Foodie News (Australia)

Failed for being four minutes late: Where Mad Mex CEO’s ‘ruthless focus’ comes from -
July 2,2013

Mad Mex’s new chief executive, Therese Frangie, was 18 years old when she learnt her first lesson about management the hard way.

“I had my shift supervisor evaluation at KFC and I was failed for opening the restaurant four minutes late. It’s like, four minutes late,” she said. “The evaluator at the time said to me, ‘You’re four minutes late serving your customers.’ ”

Frangie, who stepped into the chief executive role last week, connects that early lesson to how she plans to lead the Mexican fast food chain. “It is very black and white. I would have lost customers there,” she said. “It also fostered this ruthless focus on operational efficiency.”

She would eventually move on from the restaurant floor, but never left fast food entirely. After working her way up to operations and HR manager at KFC, she spent 18 months at Oporto as a customer experience and operations manager before joining Mad Mex in 2017 and moving into the C-suite. She takes the reins from California-born Mad Mex founder Clovis Young, who will step back from the day-to-day and move into a managing director role two to three days a week.

Though Frangie has taken the helm, she says not much will change; the passing of the baton has been the result of careful succession planning three years in the making.

“We have a very clearly articulated strategy for the next three years, the next five years. So as the CEO, I’m not coming in to change that ... I’ve been part of creating that.”

Frangie’s “Everest” will be to grow the store footprint from roughly 60 to 100 by July 1, 2026. It’s an ambitious target: the executive is well aware of economic pressures affecting household budgets as the cost of living pushes higher. Frangie is hoping the “lipstick effect”, a theory that consumers will continue to spend but on less expensive purchases, will take hold and make Mad Mex a more attractive option than more expensive restaurants.

The opposite could also happen, she acknowledges. “Maybe interest rates are going to continue to rise. People are really going to tighten their spending. The lipstick effect doesn’t apply to Mad Mex, and actually, I’ve got to pull some levers on cost control.”

So far, Mad Mex isn’t feeling the crunch, but price rises are on the menu. “We’ve definitely got a price increase coming next financial year ... that’s inflation.”

The chain will be competing in the fast-growing Mexican fast food space against its larger rival, Guzman y Gomez, which has its own ambitious growth plans to conquer the US market and list on the ASX, and currently holds market dominance with 160-odd stores around the country.

Frangie says they’re not looking at what their competitor is doing. “We will run our own race. We will continue to deliver a great product, a great customer experience through great people,” she said. “We are in no rush.”

But it is clear the newly minted boss is focused on getting in front of customers. Mad Mex seeks to position itself at the higher end of fast food, but whether that message has been received is another matter. “Our product is premium, but over the years we’ve failed to authenticate just how authentic our product is [and] really nailing that perception with the customer,” she said.

Frangie doesn’t believe the product needs to change: market research and customer feedback suggests it’s fresh, tasty, healthy, and comes in sizeable servings. “Though, when we ask mainstream customers, they’re not as familiar with our brand or our product, so it’s really that brand awareness,” she said. “The other thing that’s going to get that message out is consistency in messaging.”

To hit 100 stores by 2026, the chain will have to open more than 10 restaurants every year for the next three years. Mad Mex will be competing with other food outlets for highly coveted real estate in busy shopping centres, food courts and entertainment hubs next to cinemas and bowling alleys. Notably, the strategy does not incorporate drive-throughs, unlike Guzman y Gomez, which has reported success with the format.

Frangie has already notched a few wins: in the past six years, earnings (EBITDA) have doubled. The company declined to provide earnings or revenue figures. Same-store sales growth has risen 25 per cent every month for the past 12 months. Since joining Mad Mex, Frangie has increased the frequency of communication and engagement with franchisees and staff by moving annual meetings to a quarterly basis and establishing a weekly newsletter.

“Six and a half years ago, people weren’t at the heart of the business, it wasn’t [at] the forefront. Clovis had the aspirations of that, but that wasn’t quite happening.”

Frangie’s background in operations also differentiates her from outgoing CEO Young. “I can definitely say the first year I came on board, it had its own challenges as I started to find my feet and working with Clovis, but that became the key to our success,” she said.

“When you report to a founder CEO, there’s a lot of heart in their decisions. So when you initially approach things from what I might seem to think is a commercial perspective, a big thing you can’t forget in a founder organisation is, this is their blood, sweat and tears.”

Young will leave day-to-day operations to Frangie while he focuses on “strategy” and “special projects”.

“This gives him an opportunity to really leverage his entrepreneurial strength and also to go out there and mentor people [with] his 16 years of experience at Mad Mex and where he has taken this brand.”

Mad Mex (Australia)

Media Man

News

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