How Guzman y Gomez can thrive post-IPO

The end of June featured the much-hyped debut of Guzman y Gomez on the ASX. I wanted to look at how the Mexican fast-food franchise can thrive in the coming months and years, with ambitious expansion targets having already been set. 

Through an explosion in both physical and digital brand touchpoints, we have access to more data than ever. However, connecting first-party data (e.g. sales) with real-world third-party data (e.g. how consumers are choosing which QSR brand) is where brands are able to unlock vital insights.

The constructed findings from our data combined with Neilsen's data, support the understanding that there are three main pillars of persuasion to drive customers: Taste, Value and Convenience. To succeed GyG must prioritise all three of the QSR holy trinity. 

Convenience 

Convenience is about reducing friction or barriers to purchase. High users of home delivery/takeaways are 20% more likely than other category buyers to prioritise convenience.

Meeting your customers where they are also improving convenience. For GyG this could mean prioritising high foot traffic sites for new franchises, as GyG targets 30 to 40 new openings a year. Understanding where potential high-value franchisees are located, even down to the SA4 level will be a priority.  

Speed is an element which kept coming up, especially for Gen Z and Alpha who prefer to avoid POS interactions. Looking at improving functionality in its app, to help with pre-ordering or improving access by creating more drive-thrus could also help drive sales. 

TV has long been relied on as a channel for brand building. Indeed QSRs have often found success given viewers with heavy use of takeaway and delivery services are 49% more likely to "Find TV ads interesting” and find it gives them “something to talk about". QSRs like GyG, which may not be in every town, can use a TV-like strategy through Broadcast Video on Demand (BVOD e.g. 9Now) and Subscription Video on Demand (SVOD e.g. Netflix), which offer greater levels of postcode targeting.

GyG should appeal to people's needs states given the number of people using delivery services for food weekly or fortnightly in Australia increased by 10% in the past 12 months. 

Value

Value is as much about consumer perception through messaging as it is about pricing. By harnessing its owned media channels, GyG can broaden advocates for the GOMEZ loyalty program - which has so much potential for valued subscribers. This channel when expanded into new locations will be key, beyond initial promotions. 

Having a community-first outlook is important. Young families, who regularly frequent QSRs, prioritise this 15% more than the rest of Australia. So GyG needs to empower franchisees to use localised creative and messaging (across team photos or store tags) which can drive connectedness and loyalty. It’s something which Grill’d does really well, when customers get the privilege of casting a vote for a local charity or good cause - the result is by eating their burgers, customers feel they’re doing some good, by supporting the local area.

For many QSRs, I recommend using newer tactical channels such as Digital Out Of Home (DOOH) scenes using programmatic advertising for directional and impulse buyers. Yes, it’s a daily battleground for brands, but harnessing different strategies throughout the day can influence customers closer to the time of purchase. 

Using one media channel to inform and prime others can be key. For example, digital audio for Spotify podcasts timed with the morning commute can later influence a customer’s lunchtime choices in major metropolitan areas.  

The more locations GyG creates, the more data it will have access to, and the greater the potential for personalisation in messaging - for example tapping into the most popular past preferences ‘Grab your favourite oat latte & brekkie burrito with chorizo from GyG Central’. Making those analytic data insights work harder in media.

Taste

Taste is about the product. Sure. But also in presentation. User-generated style content on owned and earned media can result in FOMO experiences for others through video. Partnerships with brand advocates can perform well, noting that GyG previously created a signature order after Gold Coast model Rosanna Arkle.

Create magic moments through key dates which resonate with the company’s values and product, whether it’s Cinco De Mayo or helping to form weekly habits (such as Taco #GYGTuesdays). 

Growth area

Another untapped revenue source for GyG could be retail media. The channel is set to overtake linear TV in terms of revenue within three years, and now more types of businesses with shopfronts or transaction data can build retail media networks as a supplementary source of income. 

By using digital signage in-store as an advertising opportunity for other non-endemic brands it could see a surge in its revenue and share price.

The challenge for GyG will be to curate multiple resources to better understand their customers and potential franchise locations. With 3rd party cookies due to sunset within 12 months, it will need to leverage real-world category data as well as its own sales data to make better decisions and improve its business outcomes.