Once upon a time in Bondi

Last week Guzman y Gomez co-founder and co-CEO Steven Marks told Australia’s peak advertising body that “Lara Thom is the best marketer in the country”. Last night delivered independent confirmation as Thom scored top spot in the inaugural CMO Awards.

But if Brooklyn-raised Marks hadn’t watched his original Sydney masterplan crash and burn, it could have been a different story for both of them.

As a kid, Marks always wanted to go to the nice hotels glimpsed in Miami with his absent father, a West-side "pool hustler". But raised by his mother, the family was poor and they could never afford it. So when he got (relatively) rich after a whirlwind career on Wall Street and London and moved to Sydney aged 30, he aimed to build a hotel on Bondi Beach.

Marks never laid a brick.

“I didn’t realise how socialised and over-governed this place was. I mean, the US obviously has its problems but this place… I couldn’t get it off the ground.”

Luckily his best friend Robert Hazan, told in no uncertain terms by a “beautiful Australian woman” that the only way she would marry him was if he moved to Sydney, was already here.

“He and I have had a number of businesses together: one of the biggest distributors of fashion brands throughout the US; we had a record label – won't do that again; I had one of the first wine bars in Sydney.”

Their next venture came to him via an undercooked Mexican restaurant experience in Bondi. “It was busy … and the food sucked. It was really bad,” Marks told the AANA Reset conference.

“So then I went to every Mexican restaurant on the East coast of Australia. Then I remember walking into my office and telling Robert – and thank God the majority was my money – that I’d got the next big idea.”

Hazan’s response? “You’re not Mexican.”

They did it anyway.

Bust to boom

For the next four years they haemorrhaged cash.

“At one point, we were losing $30,000 a week … my mother told me she would refer to this point in my life as ‘your race to bankruptcy’.”

Then they broke even and Marks called his brother to share the good news. “He said ‘aren’t you supposed to make money?’ I said, ‘you’ve obviously never done this before.”

This year Guzman y Gomez is set to turn over a billion dollars and after going public last year has a market cap of A$3.3bn.

Marks thinks the firm can more than double revenues and restaurant footprint within five years – and claims the gradient of its growth trajectory globally is second only to two companies within quick service restaurants: “Starbucks [market cap US$93bn}; and Chipotle [market cap US$67bn].”

Marks credits that curve with obsession to detail – which led Guzman y Gomez to create what he claims is “the fastest fresh food operating platform in the world” – giving all staff options in the business and maintaining a relentless focus on culture. Not to mention the food, namely keeping it as “clean” and pure as possible, and making every restaurant experience the exact opposite of his Bondi epiphany.

Hence while the firm’s board and early backers are the same people that originally built McDonald’s Australia, Marks and Hazan took their money on the condition they would not attempt to push the same template:

“You guys can help me on real estate, process, franchising – but you can't touch my food or my people,” he said. “And if this place turns into a McGomez, we're all dead.”

“Any question you have about GyG, the answer is in the values. It is all about the food.

“People compromising the quality of food for profit. I never understand that. Make every guest love us. We're in fast food – we're redefining fast food, but it's still hospitality. You look at fast food places now, it's just all kiosks. Nobody's in the dining room. Nobody gives a shit.”

Eyes on the fries

That said, the growth opportunity now is drive-throughs, which Marks said will make up about 85 per cent of the restaurants Guzman y Gomez opens up from here on in. It opened its first drive-through 10 years ago – which brought with it a new conundrum: selling french fries. But it was also the tipping point in the brand’s trajectory.

“The problem with french fries is, when I looked at the ingredients, it’s 70 per cent potato. What the fuck is the other 30 per cent? I went to the big french fry guys and said, ‘I want a clean french fry. I just want potato, clean oil and our chipotle seasoning’. And nobody would do it for me. I found this crazy potato farming family in Victoria and convinced them to do it – and we started selling so many fries that McCain came and basically made the first clean french fry globally,” per Marks.

He’s applied the ‘clean’ principle to the rest of Guzman y Gomez’s staples:

“There was a preservative called 282 in my tortillas – it took three years to take it out and make the first preservative-free tortilla in the world; I took out an anti-caking agent that was in my beautiful Monterey Jack shredded cheese; bacon has natural nitrates, but they add nitrates – I figured a way, which took me two years, to [just] add celery salt,” said Marks.

“People thought it was a marketing campaign, but it's a food philosophy. As a food company, you have a social obligation to serve real food to your guests. I think that's behind the success of GyG.

“I remember our CMO Lara Thom, who thinks I'm a walking tagline, came to me and said, ‘So, clean: what does it mean to you?’ I said ‘clean is the new healthy, and that's how we roll with it’. And it was a brand defining moment from that day on – we've had double-digit comps ever since.”

In-house vs. agencies

Asked why he backs Guzman y Gomez’s in-house marketing team over agencies, Marks said the brand is open to partnerships – and sometimes does.

“The thing is, there's so many talented agencies out there. But for me, marketing comes from the soul of the brand. And if you're working on so many different projects, it's so hard to understand the soul. For GyG, if you can take our logo out and put somebody else's logo in, we lose. And we're so agile – when you deal with an agency, sometimes it takes too long to get the work out.”

Guzman y Gomez’s creative team, he said is “pumping work” out.

“We got three full time videographers, content people, and we move so quickly. I think that gives us a huge advantage in the market. Sometimes, obviously, we look to collaborate. But I think for GyG, we've hired so many agency people into that marketing team of 40 – and I think it’s the best marketing team in the country.”

Asked if that risked creating an echo chamber – with inwardly-focused teams potentially losing sight of broader cultural relevance and trends – Marks countered with an anecdotal nugget of what can happen when brands are too focused on trends rather than their core.

“I'll give you an example: fake meats. The vegans, they're little, but they’ve got a big voice, a lot to say,” he suggested.

“So these fake meats came out … and all of a sudden, I was under so much pressure.”

This was likely in 2019, when an alt-meat market frenzy created overcooked valuations for companies like Beyond Meat (then valued at close to $14bn) and subsequent massive correction (its market cap is now $200m).

“But I said, first of all, it's not food … it's so overly-processed, and that's when we came up with shiitake mushrooms [instead], which is what stays true to the values of GyG,” said Marks.

“So I'm more GyG-obsessed than competitor obsessed … I don't have FOMO, I’ve got JOMO – the joy of missing out. Because if you're following other people, you can't be the best.”