Strategic MARKETING PLAN

Zambrero Group

Canberra, Sydney, Adelaide, Melbourne, Perth

Prepared by Taryn Collins 4 December 2009

1.1 Environmental Analysis Zambrero is already established in Canberra as a Fresh Mexican fast food establishment, and the company is looking to enter the same industry in Sydney on Oxford St. in Darlinghurst, as well as Adelaide, Melbourne and Perth in coming months. The Fresh Mexican fast food industry in Australia is still relatively young, having only begun within the last several years, and the industry is not yet populated with a lot of other competitors. The Fresh Mexican fast food industry is growing in popularity amongst the general public in Australia as an alternative to already well-established chains like Hungry Jacks, McDonalds and Subway. However, the industry still has a lot of room for growth. Since there are so few competitors in the market, there is still a large need that is not being met, and that is where Zambrero comes in, and has the opportunity to capitalize. The primary competitors to Zambrero are Mad Mex and Guzman Y Gomez, as well as another Mexican chain called Salsas. There are many other small, locally-owned Fresh Mex and Mexican fast food establishments scattered around the major cities and in city suburbs, but none of these companies pose a real threat to Zambrero. The competition is mostly located in and around Sydney, with a focus more on the CBD and surrounding areas, though Salsas has locations in Victoria, Queensland, and SA as well. However, no city or state is even close to having a market that is saturated with Fresh Mex grills yet, so it leaves a lot of opportunity for Zambrero’s expansion. There are many areas in and around the major cities without any Fresh Mex grills that can be capitalized on, and should be in the future. 1.2 Product(s) / Service(s) Zambrero offers a selection of burritos, tacos, dos capos and chips and salsas to their customers. Guacamole can be added for an additional price. Mad Mex offers a selection of burritos, tacos, nachos, and quesadillas, as well as margaritas and Mexican and domestic beers. They offer customers a choice of salsas, and options for extra salsa, extra meat, and guacamole for an additional price, and beans and rice as a side. Guzman Y Gomez offers a selection of burritos, tacos, and quesadillas, as well as flan for dessert, and breakfast options at some locations. They also offer guacamole and salsas with chips, as well as sides of black beans and rice. Salsas offers a selection of burritos, quesadillas, tacos and nachos. They also have their signature ‘Mexicrinkles’, which are like spiced potato chips. All of the food offerings at both Zambrero and each of Zambrero’s competitors are pretty standard, though each place does have a few differentiating items on their menu, and all of the flavors are vastly different. Mad Mex’s food is relatively bland, and the display often looks old and wilted. The food doesn’t look appetizing to the customer when they come up to the bar to order, which detracts from their overall quality. Guzman Y Gomez makes their food back in the

kitchen, so the customer doesn’t get a chance to see it before or during when it’s being made, however the flavor is quite good, and the food seems to be of higher quality that that produced at Mad Mex. Flavor, freshness, and quality are all areas in which Zambrero’s product has the upper hand. Since meats and salsas are prepared on-site, lettuce is cut on an as-needed basis, and burritos are made in front of the customer, it’s clear to anyone who comes into the store that the food is fresh, and it looks delicious. The flavor is very unique as compared to the competition and it tastes homemade and gourmet. Once the customer tries the food, they will likely become devoted customers – the food will keep business coming back again and again. Another aspect of the products and services offered by Fresh Mex grills is the customer service, and it’s another area in which Zambrero excels, especially in relation to the competition. Both Mad Mex and Guzman Y Gomez take a different approach to staffing, and generally employ a predominantly Mexican staff, because their images tend to be heavier on the Mexican culture. Zambrero’s employees tend to be young, vibrant, enthusiastic staff that are passionate about good food and genuinely enjoy interacting with customers. Zambrero’s emphasis on picking the best employees to offer the best customer service is important, and as with the food, will keep customers loyal to the business.

