TO STAND OUT IN A saturated burger market dominated by

such giants as McDonald’s and Burger King, Five Guys pur-
sues a differentiation strategy that helps it to create ahigher

perceived value among its customers. One keydifferentiating
feature is its product: Each Five Guys burger is made from
never-frozen ground beef nestled atop a toasted, freshly
baked bun. Each burger is also made to order and can be
customized with any of 15 toppings—all of which can be
added free of charge. Its fries are hand-cut and sourced from
Idaho potatoes grown north of the 42nd parallel and cooked
in pure peanut oil. Another key feature is its streamlined
menu: burgers, fries, and hotdogs—no salads, no wraps, no
desserts.

High(est) quality and consistency are extremely impor-
tant to Five Guys. To ensure these standards are regularly

met, it conducts two third-party audits in each of its1,500
stores weekly to ensure the food is always fresh and thestores
are always clean. The money that Five Guys does not spend
on marketing is, instead, spent on its staff: Bonuses are
awarded to the teams that score the highest on these audits.
Each week a winning team receives a bonus of about $1,000,
which is then split among the team’s five or six members.
About 200 teams make the cut, receiving the bonus. The way
Five Guys motivates its staff also differentiates it fromother
competitors in the industry, who tend to just pay (minimum)
hourly wages.
Although Five Guys’ food tastes great and provides
emotional comfort to many of its patrons, in recent years,
especially with the increased concern about obesity and
related health complications, Five Guys has landed on the
list of U.S. chain restaurants that offer the most unhealthy
meals. A standard bacon cheeseburger has close to 1,000
calories and a large order of fries has about 1,500. As a
consequence, Five Guys food offerings have been criticized
by watchdogs such as the Center for Science in the Public

Interest. With the new focus on healthy eating, many res-
taurant chains such as Chipotle have come up with health-
ier options that include more low-calorie meals and fresh

produce.
Five Guys’ commitment to the delivery of quality foods
using fresh ingredients, simple menus, and classic flavors has

allowed it to thrive for more than 30 years in a highlycom-
petitive market, with 1,500 stores as of 2019 and another

1,500 locations in development. With all the regionalfran-
chises in the United States sold out, the company is focusing

on international expansion.

Five Guys’ success led to imitation attempts by more recententries in the fast-casual “better burger” segment of therestaurant industry such as BurgerFi, Shake Shack, and Smashburger.Do you think these new entrants are competitive threats to FiveGuys? Why, or why not? If you think they are competitive threats,what should Five Guys do about it, if anything? Explain.