Burritos on the bourse: Guzman y Gomez boss preparing to say hola to ASX

Burrito chain Guzman y Gomez could make its debut on the Australian stock exchange as early as next year, founder Steven Marks says, even as the hunt for his own replacement continues.

Australia’s fastest-growing Mexican food franchise sold $759 million worth of burritos, tacos, bowls and more in the 2023 financial year, a 32 per cent rise from the year before. Underlying earnings jumped 56 per cent to $32 million.

Guzman y Gomez chief executive Steven Marks at a store opening in Cairns last month.Credit: Richard Walker

“We’re getting ready [for] basically when the board and, obviously, our investors decide it’s the right time. It’s all about timing, but we’re definitely gearing up for it,” Marks said of the potential for an ASX listing. “There’s a possibility it could be late [financial year] 2024 or 2025.”

Guzman y Gomez operates 171 restaurants in Australia and 23 restaurants across the US, Singapore and Japan. It has plans to open more than 30 new eateries in Australia, most of which will be drive-throughs, a strategy that has proven successful for the chain.

It is uncommon for an unlisted business to unveil its sales, earnings, cash position, performance breakdown and trading outlook in much detail. Public companies are bound by the Corporations Act to prepare and disclose audited financial reports.

“We just believe it’s the right thing to be transparent about how we’re performing,” Marks said. “We’d like to show what’s going well, where we need to improve, and also make it easier for a move to public markets. It’d be a lot smoother as we’ll have practise in place for a while.”

Guzman y Gomez boss Steven Marks founded the business in 2006 with his childhood friend Robert Hazan.Credit: James Alcock

Guzman y Gomez’s institutional investors include TDM Growth Partners, Barrenjoey, Aware Super, Athletic Ventures and Point King Capital. In a share sale last year, the business was valued at $1.5 billion. Magellan once owned an 11 per cent stake but sold it last year for $140 million as part of plans to refocus its core asset management business.

The business has passed onto customers inflationary pressures on ingredient prices, implementing an 8 per cent price rise on the menu over the past 12 months, and contend with cost-of-living pressures on retail spending. However, Marks said consumers were still seeking great value.

“People still need to eat,” he said, adding that the $3 taco and its “mini” range had proven particularly popular in the current economic environment.

“People trade down from fine dining or more sit-down restaurants, and they love fast food. And the good thing is now they have fast food that’s good for you.”

In May, Marks signalled intentions to step down as chief executive following a health scare. A company statement dated May 8 said appointing a new head would allow Marks to “take a well-earned step back from running day-to-day operations” while remaining involved in the business.

Marks said the search for a chief executive continues, but that there was no rush, as “[he’s] never felt better”.

“I went to the board, I said, ‘Listen, I may need some help on day-to-day management of the business as it’s a billion-dollar global business now’, ... and we clearly have ambitions for it to be much bigger,” he said. “But I’m not going anywhere, I just need help to spread the load.”

Marks is seeking a chief executive with retail experience who would put in “deep processes” around the business, and who was an exceptional leader with “hunger and humility” who could complement him running the company.

It’s unclear if Marks will still be at the helm when the business floats.

“I would love to but who knows, is the real answer,” he said.

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