Espresso: Rory Sutherland HONEST OPINION on Five Guys

0:01They've done a couple of things well. So I think, you know, we were talking last time about gratuitous perversity, so like doing something to kind of fuck people off, but it does, psychologically, some reason it does something well. Well, the interesting one, I don't know if I mentioned this last time, I've often thought it was an interesting idea. There's this fantastic place, which is where five guys got the idea for their fries from. Yeah. They went and studied this place called Thrashers in Ocean City, Maryland, which has three branches. It just sells fries. It sells them in a kind of pyramid tone.

0:31Yes, you've talked about this. And the interesting thing, this is really weird if you think about it for the US. They don't give you ketchup. You can have vinegar and you can have salt and that's it. Now, that's not so weird to Brits. For Americans saying no ketchup, that's a real kind of weirdness. Doing these things. So on the Gail's point is they want to feel. So I've interviewed the founder of Popham's Bakery, which is one of the best bakeries up in North London, but it's just two sites. Two sites, got it, yeah. Two sites. And we were talking kind of before we hit record. I shouldn't mention them because venture capital will take it over and open 400 sites and then ruin it.

1:06Yeah, because last time we were talking about how scale kills magic. We'll get onto that again in a sec. But one of the things I said to him, are you going to open any more sites? You've got three sites. He goes, no. We're going to keep these three bakeries and we're going to do a brand bounce, which is so go into something completely different so what they've done is they've leveraged they've got the amazing fucking uh croissants and pastries and pastas that again due to scarcity sells out perfectly on time at 1 p.m every day which means there's always queues queues status blah blah blah good concept brand bounce by the way brand bounce but then what they've done brand bounces caterpillar which make heavy dust moving equipment moving into But what they've done is they've gone into homeware, because homeware is infinitely scalable.

1:49The Popham's brand is strong. People want a nice coffee cup to drink out of. And I was like, that's genius, because you could, logic would say, go and open other 10 sites around London. And you could sell it online, which you can't do with baked goods, almost by definition. Exactly. But then, so that was their point. But what he was saying about Gales is their genius is that they feel outside of London, again, opening one in, I think they opened one, where did I see them open one? In, let's just say, and Cheshire's not the best example, but a city. Seven Oaks as well. Yeah, Seven Oaks as well.

2:23So that, Woking, there's one in Woking. In Woking, that feels like, oh my God, this is a neighborhood bakery. so i think back to that gratuitous perversity point is it's like maybe the the kind of the the fact it's a bit cataclysmic the queuing system versus a starbucks adds a sort of neighborhoodness to it one but then two every single gales looks different so they're not carbon copy so the one i went to the one in i was in finsbury park uh last week that is totally different that's all pink and neon the versus the one in cobham versus the one in woking so i think what they're trying to do is build this neighborhood feel at scale.

3:02We have this thing, because of course it's different outside London versus inside. We have this chain in Kent called Elite Pubs, which is very similar, which is they're all, there is no common branding. You have to go to the website to discover which is an elite pub and which isn't. You know, if you were really, really alert, you'd probably recognize similarities. I mean, they don't, you know, not everything is completely reinvented. But fundamentally, they do quite a high degree of sort of customization to the individual building and the area. And so it's quite an interesting concept because it has the economies of scale of a chain pub, but it has the appearance to the consumer of a local.

3:43Do you know who's done this really well is Honest Burgers. Interesting. So actually, I should introduce you to him. So he's now doing a degree in behavioral economics. He's a fascinating guy. And he's creating a piece of AI. They're very, very highly rated, aren't they? I've never had one, actually. You've never had all this burgers? No, no, no, no, no. They're so good. But what they've done, they've done a few things that is against kind of, I've solved the scale kills magic conundrum. So first thing is they have the consistency of burgers. They have this kind of rule, which is 90 % systems. So you have all the systems in place of a big restaurant.

4:20They have this almost 10 % rule, which allows for a bit of fuckery. so they all let they all let employees in even though they're not there saying in honest in Brighton or honest and tooting they a bit like Julie Metcalfe's give away a um a free coffee when you like it's like they could they've got the agency to plop down a bottle of tequila and say look help yourselves have a few shots keeps these magic again it could fuck up it could fuck up because I remember always being coming from a provincial background I grew up in you as said, a sort of small town in the Welsh borders. I went to university and there was no university food on Sunday, Sunday lunchtime.

