Ed (00:04):

I am Ed Cowan, and this is Scaling Up.

Steve (00:14):

As a Founder, there’s different phases of the journey. There was times during this journey before we listed that I got a piece of feedback and they said, your passion creates fear sometimes – I’m curious, I’m hungry, and I say, if there’s one piece of feedback that I can grow from, I’m going to learn more.

Auto (00:33):

This podcast aims to educate and inspire by telling the stories of great growth companies as told by their CEOs and founders. TDM is an Australian-based investment firm that invests globally in fast growing public and private companies. For more insights, visit our website, tdmgrowthpartners.com.

Ed (00:56):

Today’s episode of Scaling Up is indeed a special one. It’s a conversation with Steven Marks, the founder and co-CEO of Guzman Y Gomez. When Steven first joined us on the podcast in 2019, GYG was already making noise. More than a hundred stores, a cult-like customer base and a founder who was across every detail of the business from avocado sourcing to store design. That episode became one of our most listened to for good reason. It was raw, passionate, and incredibly insightful, but so much has changed since then. GYG has nearly doubled its footprint, it’s gone public on the ASX, it’s entered the US market, scaled a drive-through model, launched a new app, and pushed network sales past the billion-dollar mark. The team’s changed the scale’s bigger, but what about the founder? This episode with Steven is going deep on that next chapter, what’s changed, what hasn’t, and what Steven has learned along the way. It’s a candid look at what it takes to lead through hypergrowth without losing the heart of a brand. If you haven’t heard the original episode, it’s worth going back to listen to, but for now, here’s my conversation with Steven Marks on the journey. Both he and the business have been on from 2019 till today.

(02:18):

Steven Marks what an absolute treat this is. You are our first repeat guest on Scaling Up and so much has changed in your life and also the business since we spoke in 2019. And so the focus of this episode the last six years, we’ve covered the founding story and mission. That was the last episode I reposted on the feed, so everyone’s up to date on that. But welcome back to Scaling Up.

Steve (02:44):

Thank you, Ed Cowan. I obviously have seen you in the last six years, so it’s great to see you again, but I can’t believe it’s six years. I actually looked it up before I came in today. Time flies, but great to be here again.

Ed (02:55):

So much has changed. You’ve got a new co-CEO, a new CFO, you’re now a public company of course, but I thought I’d warm you up slowly and gently- and one way to get you talking is always about the food.

Steve (03:09):

Yes.

Ed (03:10):

So we’re going to start there, and anyone that listened to the previous episode would know your passion obsession over the product was obvious. There’s zero compromise on quality when it comes to GYG, and there’s been a tremendous amount of menu innovation over the last six years. I could list them off – chicken tenders, soft serve, street corn, you name it, there’s more. But I’d love to hear how this innovation has transpired, particularly given the scale and complexity that you now operate at GYG.

Steve (03:40):

Of course, the number one value at GYG, “It’s All About the Food” and that’s our product! And everybody that works at GYG is just fanatical about food. So, like you said, man, we’ve gotten a lot bigger since last time we spoke, but what I’ve realised is I was always afraid of feeling corporate or having too much process. But what I’ve realised in time is that by having process, it allows us to be very entrepreneurial. And we’ve got something called La Cucina, which is our test kitchen. It’s very secretive. That’s where Nate Appleman and Luisa Gomez hangout, and that’s where I get to pop in a lot of the time, see what we’re working on. But it takes time at GYG, it takes about sometimes a year, two, three years to bring something because we don’t really do limited time offers. Whatever we sell, we want to sell a lot of, but we have a discipline.

(04:26):

I see a lot of business, they want to add things to the menu, but what happens when you add things, it creates complexity. And then if there’s more complexity, then you can’t execute on the experience that you give. So, we are very disciplined how we look at things, but I’ll give you a current one that we’ve been working on. So at GYG, we’re the biggest buyer of free-range chicken in the country outside the supermarkets. And we made that move to free range years ago, and there was some resistance at certain levels of the business. Does it taste better? I said, of course it tastes better. The birds are happier. But it’s our view on food. It wasn’t a marketing move; it was basically our philosophy on animal welfare and food. People loved it. So, the problem we have now is that we sell so many pieces.

(05:09):

It’s called a Maryland cut, which is 60% thigh, 40% drumstick, and then you got a deep bone it a certain way and it’s a gorgeous piece of chicken, but the bird was becoming unbalanced. So, we do about, as of today, about 110, 120 – a ton of chicken a week! So, we had to figure out what do we do with the whole bird because that also ties into our sustainability strategy. So it’s obviously the breast. So we do these beautiful, as you mentioned earlier, these chicken tenders which have a gluten-free coating on it, which are exceptional. So, we do about, say 110, 120 ton of Marilyn – of that breast product. We probably do about 15, 20 tons and it’s not enough. So we had to figure out how do we use the breast. Now the problem with breast meat is it’s usually not very juicy. It’s got high protein, but you got to make it juicy, especially obviously when you put it on our big grills.

(05:55):

So, Lilydale, who’s our partner who are exceptional people, we’ve worked on figuring out how do we brine it, how do we make it juicy? And obviously the brines got to be clean. So, we spent the last three, four months just on a brine, and now it’s starting to roll out in our restaurants, and it is incredible. So, it’s so beautiful. So, it solves a lot of different problems. We want to use the whole bird. Eventually we’ll have mince, and we’ll do something with the wings. So, it’s such a high at GYG is when you do a menu innovation of a current product and make it better. So that’s hitting the stores right now. And I haven’t stopped eating the chicken over the last month. So, everybody’s excited about this.

