McDonald’s, Guzman y Gomez and Domino’s smash fast-food rankings, Pizza Hut in crisis

CUSTOMERS are voting with their feet. New data has revealed the big winners and losers in Australia’s fast food wars.

McDonalds Fat content must now be displayed on their burgers. Madison Imrei, 18, from Langwarrin, and Jayde Boothroyd, 17, from Newport. Picture: Alex Coppel.

GUZMAN y Gomez is smashing the guac out of Australia’s fast food market.

The 10-year-old Mexican franchise founded by New York-born former hedge fund manager Steven Marks was the fastest-growing fast-food chain in 2015, according to data from market research firm NPD.

The latest Consumer Reports on Eating Share Trends (CREST) study reveals GyG’s foot traffic increased 17 per cent on the previous year, representing 2.286 million extra customer visits.

The other big winners were McDonald’s and Domino’s. McDonald’s posted 7 per cent growth in foot traffic off an already enormous base to record 41.719 million additional visits in 2015 — four times second-placed Domino’s.

The booming pizza chain increased its traffic 14 per cent, or 10.264 million visits, destroying the competition. Every other pizza chain posted declines, but Pizza Hut was the hardest hit. Visits to the Yum! Brands chain collapsed by 15 per cent, or 3.674 million, making it the worst performing fast-food outlet last year.

Domino’s chief executive Don Meij said it was validation of the store’s digital innovation strategy. “We’ve been saying this, we’re expanding and taking share beyond the pizza category,” he said.

“It shows all of the innovation in our stores has been working for us, and long may it continue.”

A Pizza Hut spokeswoman said: “Pizza Hut does not wish to make comment on the CREST survey at this stage.” McDonald’s has been approached for comment.

Pizza Hut’s sister outlet KFC came in third place, increasing its traffic 5 per cent (9.813 million), followed by Hungry Jack’s, up 3 per cent (3.791 million), Grill’d, up 12 per cent (2.875 million), and Gloria Jean’s, up 2 per cent (2.431 million).

Outlets to post declines were Baker’s Delight, down 3 per cent (1.902 million), Michel’s Patisserie, down 3 per cent (1.671 million), Crust/Capers, down 3 per cent (972,000), and Eagle Boys Pizza, down 7 per cent (922,000).

Betty the tweeting chicken couldn’t scratch a win for Chicken Treat — the West Australian outlet, whose social media campaign created headlines around the world, was the second hardest hit after Pizza Hut with an 8 per cent decline, representing 738,000 fewer visits.

Posting modest increases were Donut King, up 4 per cent (1.874 million), Muffin Break, up 4 per cent (1.754 million), and Boost Juice Bars, up 3 per cent (617,000). Coffee Club saw a 2 per cent increase (1.495 million), while Red Rooster also posted a 2 per cent increase (1.052 million).

Nandos was up 1 per cent (255,000), Oporto was up less than 1 per cent (77,000), Brumby’s Bakery was down slightly (-44,000), and Subway was down less than 1 per cent (960,000).

McDonald's is still Australia’s fast-food king. Picture:Peter Clark

RIDING THE MEXICAN WAVE

Mr Marks, who founded Guzman y Gomez with childhood friend Robert Hazan, saw a gap in the market for authentic Mexican food.

He says when he first arrived in 2002, he was blown away — and not in a good way. “I used to go out to Mexican restaurants. They were always packed and they were s***,” he said.

“I had never seen such a poor interpretation of what Mexican food should be.”

At that time, Australia had a lot of McDonald’s and a lot of restaurants, and there “wasn’t really anything in between except dumbed-down Aussie Thai food”, he says.

“Growing up in New York with a lot of Mexicans and Latin people, I thought, this is just wrong, I’ve got to change it.”

Guzman y Gomez, named after two of Mr Marks’ childhood friends, opened its first store in trendy Newtown in Sydney’s inner west in 2006.

Today it has 69 stores in Australia — 26 in Queensland, 25 in NSW, seven in Victoria, seven in the ACT and three in Western Australia — three in Singapore and one in Tokyo.

Mr Marks says Guzman y Gomez is now doing $150 million in revenue — up from $90 million two years ago — averaging $44,000 a week per store.

It’s a long way from the “painful” first few years’ of GyG’s existence. Mr Marks says it was a battle to convince customers, many of whom had tried Mexican and decided they didn’t like it, to try “real” Mexican food.

He recalls the validation he felt when, at seven stores and three years in, the business finally turned a corner. “I remember when the first five or six stores all broke even at the same time,” he says.

“I called up my twin brother in New York to tell him the stores broke even. He said, ‘Aren’t they supposed to make money?’ I said, ‘You’ve obviously never done this before.’”

For the fast-talking New Yorker, the reason for his success is simple: No compromises.

“It’s easy to say when things are tough, you know what? Do we really need that prime cut of steak? Nobody will know. When I hear that I throw them out of my office,” he says.

“It’s like death by a thousand cuts.”

Guzman y Gomez is expanding into drive-through.

Over the past few months, avocado prices have skyrocketed from around $4.50 to $8 per kilo. GyG goes through 22,000kg of avocadoes a week. Mr Marks says he was given the option of going with gas-sealed, pre-packaged avocado instead, which would have saved him $90,000 a week.

“I said, ‘F*** you, not happening’,” he says.

The 44-year-old is clearly passionate about food — he went through 18 iterations of the corn chip before he settled on the perfect recipe — and says he wants to “create a movement”.

“The food that traditional fast-food people are serving their guests is f***ing wrong,” he said. “People have no idea what they’re eating. I read lablels. I was just reading something about nuggets — it’s f***ing terrifying.

“It’s our responsibility to provide clean, safe food. When did they f***ing miss that message? When did fast food become bad food?”

The goal, he says, is to redefine fast food in Australia.

“People talk about fast casual, flexi casual, slow dining — I don’t know what any of that s*** means,” he says. “Everybody’s trying to get out of fast food and label it differently. We have awesome food and are just as fast as McDonald’s.”

To prove the point, GyG opened up its first drive-through store in Nerang, Queensland, which is already doing 75 cars an hour and over 70,000 a week — and he says the bays aren’t even set up properly.

“Our kitchens are built for it, we just needed to put in a separate window. Imagine if this is set up properly what we could do,” he says. Around half of the 20 to 25 stores GyG opens each year will now be drive-throughs.

Despite expressing horror at the fact that nearly half the population eats McDonald’s every week, Mr Marks is proud of having the backing of “McDonald’s royalty”.

Former McDonald’s Australia chairman Peter Ritchie, former CEO Guy Russo and former deputy managing director Stephen Jermyn have all put money into the business, along with private equity king Simon Moore.

Together, they own roughly 45 per cent of the company.

“Pete Richie, who spearheaded McDonald’s in Australia in the ‘70s, he came into GyG. He looked at me and said, ‘I’ve haven’t been this excited since I built my first McDonald’s,” he says.

“I got the best of what McDonald’s is and put that with my food and my culture. That was a turning point for our business.”

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