Strategic System Management Report: Five Guys, UK Food Industry Review

This report provides a comprehensive analysis of Five Guys' strategic system management, focusing on its operations within the UK food industry. It begins with an introduction to strategic planning and system management, followed by an overview of the UK's fast-food sector, highlighting trends and consumer behavior. The report then delves into Five Guys' organizational review, examining its business model, fresh ingredient sourcing, and customer-centric approach. A detailed value chain analysis identifies primary and support activities, emphasizing inbound and outbound logistics, operations, marketing, and support functions. Furthermore, the report explores Five Guys' value system and its importance in business operations. Finally, the analysis includes PESTEL and SWOT analyses to assess the external and internal factors influencing the company's performance and strategic direction. The report concludes with key findings and recommendations for future strategic planning.

STRATEGIC SYSTEM
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
UK’s Food Industry.....................................................................................................................1
Organisational Review................................................................................................................2
Value Chain Analysis..................................................................................................................3
Value System..............................................................................................................................5
Porter's Five Forces Model..........................................................................................................7
PART B............................................................................................................................................9
PESTEL Analysis........................................................................................................................9
SWOT Analysis........................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
APPENDICES...............................................................................................................................15

INTRODUCTION
Strategic Planning is an integral part of any organisation irrespective of its nature, type
and complexity. One of the components of this unit relates to System Management wherein an
enterprise-wide administration of a series of systems, including computers, is carried out in a
strategic manner (Bondarenko and et.al., 2017). This report focuses on taking into account a
company operation and seeks to ascertain how its business is carried out. Additionally, it also
aims to determine the main cost and income generated through such operations. The report also
aims to measure corporate performance by comparing similar type of businesses in terms of
profit, abilities and efficiency.
For this purpose, Five Guys has been chosen so as to facilitate a successful discussion of
its business activities by taking into account global expansion and analysing its corporate
performance over the years. This organization is a part of UK’s Food Industry which was
established by a family of five brothers in Virginia, US in 1986. Essentially, it’s a burger joint
which focuses on the quality of the product rather than quantity. It has its own ways of making
fries, burgers, milkshakes and producing the best quality food to its customers while maintaining
the hygiene level at its best.
PART 1
UK’s Food Industry
The Five Guys restaurant is a global organization originating from United States of
America and spreading to other parts of the world including UK. The Takeaway and fast food
sector of UK has been a well-establish component of the food industry for quite a while (Ansoff
and et.al., 2018). This industry has been performing well over the past five years. Among various
fads and trends, one of the purchasing patterns depicted by the consumers showcased persistently
is their need to have an economical and on-the-go food option. Additionally, over the years,
takeaways have become more prominent. In the present-day-scenario, the demand among
consumers has grown towards higher quality food which is low fat, salt and sugar as well as
organic in nature. The main reason behind this trend is the increasing awareness among buyers
towards their health.
Currently, the revenue of this sector accounted for £19.1bn with an annual growth of
1.9% ranging between the time periods 2014 and 2019 (Fast Food Sector of UK, 2019). Looking
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at the Brand Loyalty component of this sector, it is indicated that the consumers are more
inclined towards spending their income on greater variety of restaurants which have adventurous
tastes as well as a wide assortment of dining option available including Vegan alternatives of
food to choose from. Comparing traditional branded restaurants with recent delivery-focused
ones, the former were worth 4.9 billion British pounds in 2018 whereas the latter generated 2
billion pounds. Some of the main players of this industry comprise of:
 Sandwiches
 Burgers
 Chicken
 Pizza
 Fish and Chips
 Indian and Chinese Takeaway
Organisational Review
Five Guys was established in Arlington, Virginia in 1986 by a family of five brothers.
The main ingredients of their business model included Burgers and Fries. The outlet’s principle
was to perfect the cooking process and serve their clientele in a manner that would their eating as
well as overall experience in terms of service deliverance. One of the chief features of this
company is that they do not have any sort of freezers available on-site, thus, each and every
ingredient used by them is fresh and organic. This is due to the fact that preserving food produce
in the freezers for longer periods of time results in deterioration of its quality as well as flavour
to a great extent (Five Guys, 2019).
With the demand for organic and healthier food options increasing in the fast food and
takeaway sector of UK as well as other parts of the world, this is an attractive feature of Five
Guys. In addition to this, the fast food chain does not use microwaves or automated timers or
can-openers. This is due to the fact that the management of Five Guys believe that great cooking
is more of an instinctive process rather than a timed event. Hence, the food is cooked based on
sight, aroma and texture with maximum flavour ensured. For this purpose, the company is
against the policy of corners cut or cheaper alternatives used as food produce so as to save costs.
