Americans lose it over $300m Aussie hit

It sparked the Mexican food revolution in Australia with its fast, fresh meals - but now Guzman Y Gomez is taking its biggest gamble yet breaking into the US market.

It may have taken a decade, but the famous Australian-Mexican fast-food chain has finally made it to America after opening a branch in Naperville, a western suburb of Chicago, Illinois, on January 16.

It was always a dream to bring the chain to North America for co-founders and New York City natives Steven Marks and Robert Hazan.

The new store even looks the part of an American landmark and may seem completely foreign to most Australians.

But it's been quite a journey to get there.

The Naperville venue is an old bank about 40 minutes from Chicago.
The Naperville venue is an old bank about 40 minutes from Chicago.

HUMBLE BEGININGS

Guzman Y Gomez first launched in 2006 with a store in trendy Newtown in Sydney's inner west, which is still thriving today.

Within a year, Guzman had three stores and by 2012, twelve stores. The first inter-state store opened that same year in Melbourne.

The mexican food chain now has just over 125 stores in Australia, ranging from small hole-in-the-walls to over 30 drive through restaurants.

It has also grown to a staggering turnover of $A300 million.

"We are one of the largest franchises in Australia and over the last five months it's just exploded," Mr Marks told News.com.au.

 

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Happiness is what we stand for! 😀💛

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Mr Marks said it was down to a successful franchise model, with all stores working towards a common goal.

"We've built up credibility over the last thirteen years thanks to our franchisees who believe in this value that we create," he said.

The brand's Aussie success story showed to Mr Marks that the business could handle the larger masses of America.

"We wanted to reinvent fast food and I believe that our growth in Australia has shown that the masses want and need convenient, clean fast food," Mr Marks said.

GAME CHANGER

However, Australian growth on its own wasn't going to be enough to take on America.

It was when Guzman launched its first successful drive-through that cofounders Marks and Hazan knew it was the right time to launch into the US.

"We already had the freshest fast-food platform but to then open a drive through and do the same speed as a McDonalds? That was a game changer," Mr Marks said.

Before he could test his theory though, Mr Marks focused on two other markets, Singapore and Japan.

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Good vibes from GYG Japan!! 🇯🇵

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In 2013, barely a year after opening in Melbourne, Guzman Y Gomez launched in Singapore and has since exploded to 10 venues.

In April 2015 the group moved again, this time to Tokyo, Japan and have now opened up four branches across the capital.

The American store marks the 135th global branch and the fourth market that Guzman has launched in.

EPIC FOUR YEAR SEARCH

The US opening has been four years in the making with Mr Marks looking at over 100 locations throughout the country.

Eventually the chain settled on a small suburb just outside of Chicago called Naperville.

"Naperville has five high schools and a university, the store is an old bank just off a major highway and an intersection so it's an effective location," said Mr Marks.

It took the group two years to find but while the location may seem like an odd choice to many Australians, it was the perfect fit for Guzman.

"We chose suburban Chicago in the end because if we can get it right here then we can open it up anywhere in the US," Mr Marks said.

Mr Marks said the location was right off a major highway and intersection so was effective for vehicles.
Mr Marks said the location was right off a major highway and intersection so was effective for vehicles.

GAMBLE PAY-OFF

The gamble has already paid off, with Guzman Y Gomez having made double what was expected in a matter of weeks.

"We opened with $5 burritos, bowls, nachos and nacho fries so that all of Naperville would come and try our food and even at an opening special price, the overall revenue still exceeded our expectations in the first 7 days," said Mr Marks.

The team opened at 6am on a Thursday with breakfast burritos and hasn't stopped since, said Mr Marks.

While Guzman usually does free burrito days to open Aussie stores the decision was made to lower the price due to the unpredictable weather.

It's paid off though, said Mr Marks, and has only strengethed his resolve in expanding the brand.

"The sales have strengthened our belief that no other restaurant business in the United States has the food quality, the value, the speed and energy of our staff to do what we do," he said.

"The energy, that's really our point of difference and the Americans seem to agree, they really have been blown away by our energy."

GUZMAN'S HUGE RISK

The US is famous for having plenty of Mexican fast food options and brands like Chipotle, Baja Fresh and Taco Bell - the latter of which has expanded into Australia - are all household names.

Not that Guzman needs to be concerned about Taco Bell's expansion into Australia.

The American brand previously tried to establish itself in Australia both in the 1980s and 1990s and failed.

This time around, Taco Bell has plans to open more than 50 stores by 2021, but if anything, Taco Bell needs to look into its own backyard.

Mr Marks said the US brands were lazy and complacent and that people would buy into what Guzman Y Gomez was offering.

"What made our revenue have double digit growth in Australia was because we never compromised on food or culture," he said.

In fact, Mr Marks has doubled down on his commitment to provide consumers with a healthier fast food alternative.

Guzman Y Gomez has a commitment to sustainability and authentic food.
Guzman Y Gomez has a commitment to sustainability and authentic food.

GUZMAN DIFFERENCE

Mr Marks told news.com.au last year that over the last four years he had worked hard to eliminate added preservatives and colours, artificial flavours and unacceptable additives.

"It doesn't matter what you eat, it has to be clean. In the US you'll have people talk about 'clean' - in Australia people are like, 'What is this guy talking about?'" he said.

The hard work seems to be paying off, and Mr Marks said a slew of businesses and CEOs were now coming to him to ask how he does it.

"People know we are for real and we still have more plans in place. I want to compost more and put nothing in landfill, that's what I'm most excited for," he said.

That commitment was something Mr Marks required in his franchisees too, because that was the recipe to operating a successful franchise business.

"I carry this in my heart, Guzman means so much to me so I want it to mean a lot to my franchisees too," he said.

"I love my people and my franchisees as it is a family and we all work together to be successful."

For now, Mr Marks is content with the stores he has and has no plan to branch out into any new countries yet.

In Australia he is aiming for 400 stores in the near future and eventually hundreds in the US as well.

"We worked hard to build the Guzman Y Gomez experience and now we just have to continue to do it every day," he said.


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