1.3 Customer Demographics Customer demographics for Zambrero will vary slightly from location to location, depending on the profile of the general public in that particular area. However, the general target market for Zambrero will be predominantly males, as well as females, aged 18-35, who lead busy lives but are interested in healthier fast food options. Subcategories of our target market will include:

• Office workers, who are local business professionals seeking a quick but delicious lunch on weekdays during the workweek. Price is not generally going to be an issue to this type of consumer

• Captive customers, who are customers by virtue of their environment – either there are restricted eating options near where they work or live, or Zambrero will be a choice mainly out of convenience. Also included in this group are people who live in an area where the store itself is integral to the local environment – like the Zambrero location in Braddon. It operates predominantly on sales to repeat customers, who keep coming back again and again

• University students, who are typically looking for quick and easy food to grab on the go that has a lower price-point than other available options. They like good food fast, and that’s exactly what Zambrero offers

• Late-night customers, who will frequent shops like Zambrero’s new Oxford St. location – they are typically customers who’ve had a late night out, and are looking for something easy and satisfying to have to finish out the evening.

There will certainly be customers who don’t fit into any of these categories, such as tourists, but they account for such a small part of the market that their contribution to Zambrero’s business will be negligible, and therefore, not worth targeting with any advertising or promotional schemes.

Mad Mex and Guzman Y Gomez have a similar target market to Zambrero. Currently most of their business comes from busy professionals, as both companies have chosen to situate themselves in locations where there is a lot of professional foot traffic, especially during the peak lunch hours. 1.4 Competition and Competitive Advantage As previously stated, the three main competitors for Zambrero are Mad Mex, Guzman Y Gomez and Salsas. Of those three main competitors, the two most closely competing with Zambrero are Mad Mex and Guzman Y Gomez, due mostly to the proximity of already established locations. Below is an analysis of each of these two companies' strengths and weaknesses: Strengths Weaknesses Mad Mex - Already established brand

- Well defined brand image - Popular consumer reputation - Good store locations - “Authentic” staff profile - Already have stores in Darlinghurst, Circular Quay, Macquarie Centre - More extensive menu, alcohol options

- Food isn’t very good (not fresh) - No philanthropy connections - Less personalized service - Virtually no online presence

Guzman Y Gomez

- Already established brand - Competitive pricing (very good lunch deals) - Higher quality and more flavorful food - “Authentic” staff profile - Extensive menu - Already in Newtown, Bondi Junction, Kings Cross, Mlc Centre, Australia Square

- Brand image is less defined - No philanthropy connections - Less personalized service - Virtually no online presence

What will be most important for Zambrero in the future, to combat the competition, is to address their strengths, and capitalize on their weaknesses. As also mentioned earlier, the high quality food and service that Zambrero offers is unparalleled, so an emphasis and continued focus on those aspects of the company will be imperative. It will also be important to promote the Emagine foundation, as neither of these competitors has their own philanthropy, and that will certainly be a point of interest for customers. It gives Zambrero a more human side, and shows that the company cares about more than just turning a profit. It will also be great for Zambrero to try to improve awareness on the internet, through use of sites such as Facebook and Twitter, which will be discussed in a later section. Since neither Mad Mex nor Guzman Y Gomez uses the internet to advertise and to promote their brands, if Zambrero can do it effectively, it will be a whole new audience that they can captivate that isn’t already loyal to the competition. Currently in the Fresh Mexican market, Mad Mex and Guzman Y Gomez are market leaders. In Canberra, Zambrero is the market leader because there are no competitors there to speak of, but

since the company has not yet expanded to other cities, they will be behind the competition until they can establish themselves and their brand in the minds of the general public. Mad Mex seems to have the greatest following around Sydney, though their food is of lower quality. They have a well-defined brand image, and an established clientele at their various locations, but since their food is a weakness, they are certainly put themselves in danger of being overtaken. Guzman Y Gomez has a less well-defined brand image, though their food is of markedly higher quality. Both companies pay for local area newspaper advertisements, but neglect to use the internet as a means of reaching their customers. Their price-points are about the same, though Guzman Y Gomez has a $10 burrito and beverage lunch deal, which is the only Fresh Mexican deal of its kind available, and they have breakfast options at some locations, which allow them to do business for longer hours. Mad Mex is only open for lunch and dinner. Neither competitor has stand-out service, though they do have more “authentic” staff members, hiring mainly people of Mexican heritage, so the restaurant has a more Mexican feel. However, the service at most locations is mediocre – it is certainly not an area of great importance to either business. From the outside looking in, both companies seem to be striving first for profits, but do not always consider the finer details or what matters most to customers. In order for Zambrero to be successful, there needs to be a reason for customers to choose Zambrero over Mad Mex or Guzman Y Gomez. The main reasons that customers will do this, as already mentioned, are the high quality and delicious food options, paired with the exceptional service. These two key features will also create a competitive advantage for Zambrero, and will be the reason for their ultimate success.