Ed (06:30):

And it’s interesting strategically to not lean into or not be drawn into limited time offers, and you mentioned that, but that doesn’t stop innovation happening. You just know if it’s going to happen, it has to be scalable.

Steve (06:45):

Exactly, exactly. Like steak, I’m waiting for the aussie dollar to go up a little bit, I mean, and everybody’s stop exporting steaks. So, we have a recipe order for steak when the time is right, and we can get the supply. So, for us, it’s all about culinary. How do we have the people in the restaurants have this emotional connection to our food? So, the way we train our people, how we do learning and development, it’s just making sure that the rice is done a certain way and that peak goes drained and that beautiful brisket that we cook is shredded properly. And for us, those are the products that we sell. So, the better that we’re at in executing that product, obviously it’s all about revenue. Besides being foodies, we’re revenue junkies.

Ed (07:23):

On the last episode, you talked about Australia wasn’t ready for pinto beans and so you went to black beans. But finally, the Pinto is here, the Pinto is here. And let me tell you, it was worth the wait.

Steve (07:32):

Yeah, It’s excellent. We’re very proud of that Pinto.

Ed (07:35):

One of the food innovations that you have really leant into is breakfast and it plays into drive-throughs that will come to, but that day part innovation has not been easy, and yet it is a big driver of growth from here.

Steve (07:50):

So, when I think about breakfast at GYG, I mean the whole thing, the philosophy behind GYG is reinventing fast food and changing where the masses eat. Most of the stores we open now are drive-throughs. Right now, it’s about half of the restaurants we have in Australia, but going forward, it’ll be about 85%. They’re breakfast, lunch, dinner. We got 24/7 drive-throughs now. And to me, you need to own that space to truly reinvent and take over and disrupt the fast-food industry, which is what we’re doing. Now when you think about breakfast at fast food, not a lot of people do it. Here you have McDonalds – they do a billion dollars in Australia in revenue and coffee. So, one out of four coffees are sold at McDonald’s, and I actually don’t think they do a bad coffee, I mean ours is better, but we got everybody beat on breakfast.

(08:35):

So, we just had this campaign, Lara Thom, who’s our CMO, who also just won best CMO in the country, very proud of her and the team, likes to follow me around with a phone in my face and I keep saying “breakfast is the best thing on our menu!” so obviously that was the campaign. Breakfast is the best thing on our menu, and it is. So, all of a sudden people are loving our breakfast burritos, obviously our brekkie bowls, and obviously you can have guac on toast, so we knew they were going to love the food. But like anything, it takes time. It takes time to change people’s habits. But all of a sudden, if you look at obviously our results now that we’re public, we’re seeing 20% comp year over year and breakfast now we just got to make sure that we nail the coffee. So, we have a huge focus and one thing that I’m proud about, the team at GYG, when we focus on something as a team, it’s a big team and we can accomplish anything.

Ed (09:21):

And of course, there’s a huge value aspect to breakfast because particularly on the east coast of Australia, if you want to eat out at any cafe for breakfast, it’s nigh on impossible under $25 a head, and yet you’re selling breakfast burritos for $8.

Steve (09:38):

$8.20 – I mean for a breakfast burrito, free range eggs, clean hash brown, nitrate free bacon, the chicken chorizo by the Rodriguez brothers, veggie, Monterey Jack cheddar cheese, Pico De Gallo for just, I think it’s 8.20 right now. I mean it really is, I mean my kids always make fun of me. I always got to put the price in because I’m really surprised at that quality of food that GYG offers at that price point.

Ed (10:02):

While we’re on the topic of innovation, the last time we spoke, you framed GYG is a tech led QSR. You were at the time investing heavily in data and making sure that at any point in time you had real time data. Drive-through speed was a big focus as you tried to innovate there. And of course, loyalty technology that has come to market as a GYG app essentially. So, a huge amount of resource in the last six years has been injected into the business. So, let’s dive into the app specifically. I know it’s really key to the strategy and growth story, and to me it speaks volumes of the culture of the business because where many QSRs would outsource you, insource and you’ve actually got this incredible engineering talent now and quite a large team in-house driving technology innovation.

Steve (10:53):

So, Bryce Mayberry, who’s our CTO, who’s arguably probably one of the best commercial CTOs in the country, has built that team over the last couple of years. We’re a food business number one; we’re a food business that uses technology to make it easier for our guests to order at GYG. But most importantly, we use technology to make it easier for the crew to deliver that GYG experience. What Bryce has been able to do, and EC, you’re right on that, man, we do everything in house at GYG. I mean he’s put together probably one of the most talented teams of engineers. Our app right now is about 20% of our volume of our sales at GYG, and its world class. But what I love about this tech team is they just don’t do all these kinds of data tech projects. I mean, everything ties to the restaurants. So, the goal of GYG is like how do you drive revenue?