Additionally, Five Guys is a firm believer of letting their customers decide what they
wish to eat and in what manner. Thus, the company offers a multitude of possible toppings,
approximately 250,000, along with mix-in 1,000 milkshake combinations. One can say that the
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customers are provided by a variety of customizable options which would take them to try all the
combinations roughly 684 years if they consumed a product of Five Guys Outlet on a daily basis.
One can say that the company derives most of its income in the form of new store
openings and improving their core store performance across all locations (Income Sources,
2019).
Value Chain Analysis
A Value Chain Analysis is a tool that is utilised by businesses to identify their primary as
well as supportive activities that are critical in adding value to their final product along with
facilitating recognition of points which may enable them to reduce costs and increase
differentiation (Davis and et.al., 2018). Its components have been discussed as under:
 Primary Activities:
These relate to those processes of Five Guys chain that is directly involved with the
production and selling of its products to the targeted customers. These are enumerated as
follows:
 Inbound Logistics: This stage of VCA includes carrying out a careful analysis of
in-bound logistics which are mainly related to the suppliers who provide raw
materials to the organisation that facilitates production of final goods or services
in an efficient manner. For Five Guys, this includes focusing on those aspects
which are related to the retrieval of fresh produce on a daily purpose which enable
them to keep their ingredients organic at all times.
 Operations: These activities are related to those stages when the restaurant has
ordered raw materials from their suppliers and they have reached the premises of
the food outlet (Derindag and Canakci, 2019). In the context of Five Guys, it
includes those processes which turn the fresh produce into an end product in the
form of a burger or fries ready to be consumed by the customer. Through the
analysis of this stage, the chain’s management is able to know whether or not the
productivity level of the organisation is maximum or lacking. In addition to this,
they are also able to ascertain weak points that can be improvised and contribute
to increasing revenue growth as well as profitability of the business by improving
restaurant sales.
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 Outbound Logistics: Similar to Inbound Logisitcs, these activities include the
process which facilitates deliverance of goods and services to the final consumers
in a manner that is highly qualitative as well as less time-consuming.
 Marketing and Sales: One of the most important stages for any fast food chain
outlet is how they market and sell their products as well as services. For Five
Guys, the marketing and sales activities may include providing discounts,
customization as well as advertising and other promotional activities undertaken
by it. Through their analysis, the management is able to ascertain that whether or
not such activities effective and integrated enough to facilitate improvisation of
Brand Equity of Five Guys Chain (Ergunova and et.al., 2017).
 Services: Both Post and Pre-Sales Services are a crucial part of any organisation.
In the case of Five Guys, the restaurant must ensure that no kind of false
commitment is being made to the clients regarding their products or services in
any manner.
 Support:
These relate to those processes of Five Guys chain that are directly involved with the
controlling and supporting the primary activities related to products and services of the
fast food outlet. These are enumerated as follows:
 Firm Infrastructure: This component enables the management to undertake the
primary activities in a manner which helps in maximisation of quality and
differentiation (Lee, Hallak and Sardeshmukh, 2016). It includes business
functions such as Quality Management, Accounting, Financing, planning and
managing among others. For Five Guys, a firm infrastructure would help them to
establish a strong position in the market.
 Human Resource Management: It is important for the organisations to ensure
that their factors of production are capable enough to provide their customers with
products and services in a highly qualitative manner (Manning, 2015). Five Guys
would require a team of staff that are quick, calm and great at customer service so
as to ensure that the business is able to suffice all the needs of their customers
within a stipulated time. Thus, ensuring that the human resources are managed in
a proper manner with proper training and efficient skill-set.
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 Technology Development: Today, the utilisation of technology has become
inescapable. Employing technology in various processes such as production,
distribution, marketing and Human Resource procurement helps in minimisation
of time taken to produce a particular product. Even though Five Guys does not
utilise technology in production of its products such as burgers and fries, it does
employ it for other purpose such as billing. Thus, enabling them to ensure
technology supported customer service is provided to their clientele in an
effective manner. Recently, the company has installed Battery-powered wireless
sensors which ensure that the ingredients stored in coolers, prep rooms including
the milkshake machines are fresh at all times (Technology in Five Guys, 2016).
 Procurement: This component denotes the activities which are concerned with
the purchase of inputs such as equipments, machinery, raw material and other
supplies among others that are required for the production of a final product. It is
important for Five Guys, to ensure that the costs incurred in procurement of such
items does not result in minimizing their overall profits. This can be achieved by
keeping track of alternative prices as well as the prices offered by suppliers
regarding such supplies.
Thus, one can say that through Value Chain Analysis, Fast food outlets such as Five
Guys are able to ascertain cost overrun centres and minimize them accordingly.
