Five Guys' philosophy and factors contributing to rapid success

Five Guys Burger & Fries is a privately-held quick service restaurant that has grown rapidly since 2003, when the company began franchising outlets (FiveGuys, 2003). Part of the franchise agreement outlines the company's ethical stance on a variety of issues. As a result of its philosophy, Five Guys has built a reputation as a leader in the quick service business for its ethics, with respect to treatment of employees (Swanson, 2012). The company also seeks to cultivate a reputation for ethics in some of its marketing techniques. For example, restaurants will often post on a chalkboard the name and location of the farmer who supplied that day's potatoes (Peckenpaugh, 2012).

Ironically, despite the company's reputation, Five Guys never set out to be an ethical company. Rather, the family-owned business sought to adhere to the values of the founding family, who still run Five Guys (Weise, 2011). The result is that their values have been imposed on the company as a whole, for better or worse. In general, however, those values tend to be on the ethical side of business, in particular with respect to employers and suppliers. Because the original family still controls the business, maintaining its core values has been easier than if the company had gone public. There was fear that their philosophy and values would be sacrificed when the company franchised, but that has not come to pass. Instead, when franchisees do not see eye-to-eye with the family on ethical and value issues, their franchises are bought back by the company, which has secured financing from private investors specifically to undertake such buybacks and build a network of corporate-owned restaurants (Ibid).

The Five Guys philosophy, in addition to ethics, emphasizes simplicity. The menu never changes, largely because the family will not allow it. They actively dismiss any suggestion that new items be added to the menu, and they work hard to ensure that the restaurants have ingredients that meet quality standards. There are anecdotes about how the company FedExed buns to Florida when the first opened restaurants there, because they did not have a local supplier who could meet their standards (Weise, 2011).

The philosophy adds value to the company for a couple of reasons. The first is that franchises thrive on consistency. The more consistent the experience, the more value the brand has. Consumers relate to the brand, not to individual outlets. When the brand is strong, it can be expanded anywhere. At Five Guys, the philosophy that emphasizes simplicity and homespun values is applied consistently across the chain. The second reason that this philosophy adds value to the company is that it is something to which consumers can relate. In some quick service restaurants, drastic changes have failed, and resulted in a devaluation of the brand rather than improved, Starbucks in the mid-2000s being a good example of this (Quelch, 2008).

The philosophy is one factor that contributed to Five Guys' success and the ethics are another. A third one is the food, which again flows from the philosophy of simplicity. However, the food also tests well among consumers in the quick service space. Even in an intensely competitive environment, Five Guys delivered superior food and that has helped to drive its success, and its brand name, arguably more than ethics or philosophy. In the external environment, no company has seriously attempted to match the quality of the fries, and that resonates with the consumers, who even score the burgers well.

Abela and Murphy (2008) note that marketing often compartmentalizes different ethical issues, yet the reality is that consumers do not. If they feel that Five Guys treats its employees well and has a health, family-based corporate culture, these positive attitudes bleed across to other ethical issues. This reality works well for Five Guys, because the company ultimately has no "ethical" agenda, at least not anything it has specifically published. Rather, the company has always emphasized that its way of doing business will lead to profits. The profit motive is the norm in business, as opposed to the social motive (Balfour & Fuller, 2010). The sparse academic literature on the subject does not support the idea that consumers choose restaurants based on their ethical reputation to a degree that would make it a viable business option (Poulston & Yiu, 2011).

There are some businesses that have made ethics a focal point for their marketing, so the concept is not entirely refuted. Ethical marketing tends to be an extension of relationship marketing, where the relationship with the consumer is based on mutually shared ethical principles (Sirgy & Lee, 2008). If both restaurant and consumer share similar ethics with respect to duty, the consumer will be drawn to the restaurant. If we chart the marketing and the rapid growth of Five Guys, however, there is little evidence to support the hypothesis that consumers are eating at Five Guys because they are fans of the company's ethical views. Even when people admire the company's ethics, they show a preference for the food. The quality of the food creates initial visits and from there the repeat visits that drive the quick service restaurant business. Five Guys' philosophy resonates with consumers, but only because it results in food and an in-restaurant experience that consumers favor, including knowing where their potatoes came from.