Guzman Y Gomez Competitive Analysis

This assignment requires a comprehensive analysis of Guzman Y Gomez, focusing on its competitive position within the fast-casual Mexican food industry. Students must identify major competitors like Chipotle and assess industry trends such as consumer preferences for healthy and authentic options. The analysis should also explore challenges facing the industry, including labor costs, supply chain disruptions, and evolving consumer tastes.

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Contents
Introduction............................................................................................................................................3
Analysis of the literature review of Guzman Y Gomez............................................................................3
Analysis of competitors...........................................................................................................................9
History of the company...........................................................................................................................9
Products offered by McDonald`s.............................................................................................................9
Business model.....................................................................................................................................10
Strengths and weaknesses of MacDonald`s Australia...........................................................................10
Strengths...............................................................................................................................................10
Weaknesses...........................................................................................................................................11
Opportunities........................................................................................................................................12
Threats..................................................................................................................................................12
Industry analysis....................................................................................................................................13
Challenges facing the industry..............................................................................................................13
Trends in the industry and responses to the challenges.......................................................................14

Introduction
Guzman Y Gomez is a restaurant chain operating in Australia. The restaurant chain
specializes in foods such as nachos, quesadillas, burritos and other traditional dishes.
The model of the business is a franchise and it has more than 64 stores operating in
Australia. The franchises also operate several outlets in Singapore and some in Japan.
The company has an aggressive expansion strategy that has helped the company to
expand in Australia over the years and also outside Australia. The first outlet was
opened in the year 2006 in Newton, Sydney. Within a year of opening the first
restaurant, two more followed closely with Bondi Junction and the Kings Cross
branches opening. The first Guzman and Gomez branch in Melbourne was opened in
the year 2012.The businesses strategic plan is to expand to all the major urban areas in
Australia while at the same time expanding internationally. The local market has a lot
of potential for growth and therefore, the company is dedicated to committing its
resources to enable expand. The aim of the expansion plan is to help increase the
profit margins while at the same time growing their brand name. The company has
five restaurants in Singapore which are performing extremely well. The restaurants
are gaining a lot of customers in Singapore due to their specialization in Tex-Mex
dishes. The business began with 15 staff in its Newtown and currently, it has more
than 100 staff. The initial investment by the company was about $450,000. Currently,
the business has annual revenues in excess of $4 million (Perritt, Henry 2016). This
case study analyzes the history of the company, the ownership model and the
strategies that the business has employed to become successful in the market. The
case study report also identifies the
Analysis of the literature review of Guzman Y
Gomez
In its expansion plan. The business needs to put into consideration the various factors
that could have an impact on the business. The first idea is the changing in the form of
business to make it a franchise. The factors such as the effect on the ownership forms
and the financing method need to be discussed before making important financing
decisions. Currently, Guzman and Gomez have been the fastest growing brand in
Australia for the past one year. The restaurant serves Mexican food and it has an eye
for good customer relationship and service. The literature review evaluates the
mission and vision of Guzman and Gomez. The mission of the company is to become

a global leading restaurant chain specializing in Mexican dishes. The vision of GYG
is to expand and reach customers both locally and abroad while fulfilling the needs of
consumers and giving customers value for their money. The literature review also
signifies the importance of specialization in the growth of Guzman. The company’s
specialization in the Mexican dishes has helped GYG to cut a niche for itself in the
competitive restaurant chain.
The case study mainly focuses on the companies` expansion plans. The study
analyzes the core factors that are important for the company to expand successfully.
These factors are the potential of the new market, the marketing mix of the company,
communication plan, promotion strategies and the resources available to finance the
expansion. The management of the company intends to expand the company because
of the increased demand it has witnessed from customers. The ability of the company
to meet the needs of the customers has endeared it to many customers in different
locations in Australia. The standards of service at the Guzman Y Gomez also make it
an attractive restaurant for many customers who love Mexican dishes. Due to this
demand, the ownership of the company saw it fit to adopt the franchise model in order
to help reach the unexploited market. Failure to exploit this market may lead to
competitors taking advantage of the gap and hence the company will lose an
important investment opportunity. The franchisee model will allow a new strategic
investor to inject capital into the business in exchange for a share of the company. The
new capital will be used to open new branches for the company and hence reaching
more customers and making the brand more popular.
The management of the restaurant believes that there are two kinds of customers. The
first type of customer is the one who prefers fresh guacamole and the second one is
wrong (Ritzer, 2011). The restaurant aims at offering customers fresh food and of the
best quality without compromising anything. This has been important in retaining
existing customers and in attracting new customers.
The literature review also explains the benefits of expanding the Guzman and Gomez.
The main purpose of franchising the business is to help expand the geographical
coverage of the company. The franchising is meant to help the company open many
more branches in various locations locally and abroad. The expansion will also help
the company to hire new personnel and hire more facilities to open up new branches.

