I.
EXECUTIVE SUMMARY
Description of Business
Five Guys burgers is a Burger Grill that provides customers with real, wholesome Burgers and Fries
made from only fresh lean beef and freshly cut potatoes, served in a family-friendly environment and at a
great value. Employees are dedicated to providing the best hospitality in the business through training with
an emphasis on customer service. Five Guys and its employees also share a corporate vision in the franchise
world, which remains to be the leader in the fast food segment, and to sell the best quality burgers possible.
To sell the best burger possible, Five Guys focus on Quality, Service, and Cleanliness, to every guest, at every
restaurant, every day.
Fast Facts about Five Guys:
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There are over 250,000 possible ways to order a burger at Five Guys.
We use only fresh ground beef.
There are no freezers in Five Guys locations, just coolers. Nothing is ever frozen.
Four Areas of Focus:
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Serve Only fresh food
Great Value
Keep our employees highly trained
Company Objectives
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Give our customers the best bang for their buck
Keep it simple and server the best ingredients possible
Proposed Financing Plan
Franchising a Five Guys requires $500,000 to start up. I will borrow $500,000 using SBA's Commercial
Mortgage, with a second Commercial Loan at $728,130. One loan will cover working capital and the other will
be for the lot and construction. The business will be owned and operated as a limited liability company, with
the balance of capital from family members.
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II.
Description and Analysis of Business Situation
A. Rationale and Marketing Research
A franchised business has a significant advantage over independent businesses because of its
established reputation and branding draw potential customers and will therefore build a strong clientele
base faster. Performance statistic indicates long term growth is more favorable for Five Guys, who leads all
other fast food restaurants serving burgers.
Fast Food Industry 2011 (www.restaurant .org)
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Expected to generate sales in excess of $600 billion
75% of adults are trying to eat healthier foods
57% of consumers are most likely to visit a restaurants that contributes to charities and the
local community
78% of adults agree that restaurants provide an opportunity to socialize with friends and
family by eliminating the cooking and cleaning up of a meal at home
In Southwest Oregon, the most populated county is Jackson with a population of 203,206. The largest
city is Medford, with a population of 63,154. The Rogue Valley is home to over 40 different elementary,
middle, and high schools, and is one of the top ten destinations for retirement homes, with over 50 different
independent retirement communities. Furthermore the Rogue Valley is home to the largest sports complexes
in Oregon, this brings in not only local, but regional and national types of sporting events. Across from the
purposed Five Guys location, there is an Armory, which brings clientele for events such as concerts and MMA
fighting. Two blocks away, the world renowned Harry and David is located. This factory employs over 4,000
people. About 1/3 of residents live in a radius of 15 miles. This leaves 2/3 of the valley’s population living
within ten miles of the proposed location. With light traffic and easy interstate access the entire target
audience can to Five Guys within 10 minutes of driving. The average family in the Valley is two parents
household, about 35 years of age with children in school. The average child (school age) spends 5-10 hours on
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extracurricular clubs and projects, because of this the average family eats out 4-5 times a week, and fast food
two times a week.
Five Guys is known for providing customers with really wholesome burgers and fries, with no trans fats
and only fresh ingredients. The demographics show that competition in the area, with a total of five other fast
food restaurants in the surrounding areas, Five Guys have to benefit of being one of the national best burgers.
Oregon represents an ideal location for this prospective business that will generate above average income for
the population since and will provide the Valley with a great new burger.
B. Introduction
Five Guy’s is known for providing a great burger served with a mean side of fries, while keeping
everything else simple (décor). They operate over 250 individual locations in more than 19 states. With over
1,500 locations under construction Five Guy’s is expanding quickly; becoming the top burger in the US without
diluting the success of existing locations by carefully analyzing demographics. The operating hours are as
follows: 7 Days a Week from 11:00AM – 10:00PM.
Five Guy’s focuses on giving the costumers the best burger possible and not holding anything back,
giving the option of over 15 toppings; a customer can build a burger to fit their taste. Five Guy’s spends little
money on décor and would rather give back to employees. Five Guy’s gives 3.5% of net profit to employees all
over the United States each year in the form of bounces. Five Guy’s believes that if a shift crew can do a great
job and is keeping costumers happy then they should be rewarded. This year alone they will award 12 million
in bonuses.