(11:43):

How do you drive comp growth? I mean, we’re a retail business. All we think about is comp growth, like how that restaurant did this week compared to last week, without ever compromising the quality of food of our people and making it easy for our crew to execute. So that easy part is all technology. So, when I think about, say, AI for instance, we use AI at GYG to reduce the responsibilities that our restaurant managers have in the backend. So, they can just focus on fresh, hot, clean food and basically making sure our crew are engaged to deliver that experience. With the app, with the loyalty programme, with how we look at accuracy on our line, how we rebuild sticker algorithms because all of a sudden, we’ve got drive-throughs and we’ve got app and we’ve got delivery aggregators, and they all come through that bespoke stickering system, how our kitchen delivery system showcases mains and sides and drinks. This is all technology. So, what I’m so surprised with is seeing a technology team that is just focused on making sure that our restaurants are run easier as our revenue increases. These guys just did a hackathon the other day. They’re just an incredibly impressive group because they all believe in the vision and the vision is to reinvent fast food and really disrupt this industry, which is a once in a lifetime opportunity.

Ed (12:56):

And what would the vision be for the app specifically, do you think?

Steve (13:01):

Well, there was a time when you see a lot of traditional fast food businesses doing kiosks, right, and then when you see the kiosk, to me, reinventing fast food and GYG, we’re in hospitality. When people walk into the GYG, I want them to feel our energy in these restaurants. The big “Hola!” when you walk in, if all of a sudden, your dining room is filled with kiosk, there’s no experience. And what happens when you have a dining room full of kiosk? Nobody wants to go in the dining room that works there, so they’re filthy. There’s no experience. So, for us, our kiosk is our app, so we drive everybody to that app, let alone you get obviously Gomex points, which is our loyalty system. But the app is such a special experience and part of what Bryce, and the tech team are doing also is developing dynamic pickup times. So, all that’s going to read into, and that’ll come out later this year, how it reads into the algorithm of our stickering system. So, when you order on the app, we want to time it that when your order’s ready that you’re notified from that. So, it’s all about hospitality and that’s why you won’t see kiosk at GYG. We got the app.

Ed (14:01):

One thing that has happened since the last time we spoke, of course, was the COVID era. And it felt like that really forced both your hand on timing and accelerated much of this development. Really, it was a black swan event that could have obliterated a business like GYG, but in fact this external pressure created a diamond and made you stronger as a business. And the app is one aspect of this, but the other is in my mind delivery. So even before COVID, many of your competitors saw the delivery aggregators as competition or a necessary evil, but you saw them as a partner. And of course, during COVID, this enabled you to work closely with them to still get food to your customers and in many ways shape their habits for the post COVID era.

Steve (14:46):

Yeah COVID, I mean obviously a difficult time for everybody here in Australia, but it really was a game changer for GYG, and you could not have said that any better. Our delivery aggregators are our partners for us delivery is about 25% of our business. So, this year will be over 250 million dollars. I mean if that’s not a partner – so you really got to show them love and respect. And it’s funny, during that time there was so much negativity around the delivery aggregators, and we saw it the complete opposite way. I mean, however you want GYG, we want to get it to you. If you want to go through a drive-through, through the app, through delivery aggregator, dine in, takeaway, it doesn’t matter to us. We just want to make sure that we’re available. But what was interesting during COVID is obviously people had no idea what was going to happen.

(15:27):

I remember having a board meeting, they were like, what’s plan B? What’s plan C? Are you going to cut people? And I remember saying to the board, I said, first of all, we’re built for this. Obviously one of the most delivered products in Australia. We had our drive-throughs, we were doing delivery better than anyone. And I said, you know what? Nobody’s leaving GYG. I went to the entire team. Nobody’s losing their job, we’re going to lean in. And we weren’t scared at all. We’re built for this. And that year we had a 30% comp. And what was beautiful about it is it gave us the opportunity to deliver GYG food to people that never tried it and they’ve never left. And one thing I’m very proud about GYG is that we’ve always invested ahead of where we needed to be. The infrastructure at GYG, the foundation is why we’re able to hit the numbers that we’re hitting and why we’ll be able to hit in the next five, 10 years. So, I mean, COVID was amazing for GYG. I mean it was scary for a lot of people, but it really just showcased the investments we made for all those years and food in systems in delivery and could not be more proud of the team. The team absolutely crushed it.

Ed (16:28):

And coming out the other side, of course the GYG app now has white label delivery inside.

Steve (16:34):

Yes. So obviously you can go through any of the delivery aggregators, but now you can basically go onto GYG, and it’s powered by Uber Direct. And the great thing about that is you get Gomex points. So that’s probably about 2.5 – 3% of our sales and continuing to grow. But it’s obviously a better experience going through the GYG app than through the delivery aggregators, even though obviously they do a great job as well.

Ed (16:55):

And we touched on it briefly, do you think COVID changed consumer behaviour as it relates to consuming GYG?

Steve (17:03):

I think it’s an interesting question. It gave people the ability to try something different. And for us, we were so confident that our food travels so well. I mean like a burrito, I mean burrito’s probably the best thing to deliver anywhere in the world, man, I fly a lot, I see Qantas pilots with GYG burritos, and I think it opened up this whole delivery landscape where people are willing to pay a premium for the convenience of not leaving their house.

