Ex-Kmart chief eyes US breakthrough with Mexican fast food expansion

Former Kmart chief executive Guy Russo has taken over the chairmanship of Mexican fast food chain Guzman Y Gomez.

Guy Russo has taken over the chairmanship of Mexican fast food chain Guzman Y Gomez. Picture: Mike Dugdale

Former Kmart chief executive Guy Russo has made his first move in the corporate world since stepping down as an executive of Wesfarmers, taking over the chairmanship of Mexican fast food chain Guzman Y Gomez as the firm prepares to take its drive-through store concept to America.

GYG chief executive Steven Marks said the company had just signed a lease on a drive-through site 30 minutes’ drive from downtown Chicago for its first restaurant in America, which would trade under the name “Mexican Kitchen”.

“We think the big game-changer for us is you can’t get this quality of Mexican food through a drive-through in America,’’ said Mr Marks, who worked as a hedge fund manager in London and New York before moving to ­Australia in 2005, where he established the GYG concept.

“We will open a handful of stores in Chicago first. Chicago is a great test area. If we get those first couple of stores right, then we will roll out others in the US.”

He said that as GYG chairman, Mr Russo, who remains an adviser to Wesfarmers for the remainder of the 2019 financial year after previously running its department stores division, would bring new energy, vision and accountability to assist the US expansion.

“The energy that Guy has and the excitement that he has and the vision that he has is so clear. He is so direct that it is easy to know who is accountable for what and what our metrics are,’’ Mr Marks said.

US fast-food veteran Kevin Reddy, the former chief operating officer of Mexican chain Chipotle and chief executive of pasta chain Noodles & Company, was recruited by GYG in 2017 to drive the company’s expansion in the US. But he is no longer involved in the American push.

The company currently has six international outlets in Singapore and four in Tokyo.

Mr Russo has been on the board of GYG since 2014, alongside former McDonald’s Australia executives Peter Ritchie and Steve Jermyn and Rokt chief executive Bruce Buchanan.

“We’ll be seeing more of the exciting food and culture that GYG has become renowned for, along with some category-defining work in menu and restaurant innovations over the next 12 months. I can’t wait to be involved with the whole team, from robust leadership to our energetic crew in store, as we can take GYG to the next level,’’ Mr Russo said.

Last year, Tom Cowan and Hilton Brett, partners with TDM Growth Partners, also joined the GYG board after the Sydney investment firm took a $44 million stake in the business to help bankroll its local and international expansion plans.

The purchase came after Mr Marks and GYG co-founder Robert Hazan sold down their interests in the company in a process handled by investment bank Morgan Stanley and accounting firm KPMG.

“TDM has brought in that rigour and discipline to ensure people are accountable, to ensure the business excels,’’ Mr Marks said.

Guzman Y Gomez has already opened two restaurants in 2019, in Box Hill in Melbourne and ­Birtinya in Queensland, with a further 15 new restaurants ­planned for 2019 across Australia.

It now has more than 120 restaurants, 90 of which are franchised, with the ambition to grow to 500 in the future.

This includes 25 drive-through outlets. It will build another 20 this year.

Mr Marks said the group would achieve revenues of $250m in the year ahead.

“We are dominating the Mexican category. Now we can take on the broader fast food market. We have the speed and value of fast food,’’ he said.

“We now sell french fries, chicken and do breakfast and lunch.

“We are opening up drive-throughs and their growth is far outpacing our strip stores.”