The other importance of expanding the business is that the business to increase its
customer base. The increase in the number of customers will help the company to
increase its sales volumes. This, in turn, will help to increase profits for the company.
The expansion of Guzman and Gomez will help the company to expand its brand to
other countries and the brand value of hence the company will become more valuable.
The literature review also explains that the transformation of the business will give
the company a solid financial base. This is important in ensuring the business
improves standards and maintains a good liquidity position. The financial muscle will
be useful in helping the company to take advantage of new opportunities that may
arise (Plunkett, 2017). The relocation of the business to foreign countries will help the
company to tap into the markets especially in South East Asia where the Mexican
dishes may be popular. The literature review does not adequately address the costs
that the expansion will incur to the business. The literature review in this section only
discusses the positives that will come as a result of this expansion and fails to explain
the disadvantages that may come as a result of the franchise.
Guzman and Gomez need to analyze and weigh the decision to expand the business
using franchising model. In order to evaluate this decision, it is important to use the
business expansion strategies. These strategies aid in assessing the impact of each of
the factors that may have an impact on the business. The strategies will help Guzman
Y Gomez to access the risks that exist in this business. The strategies also help to
identify the trends in this industry. In addition to these, the expansion strategies will
aid the company in assessing the policies and legislation that are significant for this
business to open new branches in other countries (Plunkett, 2007). Franchise
agreements need to be carefully analyzed in order to help the owners get the best deal
out of negotiations. Expansion of the business regionally poses a big challenge to the
management since it requires a lot of dedication and traveling to ensure that the new
branches are keeping up with the standards set by the company (Allen & Albala,
2007)
The understanding of foreign markets may need Guzman Y Gomez to reach an
agreement with partners who will help to make the operations of the company in the
foreign countries. The policies and industry trends for Thailand, for instance, are not
the same as those of Australia. It is therefore crucially important for Guzman Y
Gomez to understand the complexities and the trends in the new country it is starting

operations. This has to start with the company authorizing a market research to be
carried out. The market research shall focus on the food and restaurant industry in
general. This is important to help the company gain insight on the entire industry and
understand know the competitors.
Another study should be initiated with the aim of understanding the needs, tastes, and
preferences of consumers. The consumers are becoming more and more complicated
and therefore before venturing into the new market, it is important for the business to
understand the consumer. The new markets may not be so much into Mexican dishes
and therefore, It is very important for the business to understand what the consumer in
the new market prefers. This will help the restaurant chain to offer services and
products that are suitable for this market. To understand the legal requirements and
handles in expanding to new countries, the restaurant chain needs to identify a legal
company to help it in acquiring the right documentation to help start the business
(Mcmurray & clendon, 2011).
In its expansion efforts, Guzman Y Gomez needs to identify ensure that they have
ample supply of raw materials. The restaurant needs to identify potential suppliers
who will supply them with the materials that are needed to start the business. For the
sake of quality and standards, it is very crucial for the company to contract farmers
who will be able to farm to and sell to the company at an agreed. The contracted
farmer's agreement can be very helpful for the Guzman Y Gomez since it will help the
company to ensure a constant supply of raw materials and hence assuring a constant
supply of meals to the customer. Lacking reliable suppliers for the hotel industry can
be very disastrous since it will result in a situation where the supply is less than the
demand.(Chan &Zakkour, 2014 )At the end of the day, customers will go back home
dissatisfied and disappointed since they will not have fulfilled their needs. When this
continues for a while, customers will run away and buy from other restaurants. The
loss of customer loyalty leads to loss of revenue for the company and reduction of
sales. This will also hurt the image and brand name of the company. The absence of a
proper agreement with the suppliers who in this case are the farmers of farm produce
required to prepare this meals may lead to a decline in the standards set by Guzman Y
Gomez. The quality of the farm produce supplied may be poor and this may scare
away customers and therefore the company will end up losing a lot of revenue.