Ed (17:29):

One thing since 2019 that undoubtedly has hit some kind of inflexion point is just the brand of GYG. So, I think at the time we spoke last, you were probably at 120 stores doing, let’s call it 250 in network sales roll forward six years now 250 stores over a billion dollars in network sales, so you can do the quick math, you’re getting twice what you were getting out of each store. So the brand has to be resonating. Something has really clicked when it’s come…

Steve (18:01):

Our average unit volume per store has doubled in the last five years.

Ed (18:05):

There you go. The power of the brand, the trust you’ve built, it’s just generated this incredible momentum. And part of it is all the touch points that we’ve just described, you know technology and food. And so, it’s all these things coming together and the culture, but you’ve tapped into the psyche like few before a big clean is the new healthy or fast-food athletes say yes to. There’ve been some big campaigns that have really enabled the brand to make a step change.

Steve (18:33):

What I love about this generation, they want real authentic brands. And one thing I love about GYG is that everything we do is completely transparent. When we talk about clean, you can go on our website, you can see every ingredient that’s in it. That’s why our kitchens are open. And it’s funny with Lara Thom and our marketing team, we always say when we do anything marketing wise, it has to be about us. It has to be about our people in the restaurants. It has to be what we believe in. And if you could ever take the GYG logo out and put someone else’s logo in, we lose. And I think for us is how do you create something that people feel is theirs and it’s special. Obviously, I do a lot of things for GYG and I’m out in the restaurants a lot and I get stopped all the time.

(19:18):

My kids love GYG. My kids love GYG and like you said, we had a campaign fast food mother says yes to and clean is new healthy, but people are proud to serve GYG to their children. And then when I look at those kids that are 14, 15 will be in their mid-thirties having children. So, it’s a generational play and what it comes down to and people don’t understand it’s cause of the food. This is food that people want to eat, it’s clean, it’s food that parents want to obviously have their children eat and it’s really resonated. And I think the energy that sits behind everything we do is what’s built this business

Ed (19:53):

Capturing the minds of the next generation has put GYG firmly on track to be the McDonald’s of that generation without doubt. Back in 2019, you were very keen for GYG to continue to push internationally. You’d already seen quite a bit of success in Singapore, and Japan was growing strongly, and you were eyeing off the US – I think January 2020, you opened Naperville just outside of Chicago. Since then, you’ve progressively moved towards more central Chicago, you’d probably say. I’d love to hear what you’ve learned about that market, specifically how you’re trying to build momentum as you look forward.

Steve (20:33):

Yeah, so you’re absolutely correct. So, we opened up Naperville in January 2020. COVID hit like four weeks later, and where we are is called DuPage County. So we couldn’t actually build another restaurant for another two years. So we have six now. We just up our store in Evanston, Illinois, which is near Northwestern University, which was awesome. And now we have another one opening up in, it’s called the S Plaines in July. And then Bucktown, which is now getting close to the city. So Bucktown will be a strip, it’s kind of like Newtown. So, we have our strip strategy where those 18- to 35-year-olds mostly live. Everybody’s like, well, why’d you go to the States? Everybody’s got Mexican food, but nobody has the quality that we sell. And when you think about it, everyone’s like, well, there’s so much Mexican, there’s really one Mexican player in the market, it’s Chipotle.

(21:17):

So, for me, if you think that you have a better product, better culture, a better guest experience, you might as well go after the best person in the country. And I feel like we do. And the thing that I tell most people is it takes time. Is your food better than the one who’s obviously leading the competition? Tick. We do breakfast, lunch and dinner. We got drive-throughs. But most importantly is the culture in the restaurants, which is something I didn’t realise how hard it was going to be to build. And I think when I look back in time, not that I ever took it for granted because it’s obviously the foundation of what we have, is that when I look at GYG from 2006, we built the culture. I mean, I look back at my office in the restaurants, man, there’s people have been with me for 15, 20 years and GYG has changed people’s lives.

(22:06):

But how do you really build culture in a new country? So, for us, when I think about the people in our restaurants in Chicago, some of these people are traditional fast-food workers. They want, who’s going to pay me the most money? They don’t know the stories of GYG yet they’re starting to figure out what we’re about because obviously I’m in the restaurants all the time. We’ve moved about 13 people their full time who know culture. So, the only way to build culture is to live the culture and live our values every day. So now we’re starting to see some tenure in our restaurants and in the restaurant business, whenever you have tenure people there that are staying longer, they become way more productive and that starts to build culture. So, for GYG, when I look at people that we’re bringing into our restaurants, you got to be very competitive obviously on pay, on healthcare.

(22:49):

And then they start to realise what really makes GYG special. So, when I think about the US, which to me there’s so many restaurant chains, there’s so mediocre because the population’s so big in Australia, we’ve only got 25 million people to build a brand that GYG’s built. I mean everything has to be tight from the food to your culture to your operations. So, in the us, besides the food being our obviously competitive advantage, it’s going to be our culture. When I think about reinventing fast food, it’s also reinventing the fast-food worker. Because think about the people that usually work in fast food. They might’ve had a different type of childhood, nobody probably cared about their development, they didn’t have the right resources. So, my thing is how do you turn these amazing people into stars? You just got to care about ’em. And to me, that’s what GYG is about.