1.5 Marketing Objectives The marketing objectives for Zambrero are as follows: - Get the word out about Zambrero’s new store opening(s) – generate a ‘buzz’ - Get the brand name into customers’ heads and get people talking about it - Convince customers to spend their money at Zambrero - Promote the benefits of the brand, and emphasize the competitive advantage These objectives are straightforward and simple, though actually accomplishing them is the harder part. In coming months, it will be crucial for Zambrero to cross-promote with local businesses, bars and nightclubs, and to get their name in newspapers and other local publications. It will also be very beneficial to the company to create a presence online, as much of our target market figures to spend quite a bit of time using the internet each day. Other advertising and promotional activities that will help Zambrero achieve these marketing objectives are listed below. 1.6 Advertising and Promotional Strategy As mentioned in the marketing objectives section, there is a variety of advertising and promotional methods available that’d be beneficial for Zambrero going forwards. To be most

successful with marketing the business, Zambrero should focus on combining a variety of advertising and promotional ideas to reach out to as many potential customers and members of the targeted markets as possible. Below is a list of advertising and promotional channels that’d likely generate the greatest results for Zambrero. In-Print and Online Publications Star Observer mX The Sydney Morning Herald City News City Hub Central Magazine See attached appendices for detailed list of contacts Events Capoeira performance Mariachi band performance See attached appendices for detailed list of contacts Ban Bland Sombrero-wearing advocates Nacho Ninjas Lime Jugglers Bars and Nightclubs 2-for-1 coupons Cross promotion

See attached appendices for detailed list of area bars and nightclubs

Local Area Businesses 2-for-1 coupons Company employee discounts See attached appendices for detailed list of area businesses Internet/Social Media Facebook (Zambrero, ZambreroSydney) Twitter (Zambrero, ZambreroSydney) Signage Promotional literature Emagine foundation cards/brochures Take-away menus Miscellaneous Six Burritos of Separation 2-for-1 coupons distributed near the store/during grand opening week

1.7 S.W.O.T. Analysis

I N T E R N A L

STRENGTHS

High quality, healthy food Focus on customer service Young, motivated staff and management Philanthropy background Good store location Accessible, appealing brand image

WEAKNESSES

Young/inexperienced top management Minimal upper management No brand image - new to the public No presence in a market already with competition Limited menu Lack of previous marketing

E X T E R N A L

OPPORTUNITIES

Relatively young market, new brand Can create a great brand image Can tap into health-conscious minds Philanthropy partnership and promotion Better food than competition

THREATS

Already established brands (MM, GYG) Lower-cost options (Subway, HJ, McDonalds) Difficult to break into established market

Looking at this STOW analysis, you can see that Zambrero has a lot of strengths and opportunities. For such a young company, it’s exciting for there to already be so many strengths the company can promote, however also because it’s a small company, there are weaknesses and threats that need to be addressed/ The weaknesses associated with Zambrero are mostly in relation to the age of the company, and the inexperience of its top management. It would be nearly impossible to become a big successful business without a decent amount of time and a lot of hard work put into it, and Zambrero is still in the process of creating its brand image and solidifying itself in the minds of the consumers. The top management is made up of incredibly hard working entrepreneurs and business people, however there are few people actually in the top management of Zambrero, and the company is a new venture for them all. Even with the best and hardest working people, it’s a new company, so there are going to be bumps along the way and kinks to be worked out. The small and inexperienced upper management create a bit of a weakness in that sense, however those very same people provide a strength of the company, and an opportunity for expansion and growth. Since they all work so hard, are passionate about what they do, and are willing to do just about anything to get the job done, Zambrero’s future is bright. It will be important for management to learn from the successes and failures of competitors like Mad Mex, Guzman Y Gomez, and even companies like Subway that aren’t in their direct market but still serve a similar target consumer, because they’ve been around and have tried different things with varying measures of success and failure. Another weakness is the brand image, but that too comes along with the youth of the company – not enough time has passed yet for consumers to be fully aware of the brand, and it’s especially difficult because many consumers, in Sydney particularly, have had no previous exposure to the product. In Canberra, there is a cult-like following for Zambrero, because people have had a

