Guzman y Gomez’s US dream stalls, CEO Steven Marks buys up shares at float price

Guzman y Gomez founder and co-chief executive Steven Marks at the company’s ASX float last year. Picture: Britta Campion

Ambition is wonderful, isn’t it? It got us to the moon. Gave us penicillin. Kept Brad Battin and Mark Speakman in their jobs longer than anyone thought practicable – or merciful.

But there’s normal ambition. And then there’s the sort of ambition that causes you to stand before investors and announce – without a flicker of irony – that your burrito chain will become “the best and biggest restaurant company in the world”.

Which is what Guzman y Gomez did back in August.

It took one look at McDonald’s and its $336bn market cap, sneered, and declared it was coming for the crown. No psychoactive substances were said to be involved in the making of the statement, either.

Now, let’s do some napkin mathematics.

To catch McDonald’s, GYG would need to grow its $2.4bn market cap by roughly 140 times. Shares would have to hit $3080. They’re currently trading at just under $22.

For context, that’s like Nick Evans and me announcing that we’ll beat Nick Kyrgios and Thanasi Kokkinakis in a doubles match. While wearing bomb-disposal suits. With our legs tied together. Wielding golf clubs.

Here’s the thing. When GYG floated in 2024 – with Morgan Stanley and Barrenjoey flogging shares at $22 a pop – America was the grand vision. The promised land. Four stores in Chicago were to be the beachhead for something magnificent. The $90bn Mexican food market awaited conquest. Investors were being told to strap in.

Eighteen months later? Seven stores. A net gain of three. Co-CEO Steven Marks now speaks of “significant caution” regarding American expansion.

He won’t open more until the existing ones match Australian revenue levels. Which may never happen. Meanwhile, back home, they’re cracking open 30 to 40 fresh locations annually.

The Americans, in other words, aren’t buying it. And here’s the uncomfortable question nobody asked during the roadshow: why would they?

Why would Americans abandon Chipotle – with its 3500 restaurants, $60bn market cap and cult-like devotion – for an Australian import they’ve never heard of?

Chipotle isn’t just a restaurant. It is a national institution. Americans would vote for it in a presidential election if the constitution allowed.

GYG’s share price today sits at pretty much where it was when the company floated in June last year. Picture: NewsWire/ Monique Harmer

Yet somehow the investment banks remain touchingly optimistic. Morgan Stanley and Barrenjoey – the house brokers who underwrote the IPO – have issued bullish reports with lofty price targets – $31.20 for Morgan Stanley, $36 for Barrenjoey. That Barrenjoey target is certainly down from the $54 touted in July. The analysts who came up with that figure, Tom Kierath and Peter Marks, happen to own shares in GYG. Or they did when they published their report. As did Barrenjoey. So that’s convenient.

And speaking of the IPO, just cast your mind back to when it happened in June 2024. GYG shares rocket to nearly $46. There were scenes of jubilation. Champagne sprayed as though from a Grand Prix podium. The bankers looked like geniuses.

Today? The share price is back where it started – flatter than a four-day-old cerveza someone left in the sun.

Which makes this week’s development all the more fascinating. Steven Marks – the co-CEO himself – snapped up 45,000 shares on-market at $22.35. Essentially the IPO price. What do we call this? It’s either a bold statement of confidence in the company’s prospects or it’s what people in the business call “optics management”; the captain demonstratively buying tickets for his own voyage. But what’s this ship doing? Circling a lake?

Let’s note, for balance, that we’ve eaten at GYG. Usually scoffed at the airport as the gate’s about to close. It’s not terrible. The burrito is warm. The guacamole is green. Nobody dies. It’s perfectly fine.

But the biggest and best restaurant company in the world? When your American expansion has stalled before it’s started? When Chipotle owns the market? When your CEO is buying shares at the listing price 18 months after floating?

It sounds like a fever dream. It sounds like a business plan ginned up after a long night of spicy margs. But, maybe we’re wrong. And maybe we’ll be eating our words. Twenty years from now. With a side of adequate Habanero salsa.