Younger consumers are flocking to Guzman Y Gomez, says CEO and founder
Gen Z and Gen Y are rushing to Guzman Y Gomez stores for its cheap but healthy Mexican food to take the fight to fast-food giants like McDonald’s and KFC.
Guzman y Gomez, the Mexican-themed fast-food chain that recently listed on the ASX and is worth almost $3.8bn, is continuing to grab market share from rival restaurants and especially among younger diners, such as Gen Z and Gen Y, who are opting for the chain’s clean and fresh ingredients.
Founder and co-chief executive Steven Marks said Guzman y Gomez’s theme of “clean is the new healthy” was strongly resonating with younger consumers looking for an alternative to the usual fast-food offerings.
“I think the whole clean is the new healthy for fast food, obviously for this generation is what GYG represents, and we are continuing to see growth in that area,” Mr Marks told The Australian after the restaurant chain held its maiden annual general meeting as a public company in Sydney on Wednesday.
“We definitely are seeing more kids than ever come to GYG. And that’s obviously something that we’re very proud about. And look, you know, when we have to give these presentations and talk about GYG, so I said to everybody in the audience: where do your kids eat? And do you know what they say? GYG.”
Despite these younger consumers, such as teenagers and 20-somethings have limited income, they were choosing to spend their disposable income on what they viewed as great deals at Guzman y Gomez, Mr Marks said.
“Without a doubt. Kids are coming. They’re grabbing mini burritos, $3 tacos. My kids are that demographic … and that’s what their friends eat. They love it.”
Earlier at the AGM, Mr Marks did not provide an update on trading, with Guzman y Gomez providing a trading update last month for the first quarter to show first quarter sales in Australia of $260.2m, up from $214.8m over the same period last year. The Mexican-themed restaurant has 194 stores in Australia, its key region, and has around 20 stores spread across Singapore, Japan and a burgeoning presence in the US with four outlets.
Mr Marks said the business was on track according to its recent prospectus, including to open 31 stores this financial year in Australia.
Shareholders at the AGM were told by Mr Marks in his CEO address that the company’s commitment to food has been key to driving growth in the business.
“In 2024, we relaunched the “Clean is the New Healthy” campaign, highlighting the nutritional value and quality of our food. Our Cali Burrito campaign was another success, with over 2.1 million burritos sold during the period.
“We also introduced new items such as our Crispy Chicken Tenders, which generated over $1m in weekly sales, and the Nacho Sundae, which doubled our soft serve sales. Value remains an important aspect of our offering, and our “10 Under $10” menu, $12 Chicken Mini Meals, and $3 tacos have been well-received by our guests.”
In August Guzman y Gomez proved its credentials as a high-growth stock as it strips away diners from rival fast-food chains, with its breakfast burritos a particular smash hit with tradies in the morning and its menu items across the day still popular despite cost-of-living pressures.
In August, the restaurant owner easily beat earnings expectations and forecast robust growth for the first weeks of 2025. 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.
At its October trading update, the company said its sales were above expectations for the first quarter, putting it on track to hit prospectus forecasts for earnings in 2025.
Shares in Guzman y Gomez were offered to the public in its IPO at $22 each and on Thursday closed at $36.91.
Universal Store right on trend but price cuts aren’t policy
Youth fashion retailer Universal Store is cashing in on a wave of 1990s-inspired nostalgia for casual clothing, just don’t expect it to resort to discounting to attract more buyers.
Lovisa’s shares take a tumble
The shine has come off fast-fashion jewellery chain Lovisa as concerns grow that a slower-than-expected store rollout will impact the company’s earnings expectations.