C. Self-analysis
As a scratch golfer I know what it takes to work at something. To become a scratch golf you have to
spend all the time you can at the range and work at something that is mostly a mind game. Because of this I
have learned self-management, dedication, and determination. Though DECA I have learned teamwork with
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my State Officer team. As a student that is limited to marketing and financing classes, I use DECA as a way to
further my knowledge. I have also participated in DECA at a local, state, and national level, which has helped
me a gain a great deal of self-confidence, along with proving me with a great deal of knowledge about
business. With my high school experience and proven success in both DECA and golf, I believe once I obtain
my bachelors and masters, I will be able to successfully locate myself in the business world.
D. Analysis of the business opportunity
According to the 2010 Jackson County census, Medford has a population of 74,907, with an average
annual growth rate of 1.9%. An average age of 35
which is idea, Because we are looking for people on
the go, families with school age children, young
working class citizens and sports enthusiasts being
our target audience – all groups making over $20,000
a year.
The prospective location of the future business will be on the corner of Stewart Ave and Highway 99.
We are located .5 miles away from the newly built South Medford Intersection on Interstate 5. This
intersection not only provides steady traffic flow and convenient access point onto highway 99, making this
the primary highway connecting local communities. The location and access to the highway and interstate
allow for driving time to be less than 15 minutes no matter where in the valley you are located. This location
was strategically chosen because of the distance from the Medford Armory, which hold a variety of concerts
and family events, three blocks away; Harry and David headquarters and factories, a half mile away; the Rogue
Valley Medical Center, 1.5 miles away; several little league fields; 3 golf courses; a professional ice hockey rink
and, U.S Cellular Sports Park, Oregon’s largest sport center. In addition, future developments around the
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intersection include a water park, additional lodging, +100 million commercial/industry complex, and a WalMart Supercenter, all within 1.5 miles of my business.
Direct competition in the area consists of Taco Bell, Quiznos, Subway, Carl’s Jr, and Arby’s. These
restaurants are well known as fast food options that do not provide the same level of quality or service as Five
Guys. Indirect competition is McGrath’s Fish house, Shari’s, Starbucks, and Fred Myers. These businesses are
more of a sit down dinner, or a fast sandwich on the go.
E. Proposed organization
Five Guy’s business will be run as a limited liability company (LLC)- “Wallace & Associates LLC”-with
liability to the corporate assets owned by the LLC. Therefore, claims or lawsuits against the business will not
threaten the personal assets of the LLC’s members. There will be two assistant managers focusing primarily on
food preparation, and employee scheduling to ensure everything runs smoothly. In addition, there will be an
estimated 3 full-time employees and 10 part-time employees that will be hired based on personal attributes
and previous work experience. All employees will undergo training in person and online to ensure that they
understand Five Guy’s philosophy and expectations.
III. PROPOSED MARKETING/PROMOTION PLAN
A. Proposed product or service
There is nothing like Five Guy’s in the Rogue Valley, no other place will let a customer pile a burger or
hot dog high with fresh ingredients on at a fixed rate. Furthermore the Valley needs a fast food place that is
freezer free, and cooks with 0 trans fats. Five Guy’s lets a customer choose from over 15 different toppings
Five Guy’s Keeps keep’s the menu simple, making it easy to give you the best burger or hot dog you can ever
have. Five Guy’s allows you to choose from a type of burger, hot dog, or Veggie sandwich; with the side order
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of French fires cooked in peanut oil and a drink. Because of the choices given, it makes it easy to cook in
quantities and to make sure that you are getting the best burger. Five Guy’s feels that you shouldn’t go
hungry, so to add to the atmosphere, peanuts are provided for you to eat while you wait.
B. Proposed pricing policy
The pricing of products or services provided by a business is critical. If the pricing is above the
perceived value, customers will look elsewhere. If the pricing represents fair value but is beyond the means of
the target clientele, customers will be priced out of the market. In the case of a single food fast food
restaurant, a reasonable metric use is that an average working class citizen is willing to spend about $10 to
$15 on an enjoyable lunch, while the average family is willing to spend $20 to $30 on the same meal.
