Guzman