(23:37):

And especially as the founder and co-CEO is, that’s the culture I feel so accountable to people that work for GYG, if they give their passion and their love to GYG, we got to make sure they have opportunity. And the best thing about opportunity is make sure we’ve got the resources to develop them. And I’m starting to see that now in our Chicago restaurants. I’m there every six weeks. It’s like back to the beginning, which I love. I love the pain and trying to figure these things out. But it comes down to if your people know that you care about them, then they’re going to care about you and obviously care about the food that we deliver our guests. So, you’re seeing that now happen in Chicago. We’ve got an amazing operations team there now, amazing talent team, amazing culinary team. And for me obviously been here for 20 years, I know the signs to look for and at the end of day it comes down to revenue. If revenue’s starting to turn, the comps are starting to build. I mean people are enjoying what we’re doing. So, it’s been five years. Things don’t happen overnight. I mean before I met TDM, which was basically in 2018, we were open for 12 years during that time post that we doubled. So, it just takes time. But I think it’s that relentlessness of never compromising on the quality of your food and your people. If you stay true to that, you’ll get there.

Ed (24:48):

Just picking up on one little thing you said opening up these strip stores, do you think it’s easy to build brand from the smallest stores, be it community-based brand that can then grow? It’s almost things happen backwards in the states. And so, you’re almost back to Newtown now having a university strip store in Chicago.

Steve (25:08):

So how we built GYG in Australia, we went urban suburban. We started in the cities our first, even though Newtown, Newtown’s kind of urban that we went, we had MLC Centre, Australia Square did the same thing in Melbourne, did the same thing in Brisbane so that all the people in the city saw it and then all of a sudden, we started building outwards. So all of a sudden then was in the suburbs they grew up in. But we knew that our drive-throughs were the game changer. Nobody was doing drive-through like GYG was in the US. So, we basically took the gamble to open up drive-throughs in the suburbs. Now building brand in the suburbs takes time. So now we have, let’s call it five drive-throughs in the suburbs, just opened up Evanston, which is a strip at Northwestern University, and our next strip is going to be in Bucktown, which is kind of like a new town. So, if you think about Sydney, we’ll be doing like Newtown Marrickville those things and that’ll be our strip strategy. So, we’ll have our strip restaurants and our strip numbers in Australia. Nobody comes close to us in strips. So, when I say a strip store, it’s like the strategy may be all AAA drive-throughs, but when we can’t open up a AAA drive-through, we open up AAA strip. But all real estate has to be AAA. I always talk about food and people who can’t compromise. You definitely can’t compromise on the real estate.

Auto (26:19):

You are listening to Scaling Up with Ed Cowan, a podcast brought to you by TDM Growth partners. Visit the website, tdmgrowthpartners.com or for interesting insights and commentary, follow us on Twitter @TDM_growth.

Ed (26:37):

So last year you became a listed company. I was lucky enough to be there when you rang the bell at the A SX. Very exciting. There was a huge lift between 2019 and 2014 to get in a position to enable that. So, I’ll start with the fun stuff. Maybe describe the day and the emotion of you standing up there having built this business to get to ring the bell at the ASX because so many founders start that journey and so few get that opportunity.

Steve (27:05):

Yeah, it was a dream come true, not for me, but really for everybody that’s been on this journey. But I had this dream that I wanted to list a billion-dollar business that GYG could do it right? And I believed in it so much. I just believed in the purpose, believed in the food, believed in the people, and it was a highlight to see all these faces in the room and knowing that everybody played such an integral part of that journey. But you ring it, it was successful. Obviously, IPO launched – the next day back to work. I let everybody sort of enjoy themselves that night because this is a magical journey we’re on and the purpose is so clear. I think I reflected on it for about 10 minutes and then sort of what was in the office the next day. But it’s very rare that people have that opportunity to list a business, especially such a high growth business that has so much, has such a long future ahead of it.

Ed (27:55):

Has the culture shifted at all since becoming a public company? Because often they’re demonized to an extent, they’re slower moving, or people think they are. Sometimes it promotes short-term thinking and amongst management teams or employees to match reporting cycles. Some people think you become beholden to shareholders. Maybe you can describe your experience as a co-CEO and maybe a cultural snapshot perhaps of before and after.

Steve (28:23):

We were lucky to run GYG like a public business. You were a public company, we were a public company, we were just a private public business. It’s unlisted. I mean I’d be lying to you if because everybody at GYG has options and shares. That’s something we did years and years ago and now even our shift leaders and our assistant restaurant managers and restaurant managers, because my belief always for years is that if GYG is going to be the success, it’s because of people that are building it. And I’ve had amazing shareholders along the way that believe in that as well. So that was a huge reason we went public because we wanted liquidity for everyone. But my real reason was the people that ate at GYG wanted ’em to own a piece of GYG. I mean just imagine you love something, and you can own a piece of the business.

(29:04):

So that was really one of the driving reasons for the listing along with obviously the other shareholders. When I think about the pressure of being a listed business, you have to get your head around it. You know what I mean? Because everything we do is for the long-term success of GYG, right? So we never make short-term decisions based on anything. And I think it was so ingrained in GYG that hasn’t changed since we’ve been a listed business, but this is a generational business. We want to be the best and biggest restaurant company in the world, and you can’t be the best if you make short-term decisions. So, it’s just kind of, we have Erik Du Plessis our CFO, and Helaina Raad basically runs investor relations. They’ve come from Wesfarmers. So, the mindset for GYG is how do we continue to build our culture where people aren’t worried about a stock price, worried about making short-term decisions, and it comes from the leadership of the business.

