Which food franchise is eyeing up suburban sites in its growth strategy?

Sarah Stowe

Suburban sites are a new focus for Guzman Y GomezWhy fresh food and speedy delivery is the key to this brand’s expansion plans.

Mexican chain Guzman Y Gomez plans to open about 20 taquerias each year.

Right now 18-35 year olds form 60 percent of the customer base for this predominantly urban-based franchise chain.

CEO Mark Hawthorne has told FB “What excites me about GYG is capturing the Millennial market, the holy grail of business.”

And he plans to do this in the burgeoning Latin American food category.

Of course the quality of food is central to the offer, but so too is the delivery and management of the business.

Speed is a priority for any fast food business. What marks the GYG model as different in the Mexican space is the production line. With competitors focused on Subway-style production (making food in front of the customer) GYG has taken a different approach.

The business model is reliant on through-put he says and so kitchen preparation is fundamental to getting the food out fast.

“Making food in front of you has positive points but you give up speed, the through-put can be quite restrictive. We have a double line out the back,” says Hawthorne.

But customers still get that ‘made-just-for-you’ moment.

“What we want is to show fresh steak and fresh chicken being cooked,” Hawthorne explains.

In-store typically busy periods are the lunch hours 12am to 2pm, and early evening 6pm to 8pm.

“In Collins Place and MLC centre, we can take $6,000 to $8,000 in two hours.

“We see we can take on the fast food chains. We want this premier proposition to be in the top seven in the marketplace.”

And landlords are responding, Hawthorne says, approaching the brand to feature in their shopping centres as a new face, an alternative to traditional brands.

GYG is all about attracting people who want fresh fast food. There are no freezers or microwaves used.

The latest innovation is the drive-through which has been designed with a double drive lane to maximise capacity.

This new development is taking the urban GYG brand into suburban territory, putting the fresh Mexican menu close to residential areas and industrial zones.

While the initial investment level is higher for franchisees, the benefits of the longer leases and better rents equate to a similar overall investment to that paid by franchisees located in shopping centres.

The investment is $300,000 to $400,000 but the scope of landlord contributions can vary. Sites are sized from 2,000 sq m.

Management style

Hawthorne cites the quality of management as critical to GYG’s operation.

Founders Stephen Marks and Rob Hayes bought in new investors: Peter Ritchie (who brought McDonald’s to Australia), Guy Russo CEO of K-Mart and Target, and Steve German, former CEO of McDonald’s.

“I’d rate this against other chains and offerings,” says Hawthorne.

“Love or hate it, McDonald’s does some things really well. We’ll take ideas for franchise operations, supply chain, retail stores. This is the strength and experience of our management.”

GYG has 13 company owned stores and 25 franchisees and wants to increase the franchised elements.

“We want to bring in people who can execute better than we can.”