GYG founder on why Aussie chains are primed for US expansion
With a market that boasts over 750,000 franchised outlets, the US has often been viewed as the promised land for Aussie chains. But despite the boundless opportunities on offer, few brands have successfully tackled US expansion.
A remarkably competitive landscape has made it difficult for Australian operations to thrive, particularly in the fast-food arena, where established players like Burger King, Dunkin’ and Wendy’s hold a vice-grip.
However, it must be said the US expansion is far from impossible. Take home and outdoor maintenance chain Poolwerx for example.
The Queensland-based franchise operation successfully launched in the US back in 2015, opening an 10,000 square-foot facility in Dallas, Texas two years later. Since then, Poolwerx has amassed an American network of over 60 franchise territories, 32 retail stores and more than 180 mobile units.
It’s certainly a complex market, but despite the obvious challenges surrounding competition, the lure to of franchise success for Australian food chains has often proved too juicy to ignore.
“It’s just a country of big revenue,” Steven Marks, co-founder and CEO of Australian Tex-Mex franchise Guzman y Gomez (GYG) told Inside Franchise Business.
The entrepreneur believes that while recent events have strengthened the Australian/American cultural romance that spawned in the 1980s with Crocodile Dundee, it’s the strength of the Australian framework that is priming his, and other chains for monster US expansion.
“Australia is in the news so much at the moment with the bushfires, it’s an interesting time, but to be honest, Americans love Aussies.”
Australians leading US expansion
Earlier this month, Marks and GYG unveiled their inaugural US flagship restaurant in Chicago.
The opening signalled the start of what can only be described an as ‘aggressive’ US expansion strategy, with Marks suggesting the brand was aiming to launch “hundreds, if not thousands” of stores.
So, what has the Aussie franchisor so sure that the fast food concept will translate?
“To be honest, in the US, so many of the brands are average, and big US companies are turning to Aussies to change that,” he said.
“To build a successful business in Australia, where the labour costs are so high, the food costs are so high, you have to have your operations right and a great product.”
Marks is not wrong in his thinking. Australian labour costs have significantly outpaced their North American equivalents, compounded by the barrage of media attention focused on wage theft and award complexity Down Under.
Further, the regulations that govern the sector are far stricter in Australia than other parts of the world. Franchisors in the US benefit from favourable economic conditions that reduce the barriers to finance and capital raising, making it easier to leverage established brand value to swell network growth.
Marks said the mandatory focus on operational processes and disclosure in Australia was the perfect pre-curser for global growth, particularly US expansion.
“I truly believe that any brand in Australia has the potential to succeed in the US. In a country with a small population like Australia, to be a strong business, operations have to be so tight and revenue has to be so high, so it sets you up perfectly for the US, where those challenges aren’t so tight.”
In addition to its set structures and regulatory procedures, Marks said Australia’s diverse cultural melting pot forced chains to be fluid with their offerings.
Whether it be through format, flavour or concept, Australian food chains are constantly reinventing themselves to cater to a wider audience. It’s a move that has allowed the sector to readily adapt to market evolution, something US chains have historically failed to accomplish.
In recent times, GYG has restructured its timings to introduce a full-scale breakfast concept, which Marks said was not only a success Down Under, but was also driving a point of difference in the competitive US market.
“Chipotle’s got 2500 (stores) and Taco Bell’s got however many, but just like in Australia nobody does a full breakfast through dinner offering,” Marks revealed.
“With the energy that we bring, the white space for us in the US is limitless.”
But despite the established framework providing an excellent foundation for Australian brands to embark on US expansion, it is far from a sure thing.
Much like here in Australia, franchisee tension is swelling in America. McDonald’s franchisees have voiced their concerns over the company’s new strategy, while similarly Subway has been hit with a series of allegations.
Marks said whatever your business model or industry, the example that you set in Australia must flow through to all international markets.
“It’s pride. Australia and the world needs great businesses that take care of their franchisees,” he said.
“Franchising has got slammed in recent times, so it’s nice to see a positive network like ours. These guys work so hard to build up the capital to invest in a GYG, you have a commitment to give them everything.”