Five Guys: Business Analysis, PESTLE, SWOT, and Vegan Burger Proposal

This report provides a comprehensive business analysis of Five Guys, examining its founding, operational strategies, and competitive environment. It includes an internal analysis of the company's culture, mission, and employee roles, along with a Porter Five Forces analysis to assess competitive rivalry, new entrants, supplier power, substitute products, and customer bargaining power. The report identifies strengths such as high-quality food and brand reputation, and weaknesses like lack of advertising. Opportunities include menu innovation and geographical expansion, while threats include health concerns and franchise model risks. A PESTLE analysis examines external factors like government regulations and economic conditions. The report concludes with a recommendation to introduce a vegan burger option to capitalize on the growing plant-based market and expand the customer base, supported by a SWOT analysis of the vegan burger proposal. This report is intended for students and offers valuable insights into the fast-food industry.

Five Guys
Introduction -
It was founded in 1986 in Arlington, Virginia, by Jerry and Janie Murrel and their sons,
the original five guys who made up the team. It was initially referred to as "Jerry and the Sons"
when it opened. After Jerry and Janie Murrell started the business, they had a fifth son, and now
all five sons are involved in running the Five Guys. Together, the brothers discarded the notion
of a wide range of options in favour of a more straightforward and simple burger
(DATAMONITOR, 2010). Non-frozen buggers made from ground beef and 80% lean are the
specialities of this establishment. In addition to slicing the potatoes and preparing the burgers at
home, fries are prepared daily.
Five Guys sells burgers for 7 - 9 Pounds, but they have a loyal following because of their
ingredients' high quality and freshness. Restaurants in higher-income areas, where customers
are primarily men, benefit from the menu's value pricing. As opposed to traditional advertising,
the company relies on word of mouth from its customers. One of Five Guy's core values is
exceeding customer expectations in the quality of its burgers and setting the bar higher for the
industry as a whole. What makes their business stand out in a world with burger joints on every
corner. Aside from serving delicious food in an inviting environment, Five Guy's also provides
excellent customer service. There are seventeen toppings on their hamburgers, and they are
made to order. The fries are made by hand and fried in peanut oil, providing various health
benefits. There is no marketing department at Five Guys because the company relies on
positive word of mouth from satisfied customers as the best advertising method, saving money.
New customers and franchisees come to the restaurant because of its immediate appeal and
the storefront's attractiveness.
As of this time, the chain has over 1700 restaurants worldwide and over 100 in the United
Kingdom. Carphone Warehouse Modul Sir Charles Dunstone is a sponsor of the UK company.
In 2013, the chain made its way to the United Kingdom, opening its first location in London's
Covent Garden. It took them only three years to become the UK's fastest-growing restaurant
chain and the nation's preferred fast food chain. In December 2018, the company reported a
pre-tax loss of 3.9 million pounds, but its operating profit in the UK increased to 5.8 million
pounds.

Five Guys Burgers and Fries provides restaurant-quality food at fast food speed.
Fresh ingredients are essential. Each restaurant receives raw materials and makes burgers and
fries on-site, nothing prepackaged or precooked. Five Guys' ability to customise orders is
another competitive advantage, and free toppings help achieve this. Five Guys Burgers and
Fries charge more due to customisation and quality. Customers can justify spending more on
burgers here because of customisation and quality.
Five Guys' core competency defines its order-initiation strategy. Five Guys is a make-to-order
restaurant. This strategy involves not stocking final goods and starting production only when
ordered. Each order is made from scratch to ensure freshness. This strategy lets them
customise orders. Make-to-order reduces inventory holding costs. No finished goods inventory
means no storage costs. "Raw materials" are the main cost. Production can only begin after
customer orders, so this strategy increases lead times.
Three keys to the franchise's success Five Guy's: Making high-quality food with simple
toppings, they wanted people to know they put all their money into the food. Their high quality
changes people's burger experiences. Second, quality is the key to any successful business. If
you provide great food and service, customers will return no matter how much you charge. And
treating employees in every position with value, which gives them the confidence to come to
work and provide excellent customer service. Customers become the best salesmen when
employees provide great service and food. Jerry Murrell valued his customers by treating them
right; they'll sell for you.
Internal Analysis
The operational processes and culture are the driving force for the internal operations of
the company. The company is only 31 years old but is very strong in the quick-service
industry.
Also, the internal environment consists of the staff employed at Five Guys. There are
different employee positions for the company. Along, with the staff, the culture of the
company is part of the internal environment of the firm. The mission statement "We are
in the business of selling burgers" (Five Guys, 2017), is integral to the internal
environment. During training employees learn the importance of making burgers to the
companies' standards.The different elements of the organizational culture also include
the work environment, ethics, values, expectations, and goals (Doyle, 2017).
Competitor analysis (Porter Five Force Analysis)

● Competitive rivalry is high. The company has many competitors such as
McDonald's, Burger King, and Jollybee for the burger segment in fast food.
● The threat of new entrants is very high, but the competitiveness of Five Guys is
low.
● The bargaining powers of the suppliers are mid-level. Since there is low product
differentiation; the company only uses specific suppliers to order their products.
● The threat of substitute products is high. Five Guys pricing can get very
expensive; which can cause customers to look for cheaper alternatives. Also,
there are not too many healthy products sold; which can also cause customers to
search for healthier options.
● The bargaining powers of the customers: It is high because the demands of
customers are always changing. As the needs of the customer change, Five
Guys Operations must meet the needs of their customers. There are many
competitors for Five Guys, and competitiveness in the market is high. The
company overall needs to set itself apart from the competition, so that customer
retention is high.
Segmentation -
Recommendation - Introduction to Vegan Burger in Five Guys
Plant-based burgers are gaining popularity globally, especially in the U.S. and U.K.
According to the Plant Based Foods Association, plant-based food sales soared
compared to the overall grocery. The global plant-based burgers market is expected to
reach $2.7 Bn by 2023 and grow significantly by 2025-2030. Future Markets Insights
(FMI) predicts the plant-based burgers market will grow by over 22% between 2025 and
2030.
Changing consumer preferences and a desire for healthy, sustainable food are driving
the plant-based burgers market. More consumers are ready to switch to plant-based
meat alternatives, encouraging companies to create new food options. Their efforts to
mimic meat-based burger patties should benefit the global market. Several plant-based
foods and beverage startups are pushing investments, a positive sign for the global
plant-based market.

