MEXICAN WAVE
It’s a fast-food fiesta out there.
Are you ready to join in the food fiesta?
Australia is in the midst of an all-out Mexican stand-off, with the nation’s top Tex-Mex outlets battling it out to be numero uno. But the local market wasn’t always so taco crazy.
While the US has always had a healthy obsession with flavours from south of the border, Australia has been slow to take up the offer.
In fact, just five years ago, you would have been hard-pressed to find a Mexican outlet that offered affordable, fast and flavoursome fare Down Under.
Some independents, largely operated by Mexican or Hispanic expats, were able to crack the domestic fast-food market, which was for years dominated by burgers and pizza. But on the franchise front, Aussie consumers were, by and large, still on the fence when it came to Mexican food.
Even Taco Bell, the booming US chain, backed by megafranchisor YUM! Brands failed to hit the mark here, not once but twice!
While Aussies were cautiously curious, a storm was certainly brewing, and as it has a habit of doing, the nation gradually cottoned on to what was happening overseas, taking Tex-Mex inspiration from our US counterparts.
The global success of Mexicaninspired franchise chains such as Chipotle and Del Taco blurred the lines between westernised fast-food and the iconic South American grill. Couple that with a generational change that saw more Aussies open to trying new things, and slowly the Mexican ball started rolling. Flash-forward to 2020, and Mexican-inspired chains aren’t just featuring on the franchise market, they are driving it. So who are the big players making moves
on the Mexican market?
TACO BELL
Third-time really is the charm for iconic US franchise Taco Bell. Two failed starts in Australia, including a high-profile exit in the late '90s, hampered growth for the Tex-Mex giant, however a surge in American fast food has handed Taco Bell a new lease on life.
The chain kick-started its third Aussie incarnation in Brisbane in 2017, but it wasn’t all balloons and
streamers. Having learned from its previous failings, Taco Bell, in partnership with KFC operator Collins Foods, issued a soft launch, with little promotion to generate appeal.
Instead, the brand relied on word of mouth to get the message out, and nearly three years and close to 10 restaurants later it seems the strategy has paid off.
“We really came at it this time with the intention of making sure we laid a really solid foundation,” Taco Bell Asia Pacific managing director
Ankush Tuli says.
“That led to some exciting growth, we found the perfect partners in
Brisbane and that success gave us the confidence to expand into other areas.”
That second run of expansion finally kicked off in early December 2019 when, alongside operator Restaurant Brands, Taco
Bell unveiled the first of its outlets in NSW.
The Jesmond site was carefully planned and meticulously curated, providing locals with a taste of things to come. From open-air kitchens to USB charging stations and kiosk ordering, Taco Bell’s
Aussie approach was a
direct reflection of the chain’s US heritage.
“Our fans have been appealing for us to get down to Melbourne and Sydney since we arrived in Australia, so we’re delighted to now be able to answer those requests,” Tuli says.
“Taco Bell’s unique offering of Mexicaninspired food has really resonated with the Australian public, and our unique positioning as a culture-centric, lifestyle brand, where we showcase the social experience of food, is sinking in.”
A Blacktown restaurant followed quickly after, bringing Taco Bell’s NSW sites to two, but that was just the start for the US mega-chain. With an estimated
$65 million commitment from partner Restaurant Brands, it won’t be long before you see the iconic purple bell on every corner.
MAD MEX
It’s a similar story for Aussie-born business Mad Mex. After over a decade on the quick service restaurant (QSR) scene, the chain is breaking the shackles of the domestic market in search of greener pastures.
In 2018, Singapore-based chicken chain 4Fingers acquired a 50 per cent stake in the company, signalling that growth across both Australia and Asia was on the cards.
Twelve months on, and Mad Mex is ticking off goals as it goes. A new repositioning strategy, the brand’s first in 10 years, solidified Mad Mex as a household name in healthy fast-food operation. The “Fresh Food for Life” update showcased the chain’s dedication to healthy flavours and natural ingredients.
“People want somewhere that provides great choice – that’s inclusive – catering to all tastes and dietary requirements so they can enjoy sharing real food experiences with friends and family. We’re proud to say Mad Mex provides that,” Clovis Young, founder and CEO, says.
With a fresh branding and partner on board, Mad Mex was perfectly placed to take the next step in its journey, launching an inaugural restaurant in Singapore, with Malaysian expansion following soon after.
Young reveals that the region had emerged as a primary target for Mad Mex over the past few years, particularly as the “Fresh Fuel for Life” branding took hold.
“Southeast Asia is in the midst of a food revolution towards healthy eating, and we believe Mad Mex’s healthy and quality positioning will resonate with local customers. We are very excited by the opportunity and we have big plans for the next five years.”
The Malaysian growth brought Mad Mex’s international territories to four, following successful expansion into New Zealand in 2013, but Young believes that growth is only possible when paired with sales.
At its annual conference in Fiji, the founder and CEO revealed that Mad
Mex had secured its biggest year to date, reporting a 6.5 per cent rise in like-for-like sales, following 70 weeks of sales growth in Australia.
“The results our team delivered were truly remarkable and a demonstration of the passion and enthusiasm our restaurant teams have for the food and the brand,” Young says. “The last 12 months have been very tough for retailers, so that performance really is exceptional.”
THE BURRITO BAR
It’s a reality Brisbane-born Mexican chain The Burrito Bar knows all too well. Since 2011, the San Francisco-inspired Mexican chain amassed a cult-like following, growing from three restaurants to 31.