The literature review also discusses the benefits and reasons why Guzman Y Gomez
is choosing the franchising model over other models that would have helped the
company achieve its expansion plans. The author argues that the franchising model is
the safest of all the options available. He argues that the model is free from any
potential risks. Franchising model has benefits to both sellers and to the buyers of the
franchise. The franchiser mainly benefits by getting financial assistance from another
person, the franchise. Through this funding, the franchiser is able to expand his/her
business and therefore increase their returns. The franchise model will also enable the
company to initiate new training and employee development scheme. This will help to
improve customer service and efficiency of employees. The selling power of Guzman
Y Gomez will also be enhanced through the franchising agreement. The agreement
will help to provide extra funds which can be used to market the brand name of the
restaurant and the business. This, in turn, results in increased customers hence
increase in sales. Some of the most successful franchising enterprises include
McDonald`s and Panera Bread.(Alon,2012) Both of these companies operate in the
fast food and restaurant industry.
Despite the many benefits indicated on the franchising enterprise, there are many
disadvantages of the franchising model.
One of the disadvantages of the models is that it requires the company to use colors
of the company it has entered into an agreement with. This means that the
Independence of the brand will be interfered with and this may confuse customers.
The franchising model will interfere with the profit and loss sharing margins. Even
thou the franchise will help to grow the franchiser's business, the franchise needs to
recover the invested money and this can only happen by them gaining a substantial
portion of the profits generated over the years(Gagnon &Gagnon, 2011). Another
major shortcoming that is associated with the franchising model is that the franchise
has the power to make decisions and is involved in the management of the business.
In a case where the visions and ideas of the franchiser and the franchisee are not in
line, the company may be mismanaged and this may lead to failure of the business. It
is therefore very important for both parties to be in agreement to understand the goals
and objectives of one another in order to prevent failure of the business.

There exist various different models of franchises for restaurant chains. These models
include the fast casual, fast food and full service. The fast food model is also known
as quick service restaurants which do not specialize in table service. Fast-casual is
considered to be on between the full restaurant and the fast food restaurant and it may
include cafes` and take-away hotels. The third model is the full service. These usually
offer a complete selection of menus and also offer table service. The Guzman Y
Gomez is under the full-service model where customers have to make choices on the
dishes and also have table service.
The expansion of Guzman Y Gomez will also be very appropriate through the
franchise model since the model will give the franchiser to focus on products and
research on the market and hence help to meet the needs of the customers better. The
ownership of the restaurant chain does not change and therefore, the franchiser will
remain motivated to become successful and to increase the profit margins. It is
advantageous for Guzman Y Gomez to seek a franchise since the franchisees will help
the business to expand at a fast rate. The fast expansion of the business leads to an
increased customer base and increased revenues (Perritt & Henry, 2016). In a case
where the company decides to expand on its own effort, it may take very many years
for the company to expand beyond the boundaries and this leads to loss of
opportunities and revenue. Since there is a lot of competition in the market, it is very
necessary for the company to adopt an expansion strategy to help the company
become the market leader before the competitors take over the market. Market
leadership in this niche market will help Guzman Y Gomez to have a competitive
advantage over its rivals, the competitive advantage may be in form of financial
resources or human resources as well as experience in the market. The financial
resource advantage can be helpful to the company to help it begin differentiated
products and services which the competitors are not able to finance. The company can
also attract and recruit highly qualified and experienced staff who will contribute
significantly to the growth of the company.
The literature review on Guzman Y Gomez does not clearly explain the marketing
plans that the company has in order to ensure that the expansion is met with
enthusiasm from customers. The review also fails to identify