(30:00):

We’re in this for the long term and I think as the leaders of the business, if you set up those expectations and you set up those behaviours, then obviously the team follow. So nothing’s changed, man. Our job is to make sure that we focus and execute our strategy. We know what we’re doing is working. So we just got to be relentless on our focus and our standards of excellence. And as I say to the team, don’t watch the stock price. We’re building a real business and eventually the valuation of the business will reflect what we’re building, and they all believe it because it’s the truth.

Ed (30:33):

Without doubt, the earnings power of the business will speak for itself for over a long period of time. Forgetting the short-term movements in any share price, I think we’ve covered the business. What’s changed, what’s stayed the same? The next topic is you and your team and your own scaling journey as a founder, because as I just alluded to, it is rare for a founder to still to be running their business after 20 years. There’s usually some roadblocks along the way that they have to overcome, be it their leadership style or their ability to scale strategically or scale as a leader more specifically. So why don’t we set the scene? How would others have described your leadership in 2019?

Steve (31:17):

Gentle, calm. No, I’m kidding. I’m kidding. Slightly intense. I think it’s funny when I reflect back on it, I’m an intense guy and I’m slightly relentless, but I feel such an accountability for the business and the people that are a part of this GYG journey. I mean, my dream is at the end of the day, everybody looks back at their time in GYG and say that’s the best thing they’ve ever done in their life. As a founder, there’s different phases of the journey. I hear it all the time – founders usually don’t last. They don’t last till listed. They don’t last till 500 mil market cap let on a billion or 2 billion. And maybe that’s true, but for me, I’m a very self-reflective person and I’m super curious. And there was times in this journey before we listed that I got a piece of feedback and they said, your passion creates fear sometimes.

(32:16):

And I said, who said that? No, I didn’t say that. I was just like, wow. And then all of a sudden, we did some feedback sessions, and the board came to me. They said, Steve, I mean we know how much this business means to you. We love being on this journey, but we think there’s things that you can improve on, improve upon. And I had certain people come to me, are they for real? You know what I mean? Look what you built. And it’s amazing how the team is incentivized and the strong culture. And this one guy said to me, are you going to leave? I said, no, I’m not going to leave. We’re just getting started. And I said, if there’s one piece of feedback that I can grow from, I’m going to learn more. And I got very lucky to me, I speak to this guy, his name is Chris Mordue, every week and a lot of it is about communication and relationships and we have a saying at GYG, are you good enough to get better?

(33:05):

I want to be the best version of me as a father. I’m about to become a husband again in two weeks. I’m getting married to Simone, which I’m thrilled about. I’ll touch base on that too. As a father to our kids. You live once and I want to excel in my relationships and build these impactful, beautiful moments with people. So, there was a time, I had a long discussion with the board, and I said, you know what? I’m curious. I’m hungry. I know I’m a humble person. If there’s someone that can connect certain dots for me and assist me on this next stage of leadership, because there’s no way I’m done. Right? There’s no way I’m finished with the GYG journey. I would love it. And I was lucky to be introduced to a guy named Dr. Peter Fuda. I remember the first time he met me, he said, “I don’t work with entrepreneurs, I don’t work with founders or government people.”

(33:54):

I said, well, we’re not off to a good start. And he worked with the Andy Penns of the world and the big corporate CEOs, and we hit it off. He had a huge impact on my leadership. But what it was, was that I’ve always thought about these things and he was able to connect a few things. And I’ll give you an example. First it started with me working with Peter Fuda and then actually I brought somebody in to work with my entire senior leadership team. I was like, wow, this is really impactful. If I can get this team. We used to call it a family, but most families are highly dysfunctional. So now we’re a high performing team. If GYG is going to be a 50,00 billion business one day, it’s because of the team. The team’s going to be held to account to make these decisions.

(34:34):

So, I need this team to be tight. And to me, the only way you build respect and trust is through vulnerability. So, part of my leadership journey that I worked on with Dr. Fuda was, I had to sign up for some behavioural changes. So, one of them was is that my passion could become intimidating, and then obviously the opposite behavioural change of that is how do I basically have more common constructive conversations? And I’ll give you an example – back in the day, somebody like Lara Thom, who’s the best CMO in the country, she produces some amazing work. I’m like, “come on La, it’s got to look like this!” Then all of a sudden, I realised it takes so much energy out of me to have a conversation like that and it’s not productive. So, now if she presents something and its usually excellent work, it’s like, “Hey la, these points are awesome…”

(35:20):

“Hey, these other two points, I think we need to maybe tweak a little bit. Let me know where you need my help.” So, all of a sudden, it’s less energy for me and the conversation is way more productive. So, to me it’s those interactions. How do I make every interaction I have with somebody positive and productive? Sounds simple. You know what I mean? So that’s where Fuda sort of came in. I’ve always thought about this stuff, but he just laid it out in a plan that was so easy for me. Another one was micromanaging. I’ve built this business from ground up and I’ve played every role in it. I mean, what’s beautiful now is a senior leadership team. They way better than me, a lot of things that they do, but I would micromanage certain things because I was so worried that if it wasn’t executed well, people would think we were compromising – on the experience on systems.