However, when new market challenges hit the scene, times got tough.
“Initially Burrito Bar was caught off-guard by the explosion of Mexican inspired food in the QSR market and by the end of 2017 it was really beginning to hurt,” Burrito Bar general manager Shaun Butcher says.
“In many ways, the brand was unprepared for its own success in the early years and possibly expanded too quickly. This put substantial pressure on the brand support structure, systems and processes as they tried to keep up.”
But rather than try to maintain their growth, Butcher and the team made the decision to reinforce their foundations, focusing on ensuring existing franchisees remained profitable.
What followed was a full network restructure, with the brand ceasing all expansion and doubling down on its support.
“A strategic rethink and restructure in mid-2018, especially around marketing and our menu offering has led to a situation where our franchise partners now prosper from these former challenges,” Butcher reveals.
The biggest strength for the Bay Areastyle Mexican chain is the full-service kitchen, which Butcher says enables franchisees to create a large and diverse menu, cook to order and enhance the flavour profiles customers have come to love.
“While we have all the same style of products as the other Mexican restaurants, we also have so much more and some of our most popular products are those that the other Mexicans restaurants do not and cannot provide with their limited kitchens,” he says.
“We are the perfect place for groups of people or families to come for lunch or dinner, knowing that we have something for just about everybody, even those people who may not be familiar or like traditional Mexican food.”
The restructure paid off.
Even as the threat of delivery platform aggregators grows and new competitors enter the market, The Burrito Bar is thriving, with same restaurant year-on-year growth continuing to average over 40 per cent.
But the biggest takeaway for Butcher has been that you can’t rest on your laurels. You must always be willing to try new things.
“While this relaxed casual dining environment is our strength, we recognise
Taco Bell’s unique offering of Mexicaninspired food has really
resonated with the Australian public, and our unique positioning
as a culture-centric, lifestyle brand, where we showcase the social experience of food, is
sinking in.
that the market is evolving and we will continue evolving in 2020,” he says.
“We are currently planning on building more diversity and flexibility into our brand and model to ensure we can better cater to a full range of people, including takeaway customers, online and app customers, drive-thru customers and third party aggregator customers.”
With the new structure and support processes in place, The Burrito Bar is back on the expansion train. Butcher reveals that the brand is looking to extend its offer interstate, even teasing the notion of international growth.
“Having spent the time since mid-2018 focusing on the sales and profitability of our existing franchise partners, along with optimising our model, support structure, systems and processes we are confident that 2020 is the year to start focusing on growing restaurant numbers again.
“We will also explore new avenues to provide Burrito Bar to more people through enhancing our online ordering, introducing an app, and evolving our restaurant model to prosper in drive-thru and regional environments.”
GUZMAN Y GOMEZ
Not one to be outdone, however, Australia’s largest Mexican franchise Guzman y Gomez also announced a healthy business update last year.
A new “100 per cent clean” menu, three years in the making, saw the chain drop added preservatives, artificial flavours, added colours and unacceptable additives from its food.
“Our menu and processes are constantly evolving in response to global best-practice and, most importantly, customer demand,” Steven Marks, Guzman y Gomez founder and global CEO says.
“After extensive research into consumer attitudes and trends towards food, and ongoing feedback from our guests, it’s become clear that clean is the new healthy.”
The business worked alongside independent nutritionist Sarah Patterson of The Nutrition Providers to develop the new menu, utilising the international food guidelines laid out by the World Health Organisation.
It was a monster undertaking for the Tex-Mex giant. Guzman y Gomez negotiated with several of its existing suppliers to change their products to meet the strict guidelines, in some cases even teaming up with new partners.
“Australians should never have to compromise on quality and eating whole real foods, even when it comes to fast food,” Marks says.
“When you order food, it should be easy to avoid added preservatives, colours,
Australians should
never have to compromise on quality and eating whole real foods, even when it comes to fast food
artificial flavours and other nasties that offer very little nutritional value.”
No stranger to innovation, it isn’t the first time Guzman y Gomez has redefined the Mexican QSR space. Back in 2017, the chain became the first Australian fast-food outlet to introduce free-range chicken across all stores nationwide. Since then, Guzman y Gomez also rolled out 100 per cent sow stall-free pulled pork and hormone-free beef.
TACO ’BOUT IT
Whether it’s traditional tamales or standardised salsa, Australians have grown to love the flavours of Mexico. It may have taken a number of years to get the message through, but the successes of home-grown franchises such as Guzman y Gomez and Mad Mex have solidified the offering as a leading cuisine in the QSR space.
It’s precisely why big-name international players like Taco Bell are so keen on breaking into the domestic market.
“Today’s consumer is far more ready now, more ready to experiment and hungry to try new cuisines and formats,” Taco Bell Asia Pacific managing director Ankush Tuli says.
And while he agrees, Burrito Bar’s Shaun Butcher suggests the secret to success is adaptability.
“The Australian market is very open to trying new flavours and styles of food. In the Mexican market, we are fortunate to have such a wide variety of flavours, spices, sauces, salsas and rich flavoursome ingredients to work with. This enables us to continue innovating and doing new and exciting things.”
It’s good enough reason to have consumers licking their lips. With palates continually refining and new players entering the market, the Mexican-inspired fast-food space is a spicy business opportunity that is just heating up.