again came out on top of another employer list this month.
Late last year, John Eckbert, managing director of Five Guys UK, told me that the group was ready to be aggressive when it came to its roll out this year after the group’s launch in Covent Garden exceeded expectations. At present the company is living up to that pledge.
Since its UK launch last June, the group has added a further five sites (including Kingston, which will open later today) and secured a further four openings, including high-profile locations in Manchester and Birmingham, which will launch later this summer. Although the speed of the rollout has surprised some, what has been more of a shock has been the significant numbers the group is ploughing in to make sure it can back up its growth plans.
The joint venture backed by billionaire mobile mogul Charles Dunstone is believed to have invested c£2.3m in paying the premium for the Long Acre site in Covent Garden. In some respects the price is understandable in terms of where the capital’s property market currently sits and the company’s need to secure a flagship site to underline the serious nature of its plans for what is its first venture outside the US and the probable first stepping stone to further European expansion.
The capital’s rental market was already heating up before Five Guys entered the fray, thanks, in part, to investment from overseas and a rush by landlords towards food-led operators, but the company’s aggressive expansion plans are set to take this trend out in to a regional market that is already showing signs of coming to the boil.
Earlier this year, TGI Friday’s paid a seven-figure premium for the Pesto site in Liverpool One, which is believed to be the highest paid in the North West of England and possibly for any restaurant unit outside London. The under bidder was Five Guys. At around the same time, Wahaca secured the Coal site in Wimbledon for an opening later this year, for a premium that Coal chief executive John Gater found “too good to refuse”. Again Five Guys was believed to be the under bidder. I understand that the group paid a seven-figure sum for its latest site, the Del Villagio unit in Birmingham’s Bullring.
These examples highlight the speed at which the group wants to grow and the firepower it has at its disposal. The Liverpool tale also shows that it will not have its own way in terms of rival operators, but also from landlords, some of whom have yet to be convinced by the brand, despite the big cheque book. This is underlined by the group’s efforts to secure a site at Westfield London, which recently came to fruition after an initial setback last year that was first put down to Westfield’s reluctance to the brand.
And it isn’t stopping there; while major cities are a key target for the company this year, a site in Leeds should also come on line this summer and it is still looking in Liverpool, it is also still looking at sites in and around the M25 (a move reminiscent of early McDonald’s) and at future regional developments. I understand that it is already in talks on a former Pizza Hut unit in Harlow and is bidding against a pair of other better burger operators on a unit in Bournemouth - not your typical initial rollout locations.
While the performance of its site in Reading’s Oracle scheme, the group’s second UK site and first regional shopping centre opening, is believed to have been patchy, trading across the brand’s overall estate is believed to have been strong, with the initial opening of its Guildford unit described as “exceptional”.
Although it stated an ambition to have 30 sites in operation by the end of this year, it intends to have around 20 sites open in 2014 and a further 8-10 secured in the pipeline for 2015, a target it seems capable of achieving.
The development of an operational team led by Marcel Khan and supplemented by Tim Lowther in the north is ongoing. Earlier this year, Eduardo Carnevale left Itsu as its head of training and standards to join the company, while it is understood that Louise Campbell, formerly of D&D London and Mitchells & Butlers, has recently joined the group to develop and oversee its HR function.
Five Guys is set to quickly become part of the UK’s eating-out landscape, forcing UK rivals to stay ahead of the game, note how Byron has subtly upped its roll out plans. Eckbert says: “The UK launch has gone really well and we are ready to play an important part in the UK burger conversation. This is the first international site for the group, so we didn’t know what to expect in many respects, but it has surprised us how well we have been received.”
While Five Guys is puting in place the foundations to grow into a 300-strong group, KFC is continuing to win employer plaudits, whilst overseeing an estate that is triple that size and growing. Last week, it was named in first place overall in the large organisation category at the Britain’s Top Employer awards.This is the first time a company has achieved the honour in three consecutive years.
Late last year, the company launched its first ever Graduate programme - the ‘Operations Leadership scheme’, which will see a total of 10 successful graduates join a fast track 12-month learning and development programme that will culminate in them running a million pound business within just a year. The company said that more than 1,000 people applied for the programme, and the final 10 went through an intensive selection process in order to win themselves a place on the scheme and will earn up to £30k in their first year out of university.
As the group’s HR vice-president James Watts points out: “In our sector you have to grow talent quickly within the organisation: two-thirds of our management positions are filled from promoting within.”
I have already touched on peer-to-peer training as something that is starting to gain traction in the sector, but KFC has adopted it as part of its recruitment process.
Here is one such job ad: “My name is Aimee and before my recent promotion I was an Assistant General Manager and I would like to tell you about my time at KFC…After being made redundant from my role in child psychology I was unsure of the next career move for me. My friend was always talking about what a great company KFC was to work for and the great career progression she had experienced to become a General Manager while completing her degree. She seemed really happy there so I thought I’d give it a go. I joined the company as an Assistant Manager for the flagship restaurant of my area. I had the opportunity to take part in various key projects in my area. After some amazing experience opening a new store I was promoted to General Manager. I now play a big part in training and development of new team in my area. I learn something new everyday and I’m always encouraged to try new experiences that really develop me.”
Simple, but I am sure very effective in helping the group, which already employs over 24,000 people, reaching its goal of opening 50 sites a year and expanding to a 1,200-strong UK estate.