GloucesterTimes.com, Gloucester, MA

October 4, 2012

Broken promises lead to closing, Five Guys owner says

By Richard Gaines Staff Writer
Gloucester Daily Times

---- — The demise this week of Five Guys at Gloucester Crossing has left the franchise owner disappointed and disillusioned, and the planned 195,000 square foot shopping center without an eatery of any kind.

“There aren’t a lot of sour grapes,” said Greg Vasey, “but it is fair to say we were misled” about essential components of Gloucester Crossing.

Vasey, 32, a self-financed entrepreneur, chose to invest in the Five Guys franchising phenomenon in the midst of bursting investment bank bubbles in 2008. The collapse of Bear Stearns and Lehman Brothers among other financial fiascos soured him on the obvious first steps into banking for MBAs, and while at the University of Chicago Business School, said he had already fallen “in love” with Five Guys.

Raised in Greenwich, Conn., Vasey said he was attracted to New England to test his entrepreneurial skills, and with the Sept. 10 opening of a Five Guys on Route 114 in Peabody, he now owns four Five Guys, with other successful locations in Saugus, Swampscott and Burlington, Vt., not to mention a celebrated food truck known as The Taco Truck, which was featured on WCVB’s “Chronicle” this past summer.

But Vasey said Gloucester Crossing developer Sam Park induced him to take a 10-year-lease with promises — in writing, in the City Council special permit — of a high volume Holiday Inn Express hotel and an assisted living facility. At the time, there was also serious talk of landing a Staples. Neither the motel nor the elderly housing have materialized and instead of Staples, Marshalls opened at Gloucester Crossing.

“The secret to Five Guys’ success is the appeal to the blue-collar community,” Vasey said. “We appeal to the contractor, the trades guys who can pay $9 to $10 a couple of times a week.” What he got instead is women with young children in tow, for whom the propensity to stop for a meal at Five Guys was in inverse proportion to the number of small children in the entourage.

Vasey said his business plan for the Five Guys at Gloucester Crossing was “more of a Staples-based project than a Marshalls” project.

The defining word in the name of the restaurant business after all is “guys.”

At the time, with the economy collapsing, Park and RMD Inc., the real estate division of the DeMoulas Market Basket empire, were hustling for tenants; when Staples pulled out, the developers considered themselves and the project fortunate to substitute Marshalls.

RDM gave Park a $33 million line of credit without which the core project might have cratered.

As it was, Park met the requirements for a tax increment financing break in his real estate taxes by pouring the pad for the Holiday Inn Express.

But that did nothing to help Vasey, and the anticipated business from the motel and permanent residents in what was projected to be more than 100 apartments was illusory.

“By 2010 and 2011, we started getting referred to Market Basket (by Park’s office),” he said, “We were looking at empty windows.”

Vasey said RDM/Market Basket agreed to reduce Five Guys’ rent by 10 percent, but he said the restaurant still lost money last year and “this was not a good summer.” But he added, “I have no hard feelings about Market Basket.”

Today, along the strip of small storefronts that border the project on the east, four of nine are empty. The mid-sized, secondary anchor group — Ace Hardware, Dollar Store and Marshalls — is a solid row, except for a vagrancy at the western end.

In the center, Cape Ann Liquors and GameStop now flank the empty eatery. And looming large and the source of the only economic ummph at Gloucester Crossing is Market Basket far to the west, separated from the mundane square, a checkerboard of filled and empty storefronts, by hundreds of supermarket parking spaces.

“We did everything we could to stay,” Vasey said in a series of emails and a telephone interview. “We just couldn’t make a go of it.”

But he said he remains most bitter about Park’s refusal to assure Five Guys a permanent place on the marquee of businesses at the main entrance off the Route 128 extension.

Sam Park and Mike Kettenbach, who heads RDM Inc., did not return phone calls.

Richard Gaines may be contacted at 978-283-7000 x3464, or rgaines@gloucestertimes.com.