Value System
Values play an imperative role in businesses as well as in society. They can be defined as
the core beliefs or fundamentals that govern the behaviour of an individual or a firm. A Value
System is one which includes a protocol that needs to be followed by the management of an
organisation across all levels. It was propounded by Michael Porter and is founded upon the
concept of Value Chain Analysis (Value System, 2019). Value System of Five Guys has been
also illustrated in the Appendices (2) section of this report. Such a system encompasses those
components which enhances one's work ethic by directly impacting their behaviour and
facilitates establishment of trust, confidence and commitment among the members of the
organisation. Hence, a Value System is concerned with the overall goals and objectives of the
business rather than the individual aims of its employees that are desired to be achieved by
exhibiting a decent or appropriate behaviour on the part of the employees of such an enterprise.
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It is worthy to note that a value system is not only internal but also external. This means
that a value system identifies all those processes that contribute in value addition at various
stages of value chain until the product is delivered to the final customer. In order to develop a
strong Value System in an organisation, it is important to know that whether or not the
employees share the same beliefs as that of the business or not. This is due to the fact that each
and every entity comprises a certain set of values which they may or may not be fully aware of.
As the time passes by, these values become prominent through the policies, behaviour as well as
work ethic followed by the management of the company across all levels.
No individual would like to associate themselves with an organisation that does not allow
their employees to work towards achieving their individual goals. The value system of Five Guys
includes a comprehensive system of adding quality to the pool of employees associated with the
business. This is achieved by Five Guys by ensuring that their staff has freedom to follow their
passion in a sustainable manner (Steiss, 2019). Essentially, the Value System of Five Guys
comprises the following components: Integrity: Integrity as a core value is crucial as it enables the employers to select, train
and retain those individuals who demonstrate sound morals and principles at the
workplace. In the context of given case scenario, the company believes in being
straightforward, respectful, honest and instilling a behaviour among its workforce which
enables them to take responsibility for their actions. In addition to this, Five Guys also
opines that accepting help and sharing success as a team rather than individually is one of
the most important part of its values. Thus, providing an atmosphere wherein the
employees can be highly trustful of each other as well as dependable. Get It Done: Another core value of Five Guys encourages its employees to have a 'Get It
Done' attitude that includes hustle, hard work and focus at its heart. It is important for
companies to remain optimistic at all times otherwise no business would try to revive
itself in the face of adversities. For a business like Five Guys where high customisation
and deliverance of food at quick as well as accurate rate exists, this value is paramount.
In this context, the company promotes a work ethic that enables the staff to communicate,
work coherently as well as in support of one another so as to serve the clients in an
efficient as well as qualitative manner.
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 Enthusiasm: This component is concerned with how a business incentivise their
employees for the contributions they make towards achieving the business goals in both
short-term and long-term periods. The Fast food chain, Five Guys, enables their
personnel to showcase their creativeness by encouraging the staff to engage in those
activities which are of maximum interest to them. In addition to this, their team consists
of those individuals who are ardent learners and energetic as its business model requires
talent which is able to serve customers in a prompt manner without compromising on
quality. Competitiveness: Maintaining healthy competition within the business does not impact
the company in a negative manner. On the contrary, it enables one to learn and grow in
an environment which caters to their overall development in a holistic manner by pushing
the employees to test their limits. Five Guys promotes healthy competition which enables
its employees to work harder towards accomplishing their goals sustainably while
remaining humble at the same time.
 Family: A company must work coherently. For this purpose, the members of the
organisation must harbour a sense of belonging and oneness among old as well as new
admits of the company. This will help the business to work together in harmony so as to
grow, accomplish goals as well as encourage one other at all times. Thus, ensuring that
each member of the workforce is motivated towards achieving individual as well as
organisational goals in a sustainable manner. Being a family business, Five Guys instils
such family values across all organisational levels.
By incorporating such core values in the overall business model of Five Guys, the fast
food chain has been able to provide their customers with highest quality of service over the
years.
Porter's Five Forces Model
This strategy tool was developed by Michael E. Porter in 1979 to assess and evaluate the
competitive strength and position of a business. The components taken into account for this
purpose include those forces which critically impact the ability of a business to serve their
customers and earn profit. These forces are discussed hereunder: Threat of New Entrants: This force is concerned with ascertaining whether or not it is
easy for other entrepreneurs or start-ups to enter into a particular industry or market. As
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an international franchise Five Guys' main costs are in the form of management fee it
includes a fixed component worth $25 million per annum for every franchise along with a
variable component worth $25,000 per franchise and $55,000 per location (Costs of Five
Guys, 2017). As a result, the threat of new entrants is moderate, mainly due to the reason
that it is difficult for new entrants to achieve such expansion in a smaller period of time.
