McDonald's vs The Burger Revolution | Better Burgers | 1

0:07It's 2002 in Alexandria, Virginia. Jerry Murrell is seated at a table flanked by his wife, Janie, and his four sons. Together, they run a burger chain called Five Guys, named after the men in the family. Murrell started Five Guys 16 years ago, way back in 1986. His concept was simple. Use quality ingredients for a tiny menu consisting exclusively of burgers, hot dogs, grilled cheese, and fries. Since then, the business has grown to five locations in the D.C. area. But for the past few years, Morell's sons have insisted that they should franchise. The way they see it, they've built a successful business.

0:50Locals love it. So, why not expand outside of D.C.? Morell is not convinced. He's very particular about the way his family runs Five Guys. and he worries that franchising might cheapen or change the business. But recently, his sons have been begging their father to meet with Mark Mosley. Mosley spent 16 years as a famous NFL player. Now that he's retired from football, he's particularly interested in burger chains and he's had his eye on Five Guys for a while. So finally, Morell has agreed to a meeting with Mosley at Fransmart, the franchising company where he works. And since this is a family business, Morell brought his whole family along.

1:39Mosley leans forward and smiles at Morell. Thanks for agreeing to a meeting. You know, I was surprised when you said yes. Well, the boys have been asking me to consider this for years. It's got to the point where my eldest here actually bought me a copy of Franchising for Dummies. There was some interesting stuff in there, too, so I figured I might as well agree to a meeting, even if it is just to get these guys off my back. Mosley's been primed on Morell's skepticism by Morell Sanz, so he launches into his pitch. I think you and your family have built something really great here, and it would be a shame to limit five guys to a few stores around Washington.

2:17I think there's real potential for something bigger here, and I know we can do that without compromising your standards. Listen, I appreciate that, but I know what happens when people franchise. You know, their businesses change, they lose control, and I don't want that to happen. If we did franchise, we'd have to know that the franchisees are committed to the business exactly as it is. Morell lays out his list of non-negotiables. He wants Five Guys to keep its small, simple menu with only a handful of items. He wants to keep using local, quality ingredients, even if they are more expensive. and unlike most fast food places, he wants Five Guys to only use fresh food.

3:02None of the five existing locations have freezers in them, and he doesn't want that to change. Mosley and his colleagues nod. It's a hard sell, but he's convinced Five Guys has potential exactly as it is. How about this? We make sure that all of those conditions are met. You have total control and oversight over the menu, and every franchisee has to buy at least five locations. That way, we're only getting people who are truly committed to the business and can afford to run it well. Morell considers this. And how much would each franchise cost? We'll charge a franchise fee of$45 ,000. That's the same cost as McDonald's charges for their franchises.

3:45Morell took this meeting mostly to quiet his sons. But the terms Mosley is offering are surprisingly good. As Morell looks over to his family, he can sense their excitement. For 16 years, his family has built this business together. Morell realizes that if this is what they all want to do, he shouldn't be the one to hold them back. So he holds out his hand to shake Mosley's. Let's give this a shot.

4:18Without knowing it, the Morell family just locked into an agreement that will turn Five Guys into one of America's fastest-growing restaurants. Within three days, the rights will sell out in Virginia. And within a year, 80 locations will be in development. And in a culture that prizes burgers as fast food, cheap quick eats, the spread of Five Guys will raise some questions. Is a pricey, quality burger joint really a sustainable business? and will they ever be able to compete with the mega chains we know and love?

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6:46You know, today it feels like a better burger restaurant is on every block of every major city. There are places that serve burgers and fries with premium ingredients. You've seen them around, right? Perhaps you've gone and visited them. There are also premium prices, too. They've been a small part of America's burger business for a long time, but in the mid-2000s, that segment really started to grow in earnest. As Jerry Murrell and his family start franchising their Virginian chain, Other restaurants like it start popping up throughout the United States. On the West Coast, a chain called In-N-Out is rapidly growing.

7:21In New York City, a famous restaurateur is about to open the first Shake Shack. These businesses will join the growing fast casual market, which combines the convenience of fast food joints like McDonald's with the quality and freshness of full-service restaurants. When they realize Americans are willing to pay more for better quality, these small businesses will grow into national and even international powerhouses. They'll compete against each other in increasingly overstuffed markets. As they shake up America's massive burger industry, they'll also have to go toe-to-toe against giants like McDonald's, who will fight to win back quality-conscious customers.

