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Elsa Williams 11R1

Table of Contents 1.0

Introduction............................................................................................................3

2.0

Business Situation and Environment.......................................................................3

2.1

Franchise Structure..........................................................................................................3

2.2

Franchise size and distribution.........................................................................................3

2.3

Organisational Culture.....................................................................................................3

3.0

Financing Challenges and Options..........................................................................4

3.1

Start-up stage challenges.................................................................................................4

3.2

Financial goals and strategies...........................................................................................4

3.3

The role of the Franchisor and Franchisee........................................................................4

4.0

Analysis of the External Macro Environment...........................................................5

4.1

PESTLE Analysis................................................................................................................5

4.2

SWOT Analysis.................................................................................................................6

4.3

Interpretation of PESTLE and SWOT.................................................................................6

5.0

Suitability of business situation and environment...................................................6

6.0 Recommendation.........................................................................................................7 7.0

Conclusion..............................................................................................................7

Elsa Williams 11R1

1.0 Introduction Guzman y Gomez, a premium ‘fast casual’ restaurant, created to introduce Mexican and Latin cuisine to Australia and many more countries. Guzman y Gomez is completely original with their store concept, design, menu and artwork. GYG is a franchise with over 107 stores across the country, as well as Singapore and Japan, with the restaurant chain continually expanding their stores. This report will analyse the external macro environment and the factors that contribute to the success or failure of start-up businesses. The suitability of Guzman y Gomez franchise structure and model will be examined to address the stakeholder effectiveness and satisfaction criteria.

2.0 Business Situation and Environment 2.1 Franchise Structure Guzman y Gomez has 117 stores across Australia, Japan and Singapore, with over 60 stores owned by franchisees. The business revolves around the concept of ‘fast-casual’, a concept adopted from the United States. It is quality food but served at the pace of a fast food restaurant. The business model purpose was built for the current economy; Australia has high quality, expensive restaurants or fast food places like Hungry Jacks, no in between. Guzman y Gomez leadership team consists of eight people; chief executive officer, chief operating officer, chief marketing officer, chief digital officer, chief technology officer, chief development officer, chief people officer and chief financial officer.

2.2 Franchise size and distribution Guzman y Gomez has established their franchises in a way that enables their franchises to be successful and profitable. GYG operates in three different formats; food courts, strips and drive-thrus. When a store is placed into a food court the store is typically around 40-90m2, compared to a strip, where the store is 90-300m2 with seats ranging from 32 to 150 seats. Drive-thru restaurants are 250m2 or more.

2.3 Organisational Culture The values and beliefs of the founders of Guzman y Gomez, contributed with the environment within the store, work together to create success of the business and have allowed GYG to be as successful as it is. Their mission statement is to “dominate ‘Real Food Easy’ by always delivering remarkable food and service experiences. Put simply, we won’t stop until every aspect of the GYG experience is perfect - NAmero Uno or Nothing.” GYG achieves this statement through their values and beliefs. Guzman y Gomez has five values; It is all about the food, make every guest love them, be real, got your back and it is up to us. They believe that their food is what separates them from other competitors, everything must be perfect. They control their guests’ experiences through making their experience memorable through the store layout, greetings and artwork. They support Mexican artists and use their artwork throughout their stores and by getting involved with the community; they support local communities and charities. GYG continually speak to their guests in a fun, cheeky and fiery way, to make customers experience memorable. GYG say what they think

Elsa Williams 11R1 and do not make excuses for mistakes and they take care of each other. GYG believes that restaurant quality food can be prepared fast without the use of microwaves and adding salsa and condiments through keeping things authentic, still using high-quality ingredients. Guzman y Gomez follows three principles; authentic, real and relentless. This allows them to stay unique and develop a business that many people know and love.

3.0 Financing Challenges and Options 3.1 Start-up stage challenges There are many challenges a franchisor may face when they are first establishing their restaurant. During the business lifecycle, there are many stages that the owner faces, in the start-up stage, the business idea is complete, and the business is ready to be sold to the market. There are ten challenges that franchise owners may face according to (source 6). These challenges include both time and money investments. Investing in a business is risky and within the start-up stage and start-up costs are high, finding investors is difficult as according to (source 18), some reasons franchisees do not invest into the business is because the franchisee must enter into a formal agreement. This agreement dictates how the business is run, restrictions on where the business can operate, who their suppliers are and what can be sold. Continually, franchises need to stick to specific rules and regulations and must reach the minimal net worth requirement. Franchises are big-time commitments and the approval process is long and stuff and finding the balance between work and life is difficult.

3.2 Financial goals and strategies For a business to be successful, they must set out financial goals and put strategies in place to ensure the goals are met. Currently, GYG is planning on expanding their 117 Australian stores to 500 (source 22). GYG is able to do this due to a $44 million investment from a local investment firm TDM Growth Partners (source 22). Guzman y Gomez has experienced significant growth, with its $200 million annual turnover, which is a $50 million increase from 2016 (22). Continually, GYG is expanding their stores into the United States. They are able to do this due to the opening of drive-throughs and wanting to reinvent fast food in the states (22).

