Guzman Y Gomez shifts focus to aggressive 1000-store push in Australia after US dream flops

Guzman Y Gomez says it is taking a disciplined approach to opening 1000 stores in Australia after ambitious plans to conquer the US market flopped.

The Mexican-themed fast-food chain has a network of more than 270 stores, including 250 in Australia, 24 in Singapore, five in Japan and, up until last month, eight in the US.

Over the next 20 years, Guzman wants 1000 stores in Australia to match the likes of fast-food stalwart McDonald’s.

“We’re going to get there in a very disciplined approach,” Guzman chief development officer George Mandilis told The Nightly following its recent store opening in WA.

“We always look for triple-A real estate. That perfect site, corner of (two main roads), beautiful access . . . easy carparking, dual-lane drive-through.

“We know that if we do that day in, day out and keep building our pipeline, we will get to 40 new store openings a year, which we’re tracking to.”

While Mr Mandilis is confident of Guzman’s ability to get to 1000 stores, he says it will “not compromise on that real estate”.

His comments came after Guzman’s embarrassing US withdrawal in May despite repeated commitments from its two founders, Hilton Brett and Steven Marks, pictured, the venture simply needed time to gain traction among American consumers already spoiled for choice.

Mr Brett in February said they would not expand beyond the 15 planned restaurants in the US until its eight restaurants matched sales in Australia.

Guzman shares surged as much as 20 per cent on May 22, when it first announced the US exit. The stock has fallen 16 per cent over the past six months JUto $18.83 — below its IPO price of $22.

“From a real estate perspective, there’s always lessons to learn,” Mr Mandilis said.

“When it came to the US, would we have cut our real estate strategy differently? Maybe. Would I have loved to get more stores, yes.

“Ultimately, we made the decision that we’d already utilised the capital we had told the market we would on that journey, and therefore we didn’t feel it was right to continue that journey.”

The failed attempt in the US is set to cost Guzman a one-off financial hit of between $US30 million and $US40m.

It’s now facing a class action lawsuit in the US for allegedly failing to give staff enough notice of the closures.

In Australia, Guzman wants to accelerate its rollout of drive-through outlets and strip restaurants. “The reason we look at drive-through and strips is because you can trade those two formats 24/7,” Mr Mandilis said. “That is the reason why you don’t see much of our future pipeline being in shopping centre food courts.

“We don’t do more of them because it’s really hard to build a business off something that trades largely two hours at lunch a day.”

In April, Guzman said it was on track to open 32 new restaurants in Australia this financial year, including 23 drive-throughs.

During the third quarter, Australian comparable sales grew 6.6 per cent, above JUmarket expectations of 5.1 per cent.