(36:05):

But what I realised is that instead of micromanaging, I had these standards of excellence. So, I realised for this team to basically take this business into the future and really have it become what we all believe it’s going to become is how do you keep that standard of excellence? What you need to do is coach ’em to those standards, which takes time. So, it was a huge change for me. It was just not saying, “well, the work’s got to be done this way!” – just working with them to that standard. So now I look at my senior leadership team, there’s 12 plus people. They’re outstanding at what they do and they’re fully accountable for making decisions for GYG. And then the other one was creating an environment that was very safe and very secure to give two-way feedback. And what was great is everybody in the senior leadership team had to sign up for three behavioural changes.

(36:52):

And we talked about it once a month at a meeting, but after every meeting there was feedback given. It totally changed the way this team operated. And I’m not sure there’s a lot of teams that do that in this country. So, I look at my team now, there’s obviously a huge amount of tenure, but this team is so tight, and as the business grows in this next phase with Hilton as co-CEO, every problem can’t come to us obviously for a decision. So now these guys are accountable for making decisions for the business. And what’s great is the answer always lies in your values. But that time with food, we spent an intense year together. Really what it really did for me; it brought the passion back for me into the business. I mean, everybody sort of sees me and I think just because I’ve got a big personality and a loud New York voice, you know what I mean? There’s no ego in running this business. But because I’m watching my energy and these interactions are so much more productive, it’s brought my passion back for the business even though I’ve always had passion for GYG I was just getting a little tired and now it’s never been stronger.

Ed (37:52):

Firstly, appreciate your candidness because I don’t think there’d be many CEOs that would get on a podcast and be as thoughtful and open as you just were. So, thank you for sharing. I’m sure I’ll have a huge impact on a lot of other leaders that are listening and encouraging them to lead with empowerment. You can still be holding people to account but making them empowered to be that way rather than you telling them.

Steve (38:17):

That doesn’t change. I get asked that a lot and that’s a very good point. There were certain people, I was very close that are founder CEOs of big companies. They’re like, “don’t do the coaching. It’s going to soften you up.” You’re can ask my team. I’m more intense than ever, but I just basically communicate and hold people to account in a different way and it’s way more productive.

Ed (38:40):

No one’s ever going to care about GYG as much as you do. That is a fact. And that will always tap into your energy to a point that no one else will really be able to have empathy for. (Steve: They’re getting close, I tell you that much. They’re getting close.) They don’t care as much. You touched on Hilton joining in 2023 as the co-CEO and what that has freed you up and enabled you to do. I’d love to dig a bit deeper here because it’s a tricky relationship to have a co-CEO, but when you get the right one, someone who you can trust and someone who shares the same values, you in fact get two CEOs not for the price of one. In your case, from a leadership point of view, you get twice the leadership. It can work when co-CEOs come together, and it works; it can be a huge unlock for the business.

Steve (39:28):

Yeah, I think people always ask me about this co-CEO, but I’ve always had someone with me. I think that’s what people forget. Obviously had co-founder Robert Hazen with me for a long period of time, had Mike Hirschowitz with me for a long period of time. And maybe it’s just my mindset or maybe I’m a needy guy too. The more people I have that are awesome helping build obviously this GYG journey, the better. Especially as you get bigger man retail, you got to have a retail mind. You got to wake up every morning thinking about comp and then breaking down what comp means. And obviously it comes down to food and our service and then what does it mean for our people and how, what’s the strategy of tenure? There’s so much to think about. You said earlier the one percenters to me, if I was the lone CEO, I couldn’t think about all these one percenters with the team right, and I needed help because I don’t want to be in an office.

(40:14):

I want to be in the restaurants with the team, right? With Hilton, who’s obviously, we’ve been together now as co-CEOs for over two years, help build accent group. He’s a retailer, but he’s an awesome person and we share values. We always say unless you share values, you can’t create value. And our skill sets are so complimentary, I mean he takes care of the backend, I take care of the front end. And we talk and we obviously probably catch up three, four times a week. It’s just that he knows where the company needs my input. I know where the company needs Hilton’s input, Hilton’s makes his decisions, I make my decisions, and we know when we have to make decisions together and it’s effortless. And I think it comes down to I have such a high level of trust in him. I mean such a high level of trust.

(40:58):

And he sees GYG the way I see GYG. And to me it’s an easy way to see it. You can’t ever compromise on the quality of food and your people, and you have to take care of your teams, but you hold ’em to high account. And I think that’s the sort of the tricky part with GYG is that I deeply care for the people at GYG, but I hold ’em to a very, very high account. And sometimes that’s too much for people. So that’s why some people sort of move on from GYG, obviously our senior leadership who has a lot of tenure, but it’s a relentless journey and you have to be built for that way. It’s kind of when you look at a high performing sports team, you want to be the best. You got to be constantly evolved. There’s this constant focus on making sure that we get better every day and it’s not for everyone. And because of not having to think about certain aspects of the business because Hilton takes care of it, it’s just giving me a lot more energy to drive the points that where I think I had a unique contribution to.

Ed (41:49):

Yeah, I like the framework that you just presented for a successful co-CEO and that is the overlapping values. But then there’s very little in regards to direct decision making. And Hilton is someone who has scaled a public company from I think five to a billion in revenue. He knows the public markets; he knows how to scale business. He’s an incredible operator in his own right. So great design in one sense but allowing him to do his thing and having trust in that and him allowing you to do your thing and having trust in that and the overlap is a common set of values.

