Building a burger empire together

By Daniel P. Smith

A shared entrepreneurial journey and defined roles have helped the Murrell family take Five Guys from a single hamburger joint to a heralded national brand.

When Jerry Murrell’s two oldest boys, Jim and Matt, spurned college, Jerry brokered a deal with the two teens: The family would use the cash collected for the boys’ college education to open a hamburger shop that the boys would then run.

That agreement, made 27 years ago, spawned a company —Five Guys Burgers and Fries—that now sits among the restaurant industry’s largest family-owned enterprises.

In 2012, Five Guys’ sales approached $1.1 billion, a sizable jump from the $950 million the company collected in 2011. Last year the company celebrated the opening of its 1,000th restaurant.

For the Murrell family—Jerry; his wife, Janie; and five sons: Jim, Matt, Chad, Ben and Tyler—the journey from an upstart hamburger shop in Arlington, Va., into a burger empire has been an adventure enjoyed together.

Distinct roles

Around Five Guys headquarters in Lorton, Va., the five Murrell sons are usually known as “the boys.”

Jim, 46, is considered the food guy; he spearheaded the development of Five Guys’ celebrated menu. He now serves in an advisory role with a particular emphasis on franchisee selection.

“He’s my most serious son,” Jerry says.

Matt, 44, runs Five Guys’ operations. Each year, he travels to dozens of Five Guys restaurants overseeing store construction and design.

“He has a vision for where things should go,” Janie says.

 

Chad, 41, heads the company’s training department. His father calls him “a bull.”

“Chad goes into the stores and he shows people how to get things done,” Jerry says. “When he’s behind the grill, he owns it.”

Ben, 30, directs Five Guys’ IT department and is widely referred to as the “analytical one.”

“Ben’s smart in a way the rest of us aren’t,” Jerry says.

Tyler, 26, leads the company’s bakery operations, overseeing a collection of more than 20 bakeries spread across the U.S. and Canada that supply freshly baked goods to Five Guys stores.

“Tyler had an interest in baking and cooking that was evident early on,” Jerry says. “When we’d take him to Toys ‘R’ Us as a kid, he’d look at the kitchen sets over the GI Joes or remote-controlled cars.”

Jerry and Janie play critical roles as well.

Janie, 63, is the company secretary and treasurer and president of Five Guys Inc. In Five Guys’ earliest days, she handled bookkeeping duties—balancing out hundreds of handwritten order tickets with register tape, compiling profit and loss statements and managing taxes. Even now that the company has crossed the $1 billion threshold, Janie continues waking before sunrise to begin office work.

“She’s the glue that keeps everything together,” Jerry says.

Jerry, 69, who majored in economics at the University of Michigan and became a top life insurance salesman, has long been the big-picture guy, specifically when it comes to financial matters.

“Really, I’m just the janitor. They let me pretend I’m running things,” jokes Jerry, who, as CEO, admits he has struggled with his role as the “face” of Five Guys. He routinely deflects credit to Janie and the boys.

“If the old man had to run this business himself, it’d be in trouble,” Jerry comments self-deprecatingly.

Chad, on the other hand, says his father adopts modesty to downplay his crucial role as the business and family leader. As has been the case for nearly three decades, Jerry serves as the team’s consensus builder and, when necessary, its mediator.

“Jerry’s got the clout and he’s around to pop bubbles,” Chad says. “He nips any jealousies in the bud and has very clearly said that no one has to be here, which keeps all of us honest.”

That frankness remains a key component of the family’s success and continued synergy, especially given the company’s rapid rise over the last decade and the fact that Janie is not the biological mother of the three oldest Murrell boys.

“It was never like I had three stepchildren,” says Janie, who entered the oldest boys’ lives when they were eight, six and three years old. “We were always a family, and Ben and Tyler [the sons she had with Jerry] were blended into that.”

Jerry and Janie say they have never forced any of the sons to work for Five Guys or to fill an unwanted role. Jerry calls it “letting the boys fall where they fall,” and—fortunately for the fun-loving parents—each landed in a distinct corporate position matching his passion and interests.

