About a year-and-a-half in I brought in a partner who helped supplement the franchising experience, because I didn’t really have anything.
The partner’s name is Phillip Blanco, and he was the general manager of Gloria Jean’s once, from two stores to 250 stores.
So I was the operator, I was the person who knew the concept, I came up with the design and worked with the teams that built the business, but he understood real estate in Australia. He had done 250 lease deals for Gloria Jean’s, he understood franchising.
Phillip really understood Australia and how to bring this product into a marketplace so that it didn’t come off like some American brand that was not properly suited for the market.
It was a critical supplement of skills, so he ended up buying an interest in the business.
I wasn’t trying to raise money, I was just trying to bring in extra assets, to help us be successful. And that’s proven to be quite a necessary and important evolutionary thing.
My wife and I now own around 80% and Phillip owns 20%.
It didn’t affect our average store that much.
It did affect one store in particular, which was inside of the AMP office tower, which is mostly a financial services building, and about half the people got laid off about three weeks before we opened the second store – so that was pretty bad timing.
That took a good 12 months to recover.
But, in general, this idea that you can have a really healthy meal for $12 or $15, I think that is a substitution product.
Whereas the $35 dollar, mid-tier fancy kind of Thai restaurant probably suffered as people switched from that $25 per plate down to $10 or $15.
We always said that the best opportunity for us, going into Australia, was if there was some kind of recession, and the reasons for that were that the people would trade down to our high quality substitute, and also that we would have better real estate opportunities.
We’ve certainly had much better real estate opportunities in the past 18 to 24 months than we did in the first 24 months.
It hasn’t had a negative impact so, certainly, I think it’s fantastic.
When we arrived, people did not believe that you could have a good, healthy, delicious, quality experience using Mexican cuisine as the vehicle.
That just didn’t exist, so we feel like we are personally responsible for helping change that.
It’s also really good for our business when something like Mamasita’s [a hip Mexican restaurant in Melbourne’s CBD] does incredibly well because it just helps solidify this idea that Mexican food isn’t just unhealthy, sloppy cheese stuff.
It’s fancy and it deserves a place in the culinary spectrum, as opposed to just kind of a fast food.
I think the flip side to that is that as more and more of these single store, boutique Mexican restaurants open up, I think people realise that there is still very good value for money in what we do. Our food is fantastic, it’s really fresh, it’s simple but it’s very high quality and it’s quite fast and convenient.
You can get a great meal and a beer for $20 and most of the small, new, cool Mexican concepts are great, they’re fun, they’re slick and stylish; but they’re still $60 or $70 a person when you are done with it.
People come back to Mad Mex afterwards and that becomes the staple, whereas the boutique Mexican restaurants and cafes are more of an occasional, once in a while kind of thing.
We’re not hell bent on being the biggest Mexican chain in Australia. We are committed to being the most loved and the most respected.
We want to go to as many locations as we think that there are strong buyable, busy locations.
Our concept doesn’t work in the same way a Subway does, where you can just sit there and everything’s refrigerated, and if you have one customer or a hundred customers it doesn’t make that big a difference.
Our stuff is all fresh and needs high volume, so we think that by the end of fiscal year 2013 we’ll have about 35 stores.
We do think that there are fantastic opportunities outside of Australia, whether that’s New Zealand, or Hong Kong, Singapore and possibly beyond.
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
