Despite enjoying impressive growth since launching in 2007, Mad Mex has diversified its offering, launching a more relaxed dining concept called Cantina.
Mad Mex brought something new to the fast casual scene when it launched its first store in Australia almost 10 years ago. It showed consumers that Mexican food didn’t have to be stodgy, greasy and unhealthy – at a time when the public was becoming increasingly concerned about its health and wellbeing.
“We had a real challenge, which was educating consumers that we’re not Montezumas and it’s not hangover [food]; it’s not refried beans and giant ice cream scoops of sour cream; it’s a really lean, healthy, no additive kind of food,” said Mad Mex’s founder, Clovis Young.
“We probably helped to change the perception of Mexican food from greasy, unhealthy party food that you’d only eat once a quarter if you couldn’t avoid it, to something you would happily have three times a week and feel good about because it is that much healthier. The quality is there.”
Mad Mex was launched in 2007
About three years ago the company went through its most aggressive growth period, expanding from 15 outlets to 35 in a 16 month period. But other than that, Mad Mex’s growth has been steady, Young said, with an average of 10 new openings each year.
“Ultimately, I think that if you grow too fast, you make poor decisions and that can be costly in the long run. In terms of our sales, we saw stronger sales growth in that early stage and as the category has matured, we’ve settled into what would be closer to industry market growth levels as opposed to 25 percent year on year same store sales growth,” said Young.
Another key to the business’ success, he said, is that it’s still privately owned. Mad Mex only has two stakeholders: Young and Phillip Blanco, who joined the company two years ago and had previously worked as the general manager of coffee franchise Gloria Jeans, bringing the brand Down Under in 1992.
“So because we have that experience and we don’t have to answer to a variety of different shareholder needs, we kind of run the business for the best interest of the business as opposed to [running it] for private equity returns.”
Cantina has provided a welcome boost to alcohol sales.
Delivering a new experience
In December last year, the company launched its flaghip Cantina de Mad Mex restaurant in the rooftop dining precinct at the Westfield shopping centre in Sydney’s Kotara. The company has ambitious plans for the new concept too: 20 more in Australia by the end of 2016 while also venturing into the international market including the Middle East and Asia.
“The key word is fun,” said Young. “Our customers want somewhere fun where they can take their families and Dad can have a margarita, Mum can have a glass of wine, the kids can have crispy tacos … and they can hang out and have a solid meal for 45 minutes then go see a movie.
“Mad Mex is perfectly geared to doing $6,000 worth of burritos in a two and a half hour period in the middle of the CBD for lunch. It’s an amazingly well designed business that delivers a really fast, high quality convenient food. But it never really knew how to deliver a family dining experience.”
Cantina has provided a welcome boost to alcohol sales, which on average are 500 percent greater in the new dining concept than they are at Mad Mex stores. It’s also allowed the team to expand its food offering to include items such as jalapeno poppers, empanadas and fish tacos.
A more diverse menu at Cantina
Systems for success
There are a number of lessons that independent owner-operators can take from successful franchise models like Mad Mex. The most important one, Young says, is to ensure that your existing outlet(s) can survive without you.
“If you go from one to two stores, or two to three, you need to be able to – with a very high degree of confidence – know that the first one or two can operate more or less at about 85 percent without you, from day one. So if you haven’t built your existing business to the point where it’s reasonably self sustainable with a good management team, then doubling or tripling will be hard.”
When the first Mad Mex store opened, the company had a policy of cooking everything in-house, but by the time the third outlet was launching the more complicated elements of various meals were being prepared at a central cooking site. They also invested $30,000 in an online training platform to ensure consistency in regards to both service and food preparation.
“This meant that we didn’t have to teach guys how to cook the food the same way; we took care of that piece so then we could focus on training managers to run the stores,” Young said.
“It’ s about trying to figure out the key systems that need to be in place … to allow you to make that leap and be able to focus on things that will determine your success.
“Everyone talks about the importance of people, and without a doubt people are the most important thing, but people can only be successful if the systems that support them are right.”
Cantina de Mad Mex
The business at a glance
- When was the business established? January 2007
- Number of locations: 63 stores Australia wide and nine in New Zealand.
- Number of staff members? 990
- Most valuable asset in the business? The very loyal customers that love the fun and healthy Mad Mex product and experience.
- Plans for 2016? Continue to have a steady growth at Mad Mex in Australia and New Zealand. Also now that Cantina de Mad Mex has launched, we are hoping to expand to five more locations in 2016-17. On top of that, expansion into the international market will be a big focus.