“We’re lucky not only because of the success we’ve had, but also that each boy has found his own niche,” Janie says. “We’re all pieces of a puzzle that fit together.”

From local chain to national name

The first Five Guys hamburger shop opened in September 1986. (Initially, the Five Guys moniker represented Jerry and the four oldest Murrell boys. With the birth of Tyler months after the restaurant’s opening, the name came to symbolize all five Murrell sons.)

As tweens and teens, the three oldest Murrell boys often worked side-by-side mowing lawns, pulling weeds and tackling other nondescript tasks for neighbors. That entrepreneurial history eased the boys’ move into the restaurant space as co-workers.

Jim and Matt, Five Guys’ “original operators,” naturally adopted their own preferred roles overseeing the store, with Jim working days and Matt covering the evenings. Chad, 14 years old when the original eatery opened, hustled to the store after school to tackle any number of tasks.

Though Jerry and Janie were both active in the restaurant’s operations, the couple largely let their sons manage the day-to-day tasks. When the ice machine crashed or the air conditioning sputtered, it was the boys’ responsibility to solve the riddle.

“They were going to let us sink or swim, and that forced us to learn a lot right off the bat,” Chad recalls. “They’ve never been the do-what-I-say-when-I-say-it types. They’ve given us autonomy and the chance to find our way.”

While Jim, Matt and Chad laid the early foundation for the business, Ben and Tyler grew up with Five Guys and developed a similar passion for it. Tyler remembers cutting potatoes in a Five Guys restaurant as a 12-year-old, a sight that drew the ire of at least one health inspector—and an intense rebuttal from his brothers.

“For Ben and Tyler, Five Guys is all they’ve ever known,” Janie says.

Rather than one generation building the company and then handing it off to the next, a reality that can lead to an entitlement attitude or lackluster commitment, the sweat equity, emotion and intellectual capital of all seven Murrells contributed to Five Guys’ rise into a powerful American brand.

“This is our mutual passion, and we all share credit with the others,” Janie says.

The Murrells remain the majority owners of Five Guys and their ownership stake is spread equally among the seven of them. Salaries, however, are not; each of the boys receives pay commensurate with his current role in the company. Compensation is based not on age or seniority, but on one’s work and responsibility within the organization.

“This type of transparency minimizes dissension,” Chad says. “Nobody is being forced to work or take on extra burdens. If you want to take on more, you’ll earn more.”

Transparency aside, the Murrells say, they still have their share of arguments. “Where you have intense passion, you’ll have disagreements,” Jerry comments.

The Murrells’ antidote to turmoil is a simple one: hugs. It’s cliché, yes, but also a symbolic exercise the family regularly practices to quell disputes and promote unified movement.

“The family comes first here,” Tyler says, noting that the Murrells still vacation together every year.

When it comes to important corporate moves, decisions are made in unison. As with a jury verdict, the vote must be unanimous.

“Though that process can lead to delays, we universally know it’s the right move to keep the family together,” Tyler says.

The critical turning point

The family’s commitment to each other as well as the business was tested in the early 2000s when the Murrells looked to capitalize on the company’s cult following and burgeoning local success by opening additional units. As Jerry encountered one indifferent lender after another, the boys increasingly championed franchising as the best growth alternative.

Yet Jerry resisted, even after the boys handed their father a copy of Franchising for Dummies to assuage his fears. Fresh in Jerry’s mind was a late 1990s episode in which a supposedly trustworthy Five Guys employee had been stealing money from the cash register. That experience was a sober learning point in the Murrells’ collective growth as business owners. Afterward, Jerry was hesitant to trust outsiders on such a grand scale.

“I gave a lot of pushback because I was scared to death,” Jerry admits. “Five Guys was something so personal to us, and we were going to let strangers have at it.”

While Jerry confesses the franchising debate was a rough time for the family—a period defined by long and spirited discussions—he nevertheless considers it a pivotal time for the family and the business.