Apart from this patents on food recipes also plays an important role in preventing new
entrants to gain market shares so promptly. Threat of Substitutes: If a customer has a wide variety of alternatives to choose from one
can affirm that there is a threat of substitutes for a particular business. In the context of
Five Guys, threat of substitutes is low/moderate. This is because the company provides
almost 250,000+ options to customise from along with 1,000 milkshake combinations. It
totally depends upon the customer to curate and order a burger from the outlet. Rivalry among existing competitors: Some of the prominent competitors of UK's Fast
Food industry include McDonald's, KFC, Nando's, Burger King and In-N-Out among
others. Being a player of similar size and type, Five Guys faces high rivalry from such
competitors. In 2016 (UK), Five Guys was crowned as the top fast food chain outlet,
overtaking first spot from Nando's (Position among competitors, 2017). Since the
company has highly differentiated product offerings, it has been able to secure its market
attractiveness sustainably in UK. Bargaining power of Buyers: This aspect talks about how much influence a customer
has over the firm. In the context of Five Guys, the bargaining power resting with its
customers is moderate. Mainly because, the buyers have options such as Subway and
McDonald's which provide burgers and fries at a cheaper or economical price. Hence, if
they feel a Five Guys' burger is expensive, they can easily switch to such alternatives.
 Bargaining power of Suppliers: This force is concerned with the assessment of influence
that is resting with the suppliers in regards to a particular firm. As concept of Five Guys
is built on freshness, its suppliers hold a moderate bargaining power on the company
since the company buys fresh produce on a daily basis. Thus, making it a viable client of
the supplying parties. Another reason is that the business is operational on a large scale,
thus, making its suppliers have little to moderate influence on bargaining.
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Keeping these points in mind, it can be said that the corporate performance of Five Guys,
in comparison to other industry players, is much stronger. The main reason behind this is the
range of products and customisations made available by the company to its customer base. Since
the UK's food industry is moving from fast foods to healthier options, using fresh produce
providing customers with the power to curate products on their own has a potential to disrupt the
existing market in a significant manner.
PART B
PESTEL Analysis
In order to conduct an external environment analysis, PESTEL has been chosen as the
suitable evaluation tool in the context of Five Guys Food chain. This assessment has been carried
out in the following manner: Political: This aspect relates to the degree of government intervention is prevalent in a
particular economy that results in impacting every part of the society, including
businesses. In the context of Five Guys, Brexit may cause the company to halt its
expansion plan as there are rising costs involved which may cause hike in their menu
prices offered to the customers. As a result, the chain has to find a way to eliminate
competition, improve expansionary activities and stay economical at the same time (Five
Guys and Brexit, 2017). Economic: In the recent times, economic factors such as Unemployment rates and
Inflation may cause a business to topple down and shrink its total market share. In the
context of Five Guys, the burger surpasses McDonald's and Burger King in prices. Thus,
making it a part of upmarket burger segment. This is also due to the fact that healthier
options have gained immense importance in current business scenario, thus, making it
become a premium choice among people having a high demand for such products in
countries including UK (Concept of Better Burger, 2017). Social: It is important to note that social trends govern what the customers want from the
businesses. In the context of Five Guys, healthier and organic products have gained
popularity in the fast food sector. Utilisation of fresh produce in their products which are
not frozen on any day has resulted in creation of demand which is in sync with customer
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needs for the business. Thus, allowing it to flourish despite of having an expensive price
menu in comparison to other industry players such as Subway and Burger King. Technological: This aspect indicates how the company utilises technology to gain
competitive advantage among its competitors. On the contrary, Five Guys does not
believe in utilising automated timers or can openers while making its products, however
the company does utilises websites to provide essential information regarding to allergen
information and other similar notices so as to promote awareness regarding its products. Environmental: A business is subjected to certain rules and regulations which may
prevent the business to undertake certain activities that are considered to be harmful to
the environment. For instance, waste management is one such regulation which ensures
that all the businesses including Five Guys do not engage in activities which may cause
deterioration of environment in a critical manner.
 Legal: A global organisation is subjected to a wide variety of national as well as
international laws. Being a fast growing franchise, Five Guys needs to keep in mind the
regulations governing UK as a EU member. However, once Brexit takes into full-fledged
effect, such legislations may change for the company in a significant manner.
Thus, one can affirm that an organisation such as Five Guys is highly affected by the
consumer needs, tastes and preferences which may differ from country to country and person-to-
person. Due to this, it is important for a global organisation such as Five Guys to keep in mind
political, legal, social, economical and environmental factors so as to ensure their expansion in a
sustainable and efficient manner.
SWOT Analysis
SWOT Analysis is a strategic tool which helps in carrying out a comprehensive internal
analysis of a particular business. As a result, the management is able to accurately determine the
points of strengths and weaknesses in terms of the operational activities undertaken by it
(Phadermrod, Crowder and Wills, 2019). In the context of given case scenario, the following
table provides a detailed SWOT Analysis for the company:
Strength
 Five Guys provides highly
customisable products to its clientele.
This includes 1,000 milkshake
Weaknesses
 Low Brand Awareness.
 Limited utilisation of technological
devices such as Timers, Freezers and
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