A Canadian company, Beyond Meat Burger, has teamed up with McDonald's to
introduce a new line of plant-based burgers. Apart from the collaboration, Beyond Meat
is also developing new burgers, the juiciest yet, it claims. Five Guys Burgers can also
join forces with BMB and offer a vegan burger option on their menu, which will allow
them to expand their customer base.
New Segment to target -
Vegan
● The rising trend of a vegan diet in European countries has pushed the demand
for plant-based meat products in the region. Conversely, the U.K. is known for its
progressiveness in providing a variety of fresh and high-quality food products to
its population and is associated with the habitation of the largest vegan
populations across the globe
● The global plant-based burger patties market market report
provides forecast and analysis at global and regional level as well
as for key countries during the period 2022-2026. analysts expect
the market to grow by a CAGR of 41.1% through 2024.
● The plant-based burger patties market market is in the
fragmentation with few players. The market growth is expected to
change if the market structure changes due to industry
consolidation or if some vendors exit the market. During the
forecast period, the market will show an accelerate growth of $
2.13 bn.

SWOT
Strength – The company is one of the fastest growing in fast food industry
Provides value for money and affordable meals
The strengths of Five Guys are the quality of the food, burger combination, and the
reputation of the company. At Five Guys the quality of the food is found in the
restaurants. There are no freezers in all locations, but only coolers. The beef used for
the burgers is always fresh and never frozen (Tenenbaum). Also, the different varieties
of veggies used for the orders are always fresh (Tenenbaum, 2017). The quality of the
fries is always fresh. Some quick service locations have holding times for fries after
being cooked. After the fries have been prepared and filed from a previous order, any
extra fries in the holding baskets then can go out to the next customer. At Five Guys
fries are made to order (Tenenbaum, 2017). French fries used in restaurants are cut
fresh, and they are never frozen (Burke, 2012). The fresh and never frozen fries help
makes them tastier.
The company has counted and concluded there over 250,000 hamburger combinations
possible (Tenenbaum, 2017). Lastly, the company has a good reputation. In an annual
poll by Harris Pole; Five Guys took the number one spot over In-n-Out (Tenenbaum,
2017) for the hamburger segment in fast food. There are currently 1,500 outlets across
the U.S., U.K., Europe, and the Middle East (Tenenbaum). There are also 1,500

locations committed to being built (Tenenbaum). Since the company has a strong
reputation; it has been able to flourish.
A weakness of the company is that it does not invest in advertisements (Tenenbaum,
2017). Advertising reaches new customers for different businesses. When an
organization advertises it can reach a new client base who otherwise would not know
about the organization. Since Five Guys does not announce many do not know about
the company, or what they sell.
According to QSR magazine, Five Guys ranks number twenty – six out of fifty quick
service restaurants. Compared to its competitor MacDonald's which ranks number one.
Lastly, with the lower rating for QSR, there is not a high market share, and small market
segmentation. The company does not advertise, which causes the firm to have a more
moderate market segmentation. Market segmentation allows for "determining the best
way to deliver the products to the market" (Investopedia Staff, 2017, para. 3). There is
low product differentiation; customers can find a cheaper substitute with more product
variation. Resources for the company included tangible and intangible resources. The
staff, customers, machinery, liquid assets, infrastructures, other finances, and
equipment are resources for the company.
Opportunities
Innovation in the menu and service offerings
Focus on healthy meal options and vegan products to adapt to changing lifestyle
Geographical expansion to emerging economies to counter saturation in
developed countries
Threats-
Health concerns arising due to pandemic may affect the business
Franchise model could lead to dilution of quality standards and consistency in
service
PESTLE
The external environmental factors as they relate to Five Guys; influence any strategic
decisions the company make internally. A major environmental factor that affects the
company is government laws and regulations. Companies such as Five Guys must
adhere to the requirements that are set forth or face hefty fines. The external governing
laws the fast food industry affect the operations of the firm, and how it is operating.
Economic factors also affect the general environment, and the industry as well.
"Economic factors are one of the many environmental, external factors which can affect

businesses. Although they relate to the economy on a greater scale, they have a
profound effect on the inner-workings of any and every company" (Bush, 2016, para.5).
Recession, inflation, taxes, supply, and demand are examples that can negatively affect
the internal environment of Five Guys.
The organizational structure of Five Guys is a functional organization. The operations
running company requires many different skills and talents. There is a central leadership
with the company with the found and CEO at the highest administration. Also, the
founder's sons have distinct roles they take on with the company. One son helps to
manage the entire operation, another opens new sites, another conducts manager
training, the second to youngest is the IT guy, and finally, the youngest son oversees
the bakeries the provide buns to Five Guys (Burke, 2012).
SCM-
Conclusion
For Five Guys to continue to grow, and stay competitive the company must conduct an
internal environmental analysis. The information gathered helps the guidance of
strategic decisions long and short term. Five Guys can seek out new opportunities, and
position themselves better as a quick service restaurant.