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Can Orange handle three Tex-Mex franchises? That is the (multi) million-dollar question

July 17, 2022


The site for the new Guzman Y Gomez. Copyright: Orange News Examiner.

By Peter Holmes


Does Orange have the stomach for a third Tex-Mex restaurant franchise? That is the multi-million-dollar question.


A $1.3 million development on the corner of Bathurst Road and Endsleigh Avenue will house the Tex-Mex franchise Guzman Y Gomez.


The heavy machinery has been on site for some weeks now, clearing the way for the new building, drive-through lane, parking and landscaping.





When The Orange News Examiner first reported on Guzman Y Gomez’s expansion into the NSW Central West, three franchises were available - Orange, Dubbo and Bathurst.


Stock image.

As of this weekend only the Dubbo and Bathurst franchises were still available on the company’s website, suggesting the Orange franchise had been snapped up. Factor in the cost of the land and that’s a lot of quesadillas that need to be sold to recoup.



Guzman Y Gomez will be competing for the ground beef, pulled pork, rice and beans dollar in Orange with two established Tex-Mex-themed franchises - Zambrero and Taco Bell.

Those bankrolling all three would be forgiven for being a little nervous right now. Is the market for burrito bowls, guacamole and tacos finite, or ripe for growth? Can all three survive and thrive?

 

DEPENDING on how you look at it, Guzman Y Gomez is either at the beginning or the end of Orange’s fast food franchise Golden Mile on Bathurst Road.






KFC gets first crack at those heading into town, followed by McDonald’s, Red Rooster, Taco Bell and Hungry Jack’s. Guzman Y Gomez will become the final drive-through option before reaching the CBD.



For those heading east out of the city Guzman will be the first available, but getting to it will require a turn hand right into Endsleigh Avenue at the lights.


Zambrero in Orange. Copyright: Orange News Examiner.

 


IF you drive along Bathurst Road regularly and at different times of the day you begin to see patterns in the car parks and drive-through lanes of the fast food joints on the Golden Mile.



It should be noted that this is purely anecdotal and only tells part of the story, as delivery now plays a key role in modern fast food and it’s impossible to know how much food is being collected and delivered on behalf of these franchises.




The KFC drive-through queues often spill out onto Elizabeth Street, and there are few times when the drive-through is quiet.


The 24-hour-a-day McDonald’s never seems quite as busy as KFC during lunch and dinner peaks, but you’ll generally see multiple cars in the line.



The Red Rooster doesn’t appear to have the turnover of KFC and McDonald’s, based on the cars in the drive-through and car park.



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As for Taco Bell, aside from the opening days and weeks, I don’t recall seeing more than one or two cars in the line whenever I have driven past. However a friend visited recently and said it was busy inside.





The Hungry Jack's only has a single lane queue and it’s not unusual to see six or seven cars waiting to order the microwaved hamburgers.


So where will Guzman Y Gomez fit into the mix?


 


TACO Bell was founded by Glen Bell. He opened the first Taco Bell restaurant in 1962 in Downey, California.



The company website states that “Glen invented the Crunchy Taco to satisfy the hungry mouths of Southern Californians”, however versions of a hard taco shell had been around long before Bell.


While the franchise is a household name in the US, it never took off in Australia like other US chains McDonald’s, Pizza Hut, KFC and Burger King (rebranded here as Hungry Jack's).




There are 10 Taco Bells in NSW. The menu includes hard and soft tacos, burritos, tortilla chips, hot chips, dips, nachos, burrito bowls, loaded fries and a couple of desserts including churros.


It has a range of cheaper products in a “Snackaritos” menu including a chicken quesadilla.


The site for the new Guzman Y Gomez. Copyright: Orange News Examiner.

Of the three players, Zambrero is the most-well established in the Central West, with outlets in Orange, Dubbo and Bathurst. Unlike Taco Bell and Guzman Y Gomez, it doesn’t have a drive-through. What it does have, though, is a prime Orange CBD location.



The company was founded in Canberra in 2005 by Dr Sam Prince, a 21-year-old medical student.



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“He has grown the brand to be Australia’s largest Mexican group with over 200 restaurants across Australia, New Zealand, United Kingdom and the United States,” the company website states.





Zambrero is wholly-owned by Prince.


It describes itself as “Feel Good Mex” and is known for donating a meal to someone in need with every burrito or bowl purchased.