Steve (42:24):

Yeah, it’s great. And we do something called skip levels, which is one of the things I love at GYG. So obviously we have people that reporting to us and then there’s a team that reports into those chief development officer, and we meet with them to see how the people reporting to us or how they’re performing as leaders. It’s a great way to do succession planning too. The fun part I love about GYG, from the board to the investors, to the people at hola central – which is our head office – people in the restaurants, is this curiosity to learn. I sit and watch Hilton run these meetings and he’s so good at it. He’s so good at asking the right questions to get the feedback that’s necessary to build this high performing team. And I think that’s the part of it. I think people sort of burn out from businesses, especially founders if they’re not learning, if they’re not feeling empowered, I’m empowered by the team. I get empowered by the people in the restaurants. So, it’s making sure the environment that you’re building, everybody is obviously getting that sense of knowledge, of learning, of development, and it’s an absolute joy to work with Hilton.

Ed (43:26):

I can only imagine having worked with him as well. It is a joy. You touched on Erik – rising star CFO. You touched on Lara, the CMO – award-winning. You touched on Bryce Maybury,

Steve (43:43):

Fantastic CTO, Johnny Morrison, COO, fantastic, outstanding, great team.

Steve (43:44):

Scott Bain, Dave Ham and all of them, and they really are

Ed (43:47):

Fantastic team across the board

Steve (43:48):

Yeah, amazing.

Ed (43:50):

I think in 2019, if people were re-listing to that episode, they would’ve got a sense that cultural fit and energy was more important than the ability to operate or excel at a particular skill. But it feels as though that is something that has definitely changed. You are now in the world and at a scale where operational excellence and execution doesn’t outweigh cultural fit but certainly has been elevated.

Steve (44:15):

Well, I don’t think you can get that without it being a cultural fit. When I look at our amazing franchisees and every year, we got to get stronger, we got to drive more comp. The real thing is we’re getting our food into more people’s hands. We’re changing how they eat. But if your cultures not right, you can’t build these teams. It takes time to build these amazing teams. I look now Naomi Higgins, who runs all of our operational excellence, she’s been here 10 years. Lara Thom’s been here 10 years. Nikki Richardson runs franchisees; she’s been here 8 – 9 years. Scotty Bain, who runs all corporate restaurants for 5 years, they’re outstanding people. Johnny Morrison’s been with me for about 5 years, ran supply chain. Dave Hansen. To me, as I was saying earlier, to have that trust and respect of that team for one another enables them to basically execute the way they’re executing. And they’re all excellent at what they do. And so, for me, we always talk about craft having excellence in your craft. They’re all focused on what they have to do and they’re killing it. Yeah, they’re masters of their craft, but we’re only as good as our last comp.

Ed (45:18):

Well said. So I opened with a softball question. I’ll finish with a nice easy pitch for you, but it’s an important question, and that is, after 20 years, you’ve talked about the ups and downs of your own energy and giving everything to this business as you continue to do every single day, that motivation and finding motivation must be hard at times. I’m fascinated. What continues to motivate you? Because it’s not about ego or money. Is it about the mastery? Is it about legacy? What gets you out of bed every single morning?

Steve (45:51):

I mean I look at McDonald’s has 30,000 restaurants. GYG has 250. We really want to be the best and biggest man. I think everybody globally should be GYG, just do our philosophy on food, how we treat our people, the opportunities that we give our people, how we deal with communities that we’re in, and obviously kids sports. But for me, really what really drives me is, I mean, obviously building this amazing business that can really have create huge change for children and for the communities that we operate in the energy side, for me, I’m getting married in a couple of weeks and her name’s Simone. It’ll be Simone Marks, but it’s Bosman right now. And we’ve been together about four or five years and having that relationship at home and then I’ll talk about our kids, has changed my life. It’s the first time in my life I’ve had real equality and somebody who takes incredible care of me, and we take incredible care of each other.

(46:48):

I take more vitamins; I take more tests. I am 53 this year, and I feel like I’m in great shape. I exercise, my health means everything. I was married before, and my ex-wife and I have two of these two great kids. They’re 18, 17. Simone’s got a son who’s 16. So, we have 18, 17, 16. I want to be around for a long time and I’m a worker and I love it, but my energy has to sort of stay at a certain level because we always say at GYG, you got to show up with energy. But I realise if I had all these things I had to do and all these departments to run, if I didn’t have an amazing high performing team, it would affect my energy. And that’s what I realised that I need to show up at energy and they show up as part of this GYG team to make sure that they’re held accountable to execute. So, I think having this amazing relationship at home, I mean, seeing my kids become young adults and seeing their adventurous spirit into the world is such a rush. And I’ve got a lot of gratitude. I’ve seen a lot of things throughout my life, and every once in a while, I’ll wake up and I mean, I’ve got a beautiful relationship. My children are healthy. I got a business that I’m so proud of. It’s a great feeling and something I don’t take for granted.

Ed (48:00):

Steven, thanks for this podcast. I can only hope that in six years’ time I’m going to get you back for the third one and we can work out what’s changed. And Guzman, no doubt, will still be as strong as it is today and growing as fast as it is. So, thank you again for your time and energy.

Steve (48:20)

Thanks EC, appreciate it. See you soon.