3.3 The role of the Franchisor and Franchisee The role of the franchisor and franchisee is a crucial one as the franchisee is buying the rights to duplicate the business and the franchisor needs to ensure the franchisee is reliable and will not ruin the franchise reputation. Within Guzman y Gomez, the CEO Mark Hawthorne states that they have created a family of franchisees who care about their business and guests as much as he does (source 19). GYG take care of their people and know they have a responsibility to the franchisees that ab economic model is stable, profitable and works.

Elsa Williams 11R1

4.0 Analysis of the External Macro Environment 4.1 PESTLE Analysis P – Political

E – Economic

S- Social

T – Technological

L – Legal

E – Environmental

Queensland start-up grants – (source 7), the Queensland government provides start-up grants (Small Business Digital Grants Program) helps businesses to build the digital side of their business and assists business in skill development. As well as providing many people with assistance in purchasing digital software’s. Investment to expand stores and launch in the United States – (source 22) GYG received a $44 million investment from a local investment firm TDM Growth Partners to expand to 500 stores and launch the business in the United States. This impacts the business as they are receiving a jump start into their expansion goals and will allow for more profits due to them expanding from 117 stores to 500. Increase in the popularity of Mexican food – (source 10) 92% of customers satisfied with GYG and 53.1 percent of people eating Mexican. With more people being appealed to Mexican cuisine, it will allow the business to earn more profits as many people follow trends and eat at what is considered ‘trendy’ at the time. Partnership with Google Wing – (source 1) GYG is currently working on many projects to improve the service of their business with one including the use of a drone delivery service with Google Wing. This will positively impact the business as it will allow people to order food from the comfort of their own home and still receive food from their favourite restaurant. Law changes being made in Brisbane to wages – (source 4) The national minimum wage will increase by 3.5 percent, making the minimum wage $719.20 per week for a 38-hour week or $18.93 per hour. This will affect the business negatively as it will cause the business to earn less profits as they will be spending more money each week on wages. Not considerate of the environment – (source 12) GYG does not accept customers reusable containers when packaging food. This will negatively impact the business as many people in the world are moving to a ‘trash free’ lifestyle to minimise the amount of trash being put into landfill each year due to global warming. Without the option for customers to bring their own containers, it will cause some customers to eat at competitors who do accept containers.

Elsa Williams 11R1

4.2 SWOT Analysis    

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S – Strengths High-quality ingredients for relatively good price Highly trained staff Wide range of suppliers Authentic food and culture

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O – Opportunities $44 million investment from a local investment firm (TDM) to allow GYG to expand their business

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W – Weaknesses Do not accept reusable containers Overpriced meals, not good for value Menu contains gaps and therefore competitors can apple these inconsistencies to appeal to GYG consumers

T – Threats Taco bell set to open 110 stores by 2024 (source 23) Increase in minimal wages by 3.2 percent

4.3 Interpretation of PESTLE and SWOT Through looking at the PESTLE and SWOT analysis, many trends, patterns and relationships can be seen. With Queensland changing their minimum wages to an increase of 3.2% it will cause the business to have a decline in profits due to more being spent on wages or will have to cut down on the amount of staff and therefore causing the concept of ‘fast’ to no longer occur. With the decline in profits earned each week, it can cause GYG therefore not be as authentic due to their limited staff. If the business is no longer authentic many people will turn to their competitors affecting the social aspect of the business. The added feature of the Mexican culture allows people to want to spend the money for a $25 meal as it makes the food to be more ‘authentic’ than other competitors. With more people wanting to pay the money, the business will be able to earn more profits and the social aspect of the business will be improved upon as the restaurant will further become a popular restaurant as the demand for Mexican food will be higher.

5.0 Suitability of business situation and environment Pricing

Effectiveness - GYG uses highquality fresh ingredients and charge a relatively reasonable price

Stakeholder Satisfaction - Customers not satisfied with the price and value of GYG meals. One customer was ‘disgusted’

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Employment and environment

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with a meal costing $25

Authentic food allows people to continue coming back to GYG to enjoy their Mexican cuisine

Employ many people who have the same values and beliefs to ensure that franchise is consistent GYG keep their environment authentic and original to allow customers to have a taste of the Mexican culture and cuisine

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By employing people who have the same beliefs as them allows for many customers to feel welcomed and remember the experience

6.0 Recommendation It is recommended that GYG continue to employ people who can continually display the Mexican culture and make guests and customers feel welcomed in their environment. GYG is effective in keeping their restaurant authentic and genuine. However, for GYG to continually be successful within the start-up stage and many more stages of the business lifecycle, it is recommended that they try to cut down on the pricing of their meals, but also continue to use high-quality products. This may not be possible, but they could charge for extras so if price-sensitive people do not want to pay the full price, have a option to not have any extras that will bring up the price of the meal.

7.0 Conclusion In conclusion, Guzman y Gomez is a successful business in the start-up stage through stakeholder satisfaction and effectiveness. They provide a successful business model for franchisees to follow and duplicate.

Elsa Williams 11R1...