The website stated that Zambrero had “donated over 40 million meals with the goal to reach one billion meals by 2025”, however this appeared to be out of date, as a June 27, 2022 post on Zambrero’s social media stated that the number of donated meals had risen to 58 million.

The Zambrero menu includes burritos, nachos, hard and soft tacos, quesadillas and bowls.



A bowl is essentially a burrito without the tortilla and at Zambrero can contain spiced chicken or other meat, white or black rice, guacamole, pinto beans, various salsas, jalapenos, lettuce, sour cream, a squeeze of lime juice and cheese. [Cheese is one of the ingredients that separates authentic Mexican food from the Tex(as)-Mex(ican) hybrid. ‘Mericans love their cheese.]



Taco Bell tacos. Supplied.

 


ORANGE City Council staff granted planning approval for the Guzman Y Gomez in March.


Plans were lodged last year for the restaurant, which is to be sited at the former Audi car yard.





The approval stated that the current building would be demolished and a new building constructed.

The $1.3 million project was applied for by the Spectrum Retail Group last year.



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The road to becoming a Guzman Y Gomez franchisee is expensive and onerous. The steps include phone interview with franchise recruitment team, online interview with chief restaurant officer, online meeting with the founder, formal application, two-day restaurant visit, final interview with legal team and then seven to 12 months training.



“A new restaurant typically costs between $1 million and $1.5 million to establish,” the website advises prospective franchisees.

“You will need a minimum net worth of $600,000 to obtain funding from our accredited banks to open a new GYG restaurant.”




The chain was founded in Australia about 15 years ago, with the first store in Newtown in Sydney. There are more than 100 stores locally, plus 13 in Singapore, five in Japan and one in the US.


According to its website spiel the company is “obsessed with making clean and delicious Mexican food using the best quality fresh produce”.



It stated that Guzman Y Gomez “created the fastest operating platform in the world” and that its “focus on accuracy, speed and convenience ensures every order is made fresh, as quickly as possible”.



Zambrero in Orange. Copyright: Orange News Examiner.


In a Q&A, the answer to the question “Do I need a background in hospitality?” is brutally honest: “You need to understand a ‘hospitality lifestyle’ – long hours, high pressure, non-stop, and demonstrate significant business acumen and a successful career.”


Guzman Y Gomez expects “a long term commitment” from those who buy a franchise. “This is usually in the range of a minimum of 10-15 years, including 7-12 months of unpaid training and onboarding period.




The menu includes burritos, bowls, soft and hard shell tacos, enchiladas, salads, quesadillas, nachos, fries and a “Kids Picks” menu with smaller portions.



As an example, the bowls contain white or brown rice, meat or veggies, Jack cheese, black beans, house-made corn chips, tomato salsa and house salsa.

 


NOBODY knows for sure whether Orange has the appetite to keep three Tex-Mex chains profitable. The city loves its pizzas, fried chicken, schnitzels and burgers, and maintains a number of Indian, Thai and Chinese restaurants, but will it embrace another Tex-Mex?


Although the Tex-Mex ingredients are filling and often inexpensive - rice, beans, tomatoes, onions, flour or corn-based wraps and shells - keeping the outlets running is not.



With banks passing on mortgage rate hikes, electricity prices on the rise, and general inflationary pressures on everyday supermarket items, there is demand on restaurants and takeaways to offer good value for money.


The home delivery services carved out a new market in Orange during lockdowns, but social media is littered with complaints about the food being delivered to the wrong address, and being either incomplete, or with incorrect items. When ordering with the major delivery services customers can pay what are essentially three extra fees - a mark-up on the dishes compared takeaway, a delivery fee and a general service fee.

Those that do it well get the repeat business, but you have to wonder whether people will continue to order home delivery at previous rates.





The Orange News Examiner compared the Tex-Mex scene in NSW cities of similar size.


In Tamworth there is a Zambrero. The Fresh Mex has closed, and Guzman Y Gomez is seeking a franchisee.


In Bowral/Mittagong there is a Zambrero and La Cantina at the Mittagong Hotel. Dos Hombres has closed.


Dubbo has a Mad Mex and a Zambrero. The Monkey Bar does tacos but they are a tiny part of the menu.


In Bathurst there is El Guapo Cantina and Zambrero. Dogwood has a US-theme menu that has a Baja Taco on the menu. The Guzman Y Gomez franchise has not yet been filled.


Orange has a Taco Bell and Zambrero, with Guzman Y Gomez on the way. Frida’s behind the Lord Anson Hotel has closed, and Elwood’s dips its toes into Tex-Mex.




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