Burger giant Five Guys struggles with Australian expansion after empty store goes viral
A viral photo of an empty restaurant has exposed the stark reality facing the US burger chain's Aussie expansion. Here’s where it all went wrong.
A cult American burger chain appears to be struggling to gain traction with Aussie customers after a picture of its latest store lying empty went viral online.
Four years into its Australian foray US giant Five Guys only has five stores – three in Sydney and two in Melbourne.
For comparison there are 1400 stores in America and more than 200 internationally.
Last week an X user snapped a picture of the Martin Place, Sydney CBD diner with no visible customers, captioned “the hype has died off”.
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One hospitality industry expert told news.com.au questionable location choices and a lack of differentiation was hurting the brand’s roll out.
Earlier this year, while launching the Martin Place shop, head of Australian operations Phil Keelan talked about Five Guys’ slow uptake Down Under.
“We made a mistake, and I’m happy to openly, honestly say this: we opened Penrith, 70 kilometres out of Sydney,” he told the Sydney Morning Herald in March.
“It’s a stand-alone restaurant; no one walking past the front doors. You have to make a conscious decision to go: ‘I want Five Guys’.”
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When news.com.au visited the Penrith site during the lunch rush this week, it appeared Mr Keelan was on the money.
The Mulgoa Rd diner is sandwiched between a KFC and McDonald’s, shops that saw much greater patronage – if mostly via their drive throughs, which Five Guys does not have.
On a day where Sydney was lashed by a hailstorm, news.com.au counted a total of 13 diners visiting Five Guys Penrith during a half-hour period.
It was a far cry from the long lines seen snaking out the door when the shop fist opened in 2021.
Hospitality consultant Michael Vale agreed that starting out in Penrith was a mistake, saying Five Guys had been hampered by its location choices.
“Would I have launched in Penrith? Absolutely not,” he said.
“I would have launched in Bondi Beach.”
Mr Vale, who has worked in the industry for 38 years, believed Melbourne’s Southbank store was a “very good” spot but was critical of the Martin Place site.
“I don’t see they’ve picked out the best locations,” he said.
“In Martin Place, they’ve got the metro station. Unless you’re catching a train, you’re going to go in there and then one of those?
“I don’t think so.”
The cost of a Five Guys meal has become somewhat of a meme online, owing to its significantly higher pricepoint compared to fast food competitors.
A look at its Australian click and collect menu shows a hamburger costs $17.90, a cheeseburger $19.90 and a bacon cheeseburger $22.90. Customers are also required to choose their own toppings for the burgers and hot dogs.
Founder Jerry Murrell has previously explained the prices were based purely on margins and could fluctuate due to supply chain issues.
Mr Vale, who brought Cafe del Mar to Australia, argued cost was not the biggest factor saying “if you do something special … the price is irrelevant”.
The bigger problem, he says, was that it did not offer something new to the Australian market.
“I’m in the total headspace that whatever you do, it has to have a very strong what I call a commercial point of differentiation,” he said.
“To me Five Guys is just another hamburger joint.
“What I feel is missing is it doesn’t have a distinct point of differentiation in the Australian market.”
He added, however, many businesses were feeling the pinch of current econimic conditions and said a novel concept was important to making money.
“And that to me is the most important thing today. You’ve got to have a concept, it’s all about the concept.”
Five Guys’ operator Blue Coral Concepts was contacted for comment.