8:02But in aiming to become burger behemoths, will these upstarts be able to retain their roots, The quality and focus that differentiated them from the mega-chains to begin with? This is Episode 1, Better Burgers.

8:23It's July 2003 in Madison Square Park in the heart of Manhattan, and Danny Meyer is starting to sweat in the thick, humid air. Meyer is considered New York's most famous restaurateur. He's the celebrity chef behind a slew of the most popular fine dining restaurants in the city. But today, he's not pouring over fancy menus or wine pairings for high-paying guests. Instead, he's manning a hot dog stand. He started this seasonal hot dog stand back in 2001 as part of an effort by the city to revitalize Madison Square Park. It's a project Myers enjoyed. For the last few summers, he's put his decades of experience in the industry towards selling high-quality Chicago-style hot dogs for$2.50 each, made with well-sourced ingredients, and served with the exceptionally friendly service that's become his trademark.

9:15He wants to blend together fine dining's hospitality with blue-collar cuisine. Employees make an effort to recognize returned customers and remember their orders, treating every guest as well as if it were a five-star restaurant. And while the first two summers operating the hot dog stand were slow, with a cart losing money, word of mouth has suddenly made business boom. A long line of people stretches through the park. The stand's popularity is getting written up in outlets like the New York Times. Now, as he watches more people gather in the park, he realizes it might be time for a pivot. Though he's always focused on fine dining, there's clearly a huge demand for affordable classics made with quality ingredients.

10:04Meyer decides to turn this seasonal hot dog stand into a year-round business. He'll expand the menu to include burgers and shakes. Inspired by the movie Grease, he'll call it Shake Shack, aiming to bank on American nostalgia. And before long, it'll become a New York City staple and leave the locals wanting more. You know something? When customers are lining up for something you thought was just a side hustle, pay attention. Danny Meyer read this crowd, not the spreadsheets. And then he pivoted. For entrepreneurs, that's the art. Knowing when a slow burn is really a signal fire.

10:51It's April of 2004 at a bustling McDonald's in Buffalo, New York. A customer walks up to the counter. Cashier smiles at him. Hi, welcome to McDonald's. What can I get for you? Hey, can I get a Big Mac combo with a Coke, please? The cashier nods as she marks the order down. Sure thing. Anything else? The customer frowns. It's not the answer he was expecting to hear. In 1987, McDonald's introduced supersizing. When customers order a meal, cashiers are supposed to try upselling them by asking if they'd like it supersized. It meant that throughout the 1990s, 1990s, for 39 cents, customers get an extra large fry and drink with their combo.

11:31Cashiers have been asking that question ever since. Until today. Could I get the meal supersized? The cashier shakes her head. She explains that supersizing has been discontinued. But maybe the customer wants to try one of their new salads instead? Last month, in March 2004, McDonald's announced they would stop offering supersized meals. The announcement came just a couple of months before the theatrical release of Super Size Me, a small-budget indie documentary that has since made waves. The documentary follows a man who eats nothing but McDonald's for 30 days and says yes whenever cashiers ask if he wants to supersize his meal.

12:13It tracks the negative effects on his physical health. And despite its small budget, the movie's been a supersized success at the box office, which is bad news for McDonald's. The fast food giant is facing more criticism than ever for their negative impact on the health of consumers, who are growing increasingly skeptical of its ingredients and impacts. Look, we know that reputational risk can hit harder than market share laws. McDonald's didn't wait for SupersizeMe to go viral. They pulled the plug on supersizing right before it dropped. The lesson there? In business, the right defensive move is sometimes making the first one.

12:54But there's something else here, too. When a low-budget documentary can rattle a global brand, that's a reminder. Public perception isn't just about marketing. It's about vulnerability. In the age of storytelling, one compelling narrative can undo years of messaging. And if you're not shaping your story, someone else will. Now, McDonald's is scrambling to win health-conscious consumers back with new calorie-conscious menu items like salads, fruit yogurt, and grilled chicken sandwiches. It's part of a campaign called Real Life Choices, which tells customers that whether they're cutting carbs or fat, McDonald's can help them keep on top of their fitness goals.