4:58And a group of us got into the ritual of always going to Pizza Express. I always had the fear and tea now, I think. It was just every Sunday, basically went to lunch and Pizza Express. And the one thing I did grumble about after doing this for practically two years, admittedly only during term time. And what I didn't realize, of course, is to the people working there. We're a bunch of students here today, gone tomorrow. But at no point do they kind of recognize our regular custom by going, don't worry, you can have some free garlic bread. And I always thought, you know, on visit number 10, that's getting a bit weird.

5:31You know what I mean? It's always absolutely fine. You always got exactly what you wanted. But it kind of, you know, if you'd been there literally 10 weeks in a row, something in the natural human perception of value exchange and fairness and relatedness expects the acknowledgement of your past custom and so it's very sensible way they could at honest burgers just effectively use that discretionary thing is if you have someone who comes back with their kids quite often just give you know give the kids a balloon they do other funny things as well they they they again back to gratuitous perversity is they won't allow forks.

6:09So what Phil and Tom were saying to me is... Hold on, hit me with this. So they won't allow forks. So because, again, it pisses customers off. They did a couple of things really well. So a bit, they realised... Why do you eat your fries? With your hands. Their whole point, one of their values is food is connected. They believe when you eat something with your hands, it connects your food to your soul. And he would say... So they give you wipes afterwards? I think they would give you wipes. Again, it's gratuitous, but it doesn't really make sense. But they were saying there was absolute uproar when they opened in Chiswick.

6:40You can imagine all the kind of push mums and the investment banks in the weekend. Where are the fucking fools? Do you know what I mean? Because they do that. But then this is where it gets really interesting. Because that was my weird thing about opening bacon sandwich. Yes. Where you would offer brown sauce, but no ketchup. Exactly. And sheer willful perversity. Exactly. And it's kind of, it's a bit of a kind of mini Marco Pierre White, isn't it? Which is if people ask for salt or pepper, he'd have a, you know, he'd have an absolute wobbly, you see. Exactly. And it's actually a little bit of saying, it's a way of signaling that we have our own opinion about this food, and we're doing this for reasons other than simple, naked, capitalist greed.

7:24In other words, not being completely customer focused in certain things does have, I mean, you know, I don't recommend it as a default position. You know, I don't recommend that, you know, organizations become willfully perverse all the time in everything. It would get really, really annoying. But it's something you can deploy, you know, in a very, you have to do it in a limited way. Well, the other thing they do is to keep the localization and keep the feeling of we are not a chain, even though there are 50 sites. is every single Honest Burger site will have a unique burger local to that. So Manchester will have cheese from Lancashire.

8:07Yeah, I like that. And he said to me, he goes, our accountant hates us because we're doing stuff for this fucking one burger, which we may not sell part of. And I was like, and he was like, but we don't care. We want that. Waitrose does that actually. So in Waitrose in Wales, not that there are many of them, there's one in Monmouth. they have the little local produce aisle which is really nice and it actually got into private hype because someone wasn't paying much attention to shelf stacking and he said local welsh produce and there are a load of bananas which don't grow very well in wales to be honestly honest um but um i don't know where they got that idea from but uh no and those kind of little bits of um and actually you'll see that in in the design being adopted by starbucks when they open new stores in what house they've gone from staff in a sense okay if it's a bit like mcdonald's making playing around with its logo by using it for directions you know first on the left and then use the golden arch as just a kind of arrow um you when you're when you're very well established you can afford and in fact it's beneficial to play around with your own sense of identity in other words you abandon the absolutely rigorous algorithmic does attention to rule rules in design and you uh you do variations on a theme and so what starbucks is doing is if they open a starbucks in new mexico now it won't look like a starbucks in connecticut you know they'll deliberately add some local elements or some or some customization now it's worth noting that you probably you shouldn't be doing that in the early stages perhaps but when you are established you can afford to have that kind of you know to play fast and loose with your own kind of rules a little bit