“Since the boys were operators themselves, they had experience training people and were confident we could train franchisees in our ways and install the necessary accountability,” Jerry says. “We worked through the challenge as a group, and that [decision to franchise] has led us to where we are today.”

Five Guys opened its first franchised location in 2003 and now claims nearly 900 franchised units.

As interest in Five Guys franchising exploded throughout the mid- and late 2000s and the company’s unit count accelerated alongside its size and value, the Murrells began pulling in outside expertise to complement the family’s collective skill set. Five Guys added executive-level leadership to oversee areas such as legal, finance and franchising.

Today, the Five Guys corporate board consists of all seven Murrells; the company’s largest private investor; a handful of the private investors who funded the Murrells’ initial investment in Five Guys; and company principals, including the COO, CFO and chief legal counsel. When important issues arise, such as the recent decision to expand overseas, the family meets independently of the executive board to debate issues and reach a consensus.

“Passion can be strong and emotional, so sometimes it’s best to vent with each other before bringing that emotion into the boardroom,” Janie says.

The family is determined to retain Five Guys’ entrepreneurial, operations-driven DNA. As a group, they call the shots.

For instance, at the core of Five Guys’ success on the restaurant front is a commitment to the concept, a mindset promoted by humility-producing trials with chicken and coffee in the company’s early years. By and large, the chain remains tied to its simple menu of burgers and fries.

“We’ll get pushback from some franchisees, but we stick to our guns,” Jerry says. “We’re not going to dramatically change a winning formula.”

The Murrells consider the integrity of the food and the quality of the service the two most important elements in each restaurant. (In one visit to a Five Guys store, Tyler jumped the counter to correct a staff member’s erroneous work on the grill.) The company retains tight control of its food sourcing and a secret shopper program that provides weekly cash rewards to hourly staff members at top-performing stores.

“We’re the watchdogs of Five Guys,” Janie says, “to ensure that the philosophy of the business remains intact even as the business grows and grows.”

The road ahead

These days, Five Guys is incorporating another generation into the mix. Children of Jim and Matt are now employed by Five Guys. Exciting as that is, the entry of a third Murrell generation into the family business has given Jerry, Janie and the boys added incentive to consider the future.

While the Murrells remain tight-lipped on any potential succession plans, the original seven share a universal sentiment that the family will avoid the dissent that cripples other family enterprises. They stand committed to doing things their way. Though they have hired business advisers to help guide the company’s growth, they have never sought formal advice on family business transition planning. Jerry’s sons decline to discuss how they will resolve disputes when their father is no longer around to serve as mediator.

Like other steps on the journey from one restaurant to national brand, the Murrells understand that succession planning will involve a learning curve, growing pains and plenty of dialogue.

“We’re a family, and we have honest conversations,” Janie says. “We’re not thinking this is a situation we won’t be able to resolve.”

Tyler says he and his brothers understand how quickly the Five Guys empire can collapse if pettiness, jealousies or selfish aims overtake commitment to one another.

“And that’s not a path we intend to travel,” he says.

Even so, Chad confesses that succession is a scarier proposition today than it was just five years ago, given the brand’s overwhelming growth. In July, Five Guys made its first journey outside North America with the opening of a restaurant in London, and the company is reviewing additional international expansion possibilities.

“This isn’t a train we can slow down in a snap,” Chad says, “but we’ll put our heads together and make the decisions we think are best.”

Calling the creation and evolution of Five Guys “a wonderful family journey,” Janie says the Murrell clan’s long-established prioritization of family above business positions the group to craft amicable solutions that ensure continued corporate success and, more important, close family ties.

“We’re lucky we have Five Guys, and it’s provided a wonderful life for the Murrells,” Janie says, “but keeping that very real sense of family alive has always been our foremost goal.”

Daniel P. Smith is a writer based in Chicago.

 

 

 

 

 

 


 

 

 

 

 

 

Copyright 2013 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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September/October 2013

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