13:41And this actually works. McDonald's experiences continued growth throughout 2004, despite all the negative press that follows Supersize Me. But as some customers grow weary of the Golden Arches, they'll be primed for places like Shake Shack and Five Guys, which boast freshness and locally sourced ingredients.

14:08It's June 2006. two years after the release of Super Size Me, and it's dinner time in Manhattan's Madison Square Park. It's busy. New York Times reporter Joyce Wadler is wading through the long line outside of Shake Shack. Customers can expect to stand in line for around an hour and a half before ordering, and Wadler is investigating why Shake Shack is worth the wait. Two years ago, Danny Meyer converted his seasonal hot dog stand into a year-round restaurant in the park with a menu that now features hamburgers and milkshakes in addition to hot dogs. Shake Shack has a sleek, modern take on roadside food stands with corrugated iron and a simple menu.

14:52And it's literally a stand. After walking up to order, customers sit in the park to enjoy their food. The stand is so tiny that most of the prep is done at one of Meyer's other nearby restaurants, a fine dining spot called 11 Madison Park. It's a funny image. One of the city's fanciest restaurants being used to prep hot dogs and burger patties. But the lack of indoor seating or proper kitchen, that doesn't hinder Shake Shack. This is a clear hit. The line is so long it stretches towards the McDonald's down the road. But even when faced with the temptation of a cheaper, faster meal, Shake Shack customers stay in line.

15:33A Big Mac costs$2.35 and for around$1.50 extra, You can tack on a drink and fries, but Shake Shack's price, they're almost double that. A cheeseburger costs$3.45. A double cheeseburger is nearly$6. And that's without the extra$2 for fries. Whether because New Yorkers and tourists alike love the next big thing and are drawn to lines for fear of missing out, or because Shake Shack has a kind of halo around it with its promise of better quality ingredients, this concept is a hit. Shake Shack has gained such a massive following that people travel far and wide to try it. But since they still only have one location, people can expect to wait upwards of a half an hour for a hot dog and cheesy fries.

16:19Usually, they're waiting much longer than that. To try and combat this, Danny Meyer installs a webcam on top of the shack that live streams the park along with the slogan, Plan Your Time, Check the Line, so that people can check how long the line is from home. It's a fun idea, but demand is still too high. Around 14 ,000 people are checking that live stream every day. The reporter catches a glimpse of a young man midway through the line impatiently checking his watch. Wadler jots down a note and moves through the line, hearing more or less the same thing from most people she interviews. Shake Shack gets burned by Wadler's New York Times article, though, which questions how useful the webcam actually is and raises questions about security, asking, could a cruel employer bust an employee who had claimed a doctor's appointment?

17:11Could one actually calculate how long the wait would be by looking at an image? And if Shake Shack really wants to become a New York City staple, they'll have to spin their unexpected success into a bigger business. Danny Meyer is hesitant to open a second location. He's convinced Shake Shack's success is entirely dependent on its location, and he worries it won't work as a chain. But Five Guys is already finding success throughout the country. And guess what? They're about to move into New York City.

17:52It's November 2nd, 2007. Shake Shack has finally secured plans to open a second Manhattan location a year from now. But today, no one's thinking about Shake Shack. New York's attention is on the new burger shop in town. On West 55th Street, customers are lined up out the door and around the block for opening day at the first Five Guys in Manhattan. Five Guys menu is even more limited than Shake Shack's. Jerry Murrell and his family are still at the helm, and true to their original vision, it still only sells burgers, hot dogs, grilled cheese, and fries. And like Shake Shack, eating at Five Guys costs around twice as much as McDonald's.

18:36But people rave about the burger's taste and the freshness of its ingredients. Customers also love the customization options. They can choose from a slew of toppings, adjusting their order to their preferences. and New Yorkers are so excited to try the famous new burger chain that they're willing to wait over half an hour to talk to a cashier and in some cases, an extra hour and a half for a burger. Opening day at the Midtown Manhattan location is a huge success. Clearly, Five Guys has landed on a winning formula. Remember how they only had five locations in 2002 before they decided to franchise?