Considering this criteria, Five Guy’s has established a pricing policy that accommodates customers of all
economic classes.
Five Guy’s burgers are set at a fixed price – Each customer is charged a fixed no matter how many
topping are wanted. A normal hamburger cost $5.39. If a cheese burger is ordered is will cost .60 more, and to
add bacon it will cost .90 more -all exclusive of beverages and fries. Beverages will add $1.99, and fries, $2.99.
Children may choose from burgers that are not as large and are made from smaller patties, these can range
from $3.89 to $5.39; while hot dogs cost $3.59.
This type of pricing policy has been proven to be the most successful for this type of fast food. The
price is affordable and favorable to the average working class citizen that understands how much is takes to
build good burgers like these. McDonalds and Burger King has similar pricing, but Five Guy’s has the benefit of
grilling fresh beef and using only fresh ingredients. These fast food chains cannot compete with the quality of
Five Guy’s.
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C. Personal promotion
Five Guy’s provides quality, fresh, burgers and fries in a clean, simple, attractive environment. The restaurant
storefront, layout, and lighting are all designed to be attractive and establish a simple but food friendly feeling.
We provide wood tables and chairs; this style keeps a customer focused on the food. Being more of fast food
restaurant, orders are taken at the counter, while food is being cooked and you can wait at a table. Food is
served in brown paper bags, fries in a cup and burgers wrapped in tin foil. This is all designed to keep you
focused on the food, making sure that you can fully enjoy the different flavors in each bite of a burger. Décor
is simple, consisting of quotes and comments people have made about the burgers Five Guy’s makes.
D. Nonpersonal promotion
Five Guy’s Burgers main non-personal promotion is to get customers to try the burgers. The objective is
to get each person to try their first Five Guy’s burger and leave with a positive experience that will create a
long-term clientele. Five Guy’s advertising is mostly coordinated by the main corporate office and
communication to franchisees. The most that is spent on adverting per each year is 1.5% of all net profit. Local
promotions are done at the discretion of the franchise We plan to use the Mail Tribune and local popular radio
stations. Among the anticipated local promotion that “Wallace & Associates LLC” intends follow:
Word of mouth: Five Guy’s is a large franchise and when people start to hear that you have good food
and its right off I-5 clientele are more willing to stop and try a burger. Getting people in the door by word of
mouth is the fastest way found to get people to the best burger in town.
Billboard: with four new locations opening each week it is easy to hear about Five Guy’s and know that
they have the best burgers in town. Many of the new locations are popping up along the I-5 corridor. Because
of this it is easy to get people to stop in when your only .5 miles from the off ramp of the highway. Making a
billboard is a great way to get traveling families into the restaurant to get a great burger.
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E. Place:
All of the food prepared in Five Guy’s is delivered and provided based on pre-established delivery
schedules coordinated by the main corporate office. Because of the number of Five Guy’s franchises, fresh
food and produce is purchased in such bulk as to create below market pricing while proving premier quality
foods. This allows the cost of the goods to be minimized and allows Five Guy’s to prepare great burgers for a
fraction of the price normally paid by its customers in the grocery store.
IV. PROPOSED FINANCING PLAN
A. Projected income/cash flow
Five Guy’s estimates that the sales revenue for the first year franchisee of the size restaurant intended
will be $1.5 million. Furthermore, Five Guy’s estimates that 2nd and 3rd year revenue will increase by 5 % each
year. “Wallace & Associates LLC” will create this growth by generating a loyal clientele, having a strong
presence at major regional events, and by heavily advertising on billboards and with radio ads. The
information in the tables is from analysis done with the assistance of Crater DECA Advisor Mike Rogan.
Detailed Financial Data for Five Guy’s
Franchise Startup
Franchise Fee
Building Construction
Equipment
Operational Cash flow
Total Start-up cost
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Cost
$25,000.00
$440,500.00
$74,500.00
$400,500.00
$940,500.00
This financial estimate is calculated from Five Guy’s corporate website data from new franchisees and
industrial benchmarks. Operational cash flow includes franchise start-up expenses as well as ongoing
operations and payroll expenses for an estimated 2 to 3 months after start-up. The initial gross sales (“Burger
Sales”) and years 2 and 3 increases in gross sales are based on new franchise data from the Five Guy’s
corporate website.
