Mexican fast food franchise Guzman Y Gomez has opened up on its transition to a “clean food” menu, and confirmed ambitious expansion plans for almost 20 new stores as well as a push into the US market.
The Australian chain, founded in 2006 with the opening of its first restaurant in Sydney’s Newtown, recently unveiled the new menu, which founder and global CEO Steven Marks told My Business is the result of three years’ worth of “extensive research” and development.
Mr Marks said that Guzman Y Gomez first approached suppliers three years ago in a bid to create a menu free of unwanted additives and preservatives.
“We developed our own definition of what ‘clean’ meant to us. We developed a list of unacceptable ingredients and additives and presented them to our suppliers,” he explained.
“There weren’t many issues with our food in the first instance; however, our suppliers were more than willing to work with us and challenge what they know about food to eliminate ingredients that we felt were unnecessary. All of our suppliers were up for the challenge.”
According to Mr Marks, a number of the products developed during the process “were a global first”.
“Our tortilla, for example, was the first product developed globally that didn’t contain preservative 282: that’s because we simply don’t need a shelf life of six months. We go through so much volume,” he said.
Cost versus customer health benefits
A radical overhaul of a restaurant’s menu, and the development of new products, is obviously a substantial investment. And, as Mr Marks explained, some products proved more costly to change than others.
“The biggest move we made which impacted our bottom line has been to our proteins,” he said.
“Three years ago, Guzman Y Gomez became an industry leader by being the first fast food company in Australia to move to free-range chicken — it wasn’t cheap, but it was worth it.
“We have also spent a considerable amount in moving to a bacon that matched our clean criteria. Those costs to the business have been substantial, but we knew they were the right ones to make for our guests.”
Other changes involved removing items rather than introducing new ones, meaning the cost, at least in theory, was minimal on the supply side. Although the time investment “has been enormous”.
Investment already paying off
According to Mr Marks, the business investment is already beginning to pay dividends.
Since launching the new menu on 24 September this year, he said that “like-for-like sales increased immediately”.
“It’s a real testament to all of our hard work over the last three years,” he said.
Competing with the big guys
It may seem like a daunting prospect to take on the likes of global giants like McDonald’s, KFC and Subway in the fast food space.
Yet Mr Marks is upbeat about his business prospects for Guzman Y Gomez, citing the chain’s growth to 120 outlets in three countries over the last 13 years.
In addition to the new menu, he cites early adoption of technology as allowing his business to “hold our own with the bigger fast food players”.
“When Guzman Y Gomez first started, we invested in developing our own bespoke ticketing and ordering systems, which allowed us to compete with the speed of traditional fast food players,” he said.
“With convenience a key priority for Australians, having a solid strategy around the expansion of our drive-thru stores throughout Australia and mobile ordering has been key to driving sustainable business growth over the past few years.
“I believe drive-thru is the future of the fast food industry, and crucial if you are looking to compete with other players in the industry, you need to be fast: our Guzman Y Gomez drive-thrus can take over 100 orders per hour.”
Another implementation, which may not be synonymous with fast food at first glance, was the launch of the company’s own mobile app.
“At the time of launch, sales via the app accounted for 24 per cent of all transactions, and led to higher transactions per order than in-store,” Mr Marks said.
“Our app is also fully integrated with the GOMEX loyalty platform, where our guests can earn points to claim in store.
“The GOMEX loyalty platform has more than 350,000 active members, and we are continuing to invest in customer acquisition through the app by rewarding all new users a free mini burrito when they sign up.”
So what’s next for Guzman Y Gomez?
Far from slowing down, the business is continuing to roll out new stores and push into new overseas markets.
The business already operates more than 120 locations across Australia and has expanded its presence into Singapore and Japan, with around 80 per cent of its outlets being franchised.
Further expansion at home is on the cards, as is an impending launch into the US.
“We’re looking to open over 18 new restaurants this financial year all over Australia, as well as our flagship and first restaurant in Naperville in the USA,” Mr Marks said.
Advice for other business owners
Mr Marks said his journey in business has been heavily influenced by a core piece of advice he was given: “Move your feet and never stand still.”
Yet that advice comes with a caveat, which relates to moving too quickly to take in the details.
“My first month of trading on Wall Street at 22 years old, I got excited and bought too many shares of a Mexican cement company, which resulted in our business having a seat on the board of the company,” Mr Marks lamented.
“I’ve been obsessed with detail ever since!”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.