19:16Just five years later, they're raking in nearly$200 million a year. They have around 250 locations across the U.S. and will be adding 200 more in the next year. They're planning to expand throughout New York City, too, with 29 more locations planned in Manhattan alone. Hey, listen. Franchising is like cloning your business, but the DNA had better be perfect. Morel's insistence on quality control, a minimum buy-in, and non-negotiables. Now that's how you scale without selling your soul. If your standards don't come baked in, don't be surprised when the flavor changes. And notice something else here.

20:02Five guys didn't reinvent the burger. They perfected it, or at least fine-tuned it. Tiny menu, no freezers, custom toppings. sometimes product discipline beats innovation flash. In saturated markets, standing out can be as simple as standing firm. Five Guys has proven that there's space to grow in the better burger business. Though it's still a niche part of the burger industry at large, there's a clear hunger for more quality, fast, casual chains. But as all of these chains expand into each other's home turf, They'll have to compete for space and customers.

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23:41It's May 29, 2009, at a Five Guys location in Washington, D.C. Five Guys started in the Washington area, and though they've now expanded to have 400 locations across more than 25 states, they're still a local favorite. Customers are quietly eating lunch, when suddenly a group of men in black suits walks in, followed by a camera crew. One of the men walks up to the counter and begins to order. All right, so then I got a little cheeseburger with lettuce, tomato, ketchup, and pickles. Put lettuce on my... Recognizing the voice, someone shouts, Oh, my God! All the customers look up at once and many start yelling.

24:24It's President Barack Obama. Today, NBC is filming a Day in the Life documentary with a president who decided to make an impromptu stop at the restaurant. As he waits for his cheeseburger, which he's loaded up with jalapenos and lettuce, other customers cheer and shout questions at the new president, who was just inaugurated a few months ago. The visit makes headlines everywhere. People start associating Five Guys with the shiny new president. It's an association that'll make a lasting impact, even internationally. Not long after, Five Guys announces it'll open its first locations outside of the U.S.

25:03The chain will start franchising in Canada. Canadian media has a field day with headlines announcing that the president's favorite burger is going north. And in 2010, the first Canadian Five Guys opens up.

25:23It's early July of 2011. By this point, Five Guys has expanded to around 800 locations, with 10 in Canada. But today, Shake Shack is opening up its own international outpost. And we're actually on a different continent altogether. Shake Shack has expanded to just nine U.S. locations, mostly concentrated on the East Coast. It's still tiny compared to Five Guys. But it's proving that the desire for quality, fast, casual burger shops extends well beyond North America. because a few months ago, they opened their first international location in Dubai. And today, they're opening a Shake Shack in a mall in Kuwait, establishing a foothold in the Middle East.

26:10Usually, businesses wait until they've expanded a bit more in their home country before going international. But in 2008, when Shake Shack only had two locations, a Middle Eastern franchise operator called Alshaya Group asked if they would be interested in expanding into the Middle East, where other American businesses like Starbucks are also expanding, proving that there's a growing market. Shake Shack agreed. Now, they're the first American fast-casual burger chain to break out of North America. And the success of their Dubai outpost has proven that everyone is hungry for American burgers.

26:53It's July 11, 2011, just a week after Shake Shack opened its second Middle Eastern location. Back in the U.S., they've also just expanded into Washington, D.C., challenging Five Guys in their original stomping ground. A few years ago, Barack Obama's visit to Five Guys spurred positive publicity and a flurry of press. But today, Shake Shack is going to get its own visit from a member of the First Family. and wind up in the news for the wrong reasons. The First Lady got her grub on, and now people are talking. Lots of you commenting on Michelle Obama's lunch yesterday. She got it at a new Shake and Shack.

27:36It's in Washington, D.C. The burger fries and chocolate shake came with more than 1 ,500 calories, according to the restaurant's website. The story of Michelle Obama stopping into Shake Shack spreads like wildfire, with the First Lady receiving flack from the press. She's been outspoken about healthy living and eating well and runs the Let's Move campaign to fight childhood obesity. So while Barack Obama's Five Guys visit made him seem relatable, people think Michelle's makes her seem like a hypocrite. It's possible that the uptick in criticism also comes from the high calorie count. For a long time, it seems like better burger chains were recognized as healthier, more wholesome alternatives to fast food due to their fresh, high-quality ingredients.