Analysis of competitors
Guzman Y Gomez (GYG) is a fast food chain of restaurants specializing in Australian
dishes. The restaurant chain has taken Australia by storm and everyone is excited
about the products of the company as well as the services it offers. The company is
about to become one of the most popular takeaway outlets in Australia. The company
is operating in an industry where there are many competitors. The competitors include
direct and indirect competitors. The main competitors of GYG are the popular fast
food joints such as MacDonald`s, Pizza Hut Australia, Subway and Yum restaurants
Australia (Jou, 2017). Thou MacDonald`s does in not specialize in Mexican dishes, it
is seen as the main competitors to GYG since they are both in the fast food industry
and the products offered to customers are almost similar. This section will, therefore,
analyze MacDonald`s as the main competitor of GYG. The section analyzes the
products that the competitors offer and how these products relate with those of GYG.
It also evaluates the strengths and weaknesses of the competitor in order to identify
their competitive advantage. This also helps to understand the weaknesses of the
competitors which can be taken advantage of by GYG and exploited to become good
business opportunities for the company (Pilcher,2014). This section also identifies the
trends in this industry as well as the industry drivers in the fast food industry in
Australia.
History of the company
MacDonald`s is a fast food company which was formed in the USA in the year 1940.
It was operated by Richard and Maurice McDonald in California. The company grew
in the USA and later expanded to other countries such as Australia. Currently,
MacDonald`s Australia is the market leader in the fast food market in Australia. The
company has grown over the years to the point of almost dominating the fast food
market in Australia. Over the past few years, competition has been increasing from
companies such as GYG, subway, and Dominos
Products offered by McDonald`s
MacDonald`s has a wide range of products and brands. Some of these brands include;
Hamburgers, chicken, French fries, soft drinks, salads, desserts, coffee, breakfast, and
milkshakes. The company has a wide product portfolio which helps to increase its
revenue. MacDonald`s has received a lot of criticism from consumers and other

stakeholders due to the unhealthy nature of its products (Walker, 2008). This criticism
resulted in a change in McDonald`s strategy and the company introduced new
products such as fish, salads and fruits.
Business model
Most of McDonald`s restaurants are operated by a franchisee. The company owns all
the land on which the restaurants are located. Most of the company’s revenue in
Australia comes from rental payments from franchisees. The company also has a few
outlets that are operated and directly managed by the company itself.
Strengths and weaknesses of MacDonald`s
Australia
Just like every company, MacDonald`s has many strengths and weaknesses. The
strengths of the company are the factors that have given the company a competitive
advantage hence helping the company to become competitive over all those years.
The weaknesses are the challenges that the business is facing or the loopholes which
can be corrected to make the company competitive.
Strengths
One of the biggest strength of MacDonald`s is that it is the second biggest chain of
fast food restaurants in the world. The company operates more than 36,000 restaurants
globally including franchised outlets. The company operates in more than 120
countries globally (Hayes & Laudan, 2009). This helps to give the company a
competitive advantage over the competitors. This is because the company is able to
obtain revenue from different streams and in case one of the outlets s not performing
well, this can be offset by the good performance of the other restaurants. The location
of the restaurants across many locations helps McDonald`s to spread risk and to reach
a higher number of customers. McDonald`s records the highest yearly sales. In the
2017 financial records, the company announced sales revenue of US$24.622 billion.
Due to the huge size of the business, McDonald`s is able to enjoy economies of scale.
When this is compared to the size of GYG, McDonald is a very big giant in the
industry. The fixed costs of the company are shared across all the branches that it
operates hence helping to minimize costs for the company.

Another strength of McDonald`s is that the company has operated since 1940 and
hence has over 70 years of experience in this industry. GYG has been in operation for
barely 11 years now. The long stay in the industry helps the company to understand
the industry trends and tricks and hence be able to manage risks better and to design
more effective strategies (Best, 2017).
McDonald`s has a capacity to attract more skilled and highly qualified employees
compared to its rivals such as GYG. This is because the companies` brand is more
attractive and recognized and they have better remuneration terms than many other
competitors in the industry.
MacDonald`s can also use its market power over suppliers to influence them to reduce
price which helps the company to reduce the costs of production. This can be
transferred to the final consumer and the company’s products are cheaper and
affordable to the customer hence attracting more customers.
Another strength that McDonald`s possesses that makes it enjoy a competitive
advantage over rivals is that the company is the most recognizable brand
internationally. In the year 2015, McDonald`s was ranked as the 9th most valuable
brand globally by Forbes magazine (Best, 2017). The brand awareness helps in the
introduction of new products to existing and new customers.
Weaknesses
Despite the many strengths indicated of the business, there are also various
weaknesses of McDonald`s. The biggest weakness is that the company’s products are
viewed mostly as unhealthy and therefore customers are being cautious on what they
consume. The increasing health concern for customers has brought about a decline in
companies` sales.
The market share of McDonald`s has been declining in the recent past. This has been
mainly due to their unhealthy products or due to increased competition from
companies such as KFC GYG and Subway (Dempster, 2010). This stiff competition
has eaten into the market share of McDonald`s.
There has been a challenge of disgruntled franchisees. The challenge has been
brought about due to the tough restrictions and conditions put by the company while

