Clovis Young has fulfilled his childhood fantasy of opening a Mexican restaurant by founding the Mad Mex chain.
Young says his timing was impeccable in opening the year the global financial crisis hit as people “traded down” to high quality but cheap Mexican food, while real estate opportunities were plentiful for those looking to open restaurants.
Now Mad Mex is riding the Mexican wave around the country, as the popularity of Mexican food goes from strength to strength.
I understand you started your career as a banker, how did you end up in Mexican food?
I started as an equities trader working on the proprietary trading side, so we were making more bets for the businesses as opposed to a sales trader.
It was a fascinating way to see the world, but ultimately I didn’t think that I was contributing much to the creation of anything other than just purely being a speculator. It didn’t seem terribly satisfying after a few years.
So I went back to business school and got an MBA at Carnegie Mellon, and came out of that with a fascination with entrepreneurship and broad-based business.
The thing about starting a business that really appealed to me was this idea that you got to do so many of these different functions, all of which I felt were fascinating.
Marketing is fascinating, accounting is really interesting, finance is great, so is economics and microeconomics, all of the different aspects of business, I think, are great. And all I saw in all the jobs out there I would only get to focus on one of those things, and not really be able to do a range.
But I had a real passion for Mexican food and I grew up in Southern California, and for years most people have this one thing they can’t get off their minds and going back to just, “Oh, if we could just open up an amusement park” – for me it was always Mexican food.
What made you move to Australia?
I was in the United States and had just sold a business that I had got involved with – a finance and insurance business – which was pretty uninteresting.
I had seen massive popularity in Mexican food, and the growth of the kind of Mexican food that I was familiar with from California take over the whole US.
There were a couple of big brands of Mexican food including Chipotle, QDOBA and Moe’s Southwestern Grill, which really succeeded in the US.
The premise was that the kind of food I loved had proven to work really well in the US, while Australia, in contrast, didn’t seem to have any of that.
My wife and I had a family connection to Australia and had been over here on many vacations and loved the country, but we also realised that Australia was underserviced and was a clean slate for us to try to put this childhood fantasy into practice.
We did two weeks’ worth of analysis; if we had known then what we know now about the cost of real estate, the cost of labour, the cost of goods, we might never have had the courage to do it, but we just jumped into it and that was it.
We arrived in 2006 and then opened our first Mad Mex restaurant in November of 2007.
Can you tell me about how your business model works at Mad Mex?
We run company-run restaurants and we support franchised restaurants. We like owning restaurants and we like running restaurants, but we don’t necessarily want to own and run restaurants together.
So franchising is a great way to get smarter, capitalised people to take on responsibility of – and give people an opportunity to own – their own business, and it allows us to grow.
And what’s the split between company-owned and franchised?
For this year coming up, the revenue is probably 60% franchise and 40% corporate. Next year we will see 70% of the new store openings being franchised and 30% being company-owned.
A lot of franchised businesses aren’t good at running their own business, so they don’t try to.
All they do is franchise out.
Michel’s Patisserie is a great example of a business that, when it was run company-owned it wasn’t making any money, but franchised it could make money.
So I think we’re a bit unique, as we’re committed to running these business and doing it ourselves, as well as franchising, which gives our franchisees a great deal of comfort that we are all in it together, and we share and know what we’re talking about.
The strongest franchise networks in the world tend to be businesses that have high company ownership as well as a high franchise component, not just purely a franchise model.