chance to taste the food and get to know the brand over the past few years, but that’s not the case anywhere else. Once the Oxford St. Darlinghurst store is installed and open to the public, and customers can start to get a sense of the brand and the food, they will be much more apt to spread the word and to come back time after time. But since the store is still in the working stages, it’s unknown to the general public. This is why creating an online presence, generating a word of mouth buzz, and putting on attention-catching displays during the grand opening week will be important – until the food and the company has a chance to speak for itself, Zambrero needs to focus on promotions. 1.8 Market Research To compile this report, I first focused on getting to know Zambrero. I spent time talking to Zambrero management, visited all of the existing Canberra locations, and even worked in the new Belconnen store on a couple of busy nights to gain an understanding of the employee’s perspective. I watched traffic flow in the stores, tried the food, and got to know the company on a deeper level. After I felt like I knew Zambrero inside and out, I started to focus more on the competition. I conducted a lot of market research using a variety of methods to start to understand the Mexican fast food industry and its primary players. I did multiple store observations at competitor locations (Mad Mex and Guzman Y Gomez) during peak hours to try to gain an understanding of customer traffic, customer demographics, and buying patterns. I also researched each company individually, focusing on menu content, philanthropic backgrounds (which neither Mad Mex nor Guzman Y Gomez have), current locations in Australia, desired expansion locations (if so noted) and any other information I could find. My findings are scattered throughout this report, and any additional information can be found in the attached appendices. The appendices include:

• the results of the competitor observations • contact information for local businesses • contact information for bars, nightclubs • contact information for capoeira schools • contact information for mariachi bands

Strategic marketing Plan: Appendices

1.1 Competitor Store Observations 1.2 Local Businesses 1.3 Local Bars and Nightclubs 1.4 Capoeira and Mariachi Band Contacts 1.1 Competitor Store Observations Oxford St. Foot Traffic Observations Pie Face, 11:35am-1pm, Thursday 12 November *11:35am: Mad Mex full, ½ businessmen, half students

• Tons of foot traffic – very high traffic area • lots of young people, mostly students • occasional older couples – possibly tourists? • few business people/professionals dressed for work • predominantly younger crowd, mostly casual dress – students? • Crowd walking by is split between people strolling by and people walking with a purpose

– seems like a thoroughfare, with people walking by simply en route to their next destination – the area is not a destination in and of itself

• 5-minute pedestrian count: 67 men, 21 women Mad Mex, Oxford St. Thursday 19 November, 12-1pm 47 male customers, 27 female customers Total: 74 Guzman Y Gomez, Kings Cross Wednesday 25 November 12-1pm 25 male customers, 5 female customers Total: 30 Guzman Y Gomez, Mlc Centre Thursday 26 November 12-1pm 160 male customers, 70 female customers Total: 230 1-1:30pm 64 male customers, 45 female customers Total: 109 1:45-2pm 21 men, 11 women Total: 32 Mad Mex, Oxford St. Friday 27 November 12-1pm 41 men, 40 women

Total: 81 1-1:30pm 30 men, 14 women Total: 44 1.2 Local Businesses ANZ 55- 73 Oxford St Darlinghurst 13 1314 National Australia Bank Ltd 376 Victoria St Darlinghurst (02) 9331 4147 St George Bank Limited 157 Oxford St Darlinghurst (02) 9360 1880 Westpac 547 Crown St Surry Hills 13 2032 H & R Block Ste 4A 66 Oxford St Darlinghurst (02) 9360 4819

American Express 175 Liverpool St, Sydney (02) 9271 1111 TAFE NSW Information Centre Level 13 1 Oxford Street Darlinghurst 2010 Martin College, Sydney Campus Level 1 63 Oxford Street Darlinghurst Sydney NSW 2010 1300 762 129