negotiating the deals. The franchisees are dissatisfied because they are not able to gain
the profit share they targeted.
The new product development has been very slow in McDonald`s. The company has
introduced very few new products with products like salads being introduced just
recently due to pressure from various stakeholders. This has really affected the
standing of the company in the industry which is becoming ever competitive by the
day.
Opportunities
McDonald`s has an opportunity to expand even further and exploit new emerging
markets such as China and India.
The company also has an opportunity to enter into Joint Venture with retailers like
supermarkets. This would help in distribution of the companies` products.
There is the need and opportunity for the company to respond to social change
through innovation. The company should focus on developing products that are
healthier and change the positioning of the company in the industry.
There is an opportunity for the company to use CRM and database marketing in order
to market more accurately to the desired target group. This will help the company to
reduce the costs of marketing.
Threats
There is a threat of the industry becoming mature soon rather than later. This,
therefore, means that the declining stage is about to begin and it will be characterized
by decreasing sales and declining profit margins.
The threat of competition is also very huge and real. Smaller companies` have become
even more competitive in the recent past. They have been on the mission of
developing new products and expanding rapidly to various countries globally. Such
companies include the GYG which specializes in Mexican dishes and Subway as well
as KFC. This company threatens to eat into the market share of the McDonald`s.
The changing demographics mean that the consumer tastes and preferences have
changed and hence there is need to understand what the consumers want.

The emergence of more health-conscious customers has become a threat to most of
the companies in this industry since most of the products are viewed as contributing to
being overweight and other health complications.
Industry analysis
The global combined revenues of the companies in the fast food industry are over
$570 billion. In the United States alone, the revenues were estimated to be slightly
above $200 billion in the year 2015. This is a huge growth from the 1970s overall
revenues of about $6 billion. The global fast food industry is expected to grow at a
rate of 2.5% per year for the next five years.
The consumers in this industry mainly focus on tastes, prices, and quality of products
being offered. Customers also focus on the quality of service, consistency of customer
experience, affordability as well as speed.
Fast food restaurants and fast casuals make up a significant portion of the industries`
market share. The restaurants have a reputation for consistency, simplicity, good feel
and music. Customers order and pay at the counter and then take the food out or grab
a tray to sit and enjoy the meal. There is no table service in this model. The Mexican
food has been slowly eating into the market share of hamburgers which were the most
popular fast food in the restaurant. This has contributed to the growth of outlets such
as the Guzman Y Gomez.
Challenges facing the industry
There are a variety of challenges facing the global fast food industry. These
challenges include:
Perceptions of unhealthy menus. The fast foods have a reputation for being unhealthy
and this has been challenged since the tastes of the customer are shifting more to
healthy food.
The other challenge is that of poor working relations and low wages. The workers in
the fast-food restaurant are paid so poorly and this affects their morale. A study
conducted in the United States in the recent past indicates that the workers are paid so
poorly that more than half of them depend on public assistance programs.

The industry has also suffered cultural degradation with the introduction of Taco Bell
which is not real Mexican food.
Trends in the industry and responses to the
challenges
There has been a trend where consumers are so concerned about their health and what
they eat. To deal with this challenge, many companies in this industry have
introduced healthier foods such as salads and fruits. Mexican dishes are also
becoming increasingly popular.
The consumer is also very considerate of the prices. This has prompted many of the
industry players to come up with ways in which they can minimize costs in order to
offer more competitive pricing.
New micro franchising cuisines are becoming increasingly popular. This includes
chicken and burger franchises as well as the Mexican and Chinese dishes franchises.
The location of the restaurants is also changing. Drive-thru and stand-alone stores are
becoming unpopular with counter service becoming more accepted.
Conclusion
This case study has been able to thoroughly review the literature review conducted on
Guzman Y Gomez. It contains a detailed critical analysis of the Guzman Y Gomez
expansion plan through franchising. The paper identifies and discusses the advantages
and disadvantages of franchising to both the franchiser and the franchisee. In addition
to this, the review helps to identify the important trends and factors that the company
needs to understand when expanding to new countries. This paper also contains an in-
depth analysis of McDonald`s Australia which is one of the biggest competitors of
Guzman Y Gomez. The final section of the paper is an analysis of the industry to
identify the new trends and the challenges facing this industry.
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