B. Projected three-year plan:
Revenue
Burger Sales
Cost of Goods Sold
Gross Margin
Operating Expenses
Salary (Asst. Managers)
Salary (Self )
Wages (part time + Fulltime)
Uniforms
Royalty @ 6%
Advertising @ 1.5%
General Insurance
Maintenance
Accounting and Legal
Total Operating Expenses
Operating Profit (loss)
Mortgage on $728,130 Loan
Mortgage on $500,000 Loan
Year 1
$1,500,000.00
$650,100.00
$849,900.00
Year 2
$1,575,000.00
$682,605.00
$892,395.00
Year 3
$1,653,750.00
$716,735.25
$937,014.75
$50,000.00
$34,650.00
$194,040.00
$2,000.00
$90,000.00
$22,500.00
$6,000.00
$4,500.00
$5,000.00
$408,690.00
$441,210.00
$40,863.12
$65,615.24
$50,000.00
$35,000.00
$194,040.00
$2,000.00
$94,500.00
$23,625.00
$6,000.00
$4,500.00
$5,000.00
$414,665.00
$477,730.00
$40,863.12
$65,615.24
$50,000.00
$35,500.00
$194,040.00
$2,000.00
$99,225.00
$24,806.25
$6,000.00
$4,500.00
$5,000.00
$421,071.25
$515,943.50
$40,863.12
$65,615.24
Pre-Tax Profit
Tax
Net Profit
$334,731.64
$55,800.00
$278,931.64
$371,251.64
$59,062.50
$312,189.14
$409,465.14
$62,015.63
$347,449.52
Net Profit (as % of Gross Sales)
19%
20%
21%
C. Capital and repayment plan:
In order to obtain the money needed to start and run a Five Guy’s franchise, two loans will be acquired.
The first loan will be a 25-year mortgage for $728,130 at 5% interest through the SBA. The intent is for
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“Wallace & Associates LLC” to take no more than $150,000 of net profit as earnings and everything above that
amount will be used as additional principle to pay off the loans and build equity faster.
The second loan is for operational cash flow will be obtained through a second SBA loan. This loan will
be a fully amortized 7 year mortgage for $500,000 at 4% interest. Payments on both loans are included as
monthly debt service. If additional funds are needed for emergency cash flow issues, the business will obtain a
line of credit of $500,000 to $750,000 at a market rate. If the business plan proves as successful as anticipated,
the entire capital needed to construct and open the franchise will be paid off within 25 years, and the net
profit will increase exponentially from the point forward.
Total Cash Needed
20% Down Payment
3% Loan Fees
Total Out of Pocket Cash Needed
Loan Amount
Prime Rate
Additional Interest
Total Interest Rate
Length of Loan in Years
Monthly Payment
Interest on 12th Payment
Working Capital
$500,000.00
$100,000.00
$12,000.00
$112,000.00
$400,000.00
3.25%
0.75%
4.00%
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$5,467.52
$15,080.30
Real Estate/ Building Cost
$728,130.00
$145,626.00
$17,475.12
$163,101.12
$582,504.00
3.25%
1.75%
5.00%
25
$3,405.26
$28,852.43
V. BIBLIOGRAPHY
1. Welch, Liz. "How I Did It: Jerry Murrell, Five Guys Burgers and Fries." Inc.com. N.p., 1,4,2010. Web. 20 Jan 2012.
<http://www.inc.com/magazine/20100401/jerry-murrell-five-guys-burgers-and-fries.html>.
2. Entrepreneur Five Guys Burgers and Fries. (2012). Retrieved from
http://www.entrepreneur.com/franchises/fiveguysburgersandfries/308820-0.html
3. Jackson County Property. (2012, January ). Retrieved from
http://web.jacksoncounty.org/fca/index.cfm?btextonly=false
4. Five Guy’s Burgers and Fries. (2010). Retrieved from http://www.fiveguys.com/
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