1.3 Local Bars and Nightclubs Arq Club 16 Flinders St Darlinghurst

Beauchamp Hotel Bar Oxford St Darlinghurst

Brighton Hotel Pub 77 Oxford St Darlinghurst

Burdekin Hotel Bar 2 Oxford St Darlinghurst

Cafe Lounge Bar 277 Goulburn St Darlinghurst

Cafe Pacifico Bar 95 Riley St, East Sydney Darlinghurst

Cantina Bar and Grill Bar 245 Oxford St Darlinghurst

Chicane Bar 1A Burton St Darlinghurst

Club 77 Bar 77 William St Darlinghurst

Colombian Hotel Bar 177-123 Oxford St corner of Crown Street Darlinghurst

Darlo Bar Bar Corner 306 Liverpool St & Darlinghurst Rd Darlinghurst

Divas Cabaret Club Bar 163 Oxford St Darlinghurst

Dugout Bar Bar Burdekin Hotel, 2 Oxford St Darlinghurst

East Village Bar 234 Palmer St, East Sydney Darlinghurst

Eden Nightclub 88 Oxford St Darlinghurst

Exchange Hotel Bar 34 Oxford St Darlinghurst

Fix Bar The Kirkton Hotel, 229 Darlinghurst Rd Darlinghurst

Flinders Hotel Bar 63 Flinders St Darlinghurst

Gaff, The Bar Pub 16-18 Oxford Sq Darlinghurst

Gaslight Inn Pub 278 Crown St Darlinghurst

Green Park Hotel Bar 360 Victoria St Darlinghurst

Havana Club Deluxe Club Oxford St Darlinghurst

Hotel William Pub Cnr William Street and Yurong Street, East Sydney Darlinghurst

J'adore Le Restaurant Le Bar Bar Burton St. Darlinghurst

Judgement Bar Bar The Courthouse Hotel, Level 2 Corner Oxford St and Bourke St Darlinghurst

Kinselas Bar 383 Bourke St Darlinghurst

Lime Bar Lotel Bar L'otel Hotel,114 Darlinghurst Rd Darlinghurst

Lord Roberts Hotel Pub Stanley St, East Sydney Darlinghurst

Lounge Bar Bar Ground Floor, 173 Darlinghurst Rd Darlinghurst

Manacle Bar Taylor Square Hotel, Rear, 1 Patterson Lane Darlinghurst

Middle Bar Bar 1st Floor, Kinsela's, 383 Bourke St, Taylor Square Darlinghurst

Midnight Shift, The Club Oxford St Darlinghurst

Minibar, Burdekin Hotel Bar 2 Oxford St Darlinghurst

OneSixThree Club 163 Oxford St Darlinghurst

Oxford Hotel, The Bar Club 134 Oxford St Darlinghurst

Palace Hotel Pub 122 Flinders St Darlinghurst

Q Bar Club 34 Oxford St Darlinghurst

Rogues Nightclub Bar Pub 16-18 Oxford Sq Darlinghurst

Ruby Rabbit Bar 231 Oxford St Darlinghurst

Slide Lounge Bar Club 41 Oxford St Darlinghurst

Spectrum Club 34 Oxford St Darlinghurst

Stonewall Hotel Bar 175 Oxford St Darlinghurst

Suzie Qs Club 169 Oxford St Darlinghurst

T2 Taylor square hotel Bar 1 Flinders St Darlinghurst

Tandoori Palace Bar 86 Oxford St Darlinghurst

Tantra Bar Club 169 Oxford St, East Sydney Darlinghurst

Taxi Club Bar 40 Flinders St Darlinghurst

The Victoria Room Bar Level 1 235 Victoria St Darlinghurst

UN Nightclub Club Level 1, 33 Oxford St Darlinghurst

Vegas Bar Bar level 3, 34 Oxford St Darlinghurst

Will and Tobys Supper Club Bar Level 1, 294 Victoria St Darlinghurst

1.4 Capoeira and Mariachi Band Contacts The Mexican Mariachis (02) 8205 7366 Mariachi Australia (04) 15 073 306 Viva Mexico (04) 08 640 495 Fiesta Viva (02) 9967 8107 (phone), (04) 3117 2363 (mobile) 7 Flavours, “The Real Mexican Mariachis” – booking agency info@7flavours.com or flavours@7flavours.com **Australia Capoeira – worked with this company for the Canberra store openings (04) 11 206 802 Capoeira Aruanda (04) 14 745 161 Capoeira Academy

(04) 12 071 319 International Capoeira College (02) 92 674 768