Guzman y Gomez beats prospectus sales, earnings forecasts

The nation’s fast food chains might be suffering from dour consumer sentiment and a pullback in spending on takeaways, but sales are booming at Mexican-themed Guzman y Gomez.

Steven Marks, founder and co-CEO of Guzman y Gomez at its ASX listing in June. Picture: Britta Campion/The Australian

Mexican-themed restaurant chain Guzman y Gomez is stripping away diners from rival fast-food chains, especially younger people, as its breakfast burritos prove a smash hit with tradies in the morning and its menu items across the day hit a “sweet spot” in terms of pricing amid the high cost of living.

Further bolstering growth during its first year as a publicly listed company has been the transition of a handful of stores to 24-hour opening times that has driven strong store sales, consumers discovering its coffee as a good alternative to cafes and barista coffees offered by other fast-food chains and value deals such as its recently launched $12 Chicken Mini Meal.

Now with momentum behind it, Guzman y Gomez has begun fleshing out its growth plans for 2025 and beyond.

This will include growing its breakfast catchment as Australians discover the chain as a new breakfast alternative, and menu innovation driven by accomplished US chef and culinary innovator Nate Appleman, who helped revitalise US fast-food giant Chipolte’s menu and has now moved to Australia from the US to work at Guzman y Gomez.

On Tuesday, Guzman y Gomez easily beat earnings expectations and forecast robust growth for the first weeks of 2025, as its major fast-food rivals such as KFC and Domino’s Pizza struggle to attract customers who are instead making a line for the chain’s breakfast burritos, nachos and $3 tacos.

Guzman y Gomez, which listed on the ASX in June, delivered revenue and profit ahead of its prospectus forecasts.

It reported a statutory net loss of $13.678m for 2024, as expected, although pro forma net profit of $5.7m, up 94.1 per cent, was 71.2 per cent ahead of prospectus forecasts.

Its revenue for the period of $342.2m was up 32.1 per cent, and 0.7 per cent better than its revenue target issued in its prospectus. Comparable sales growth of 8.1 per cent was primarily driven by restaurants in Australia.

Global network sales rose more than 26 per cent to $959.7m. In keeping with its prospectus, no dividend was declared.

Founder and co-chief executive Steven Marks pointed to Guzman y Gomez’s increasing breakfast trade as a standout of the result that experienced 18 per cent growth.

“Breakfast is the best thing that we sell at GYG. You know one thing about Australians is they love to get up early, they’re healthy and they want to eat a breakfast that makes them feel good,” Mr Marks told The Australian. “It’s not a hangover food. It’s free range eggs, beautiful Pico (salsa), there’s cheese, there’s beautiful, clean hash browns. You have chicken chorizo, clean bacon – and to have it in a cafe style, great quality, for $8.

“Around 80 per cent of our restaurants have breakfast. We haven’t put any marketing dollars behind it yet, which is something that we’re very excited about … and we think it’s going to drive a huge part of our growth.”

He said “the tradies love it”, especially the brekkie burrito. “It gives them a different option than what is out there in the market and not a lot of fast-food players do breakfast and definitely not at our quality,” he said.

Mr Marks said the overall results for the year demonstrated solid guest demand for clean, fresh food delivered at high speed, and strong operational execution.

“GYG delivered network sales growth of 26 per cent for the year, ahead of prospectus forecasts,” he said. “This result was underpinned by strong comparable sales growth and the continued delivery of restaurant network expansion across Australia.”

In the first seven weeks of the financial year, Australian segment same-store sales growth was above expectations at 7.4 per cent, reflecting the continued success of the Clean is the New Healthy campaign, delivery outperformance and demand for value menu items such as the $12 Chicken Mini Meal, the company said.

In comparison, Domino’s recently reported that its group same-store sales since July had slipped 1.3 per cent, while Collins Foods, owner of 279 KFC stores in Australia, said comparable sales for the first seven weeks of 2025 were down 0.8 per cent and down 0.3 per cent for the first 16 weeks.

The Australian restaurant pipeline continued to strengthen last fiscal year, with 91 sites in the pipeline and 46 restaurants ­approved by the board. Guzman y Gomez currently has 220 restaurants operating, with 64 corporate and 130 franchised within Australia, 17 restaurants in Singapore and five restaurants in Japan as at June 30.

The chain opened 25 new restaurants, with 23 net new restaurants operating. One restaurant forecast to open was delayed by three weeks, opening after the end of the period.

Shares in Guzman y Gomez initially fell 5 per cent on the results to an intra-day low of $32.54, even though the result beat prospectus forecasts.

The stock then staged an afternoon recovery, closing 3.2 per cent higher at $37, a 68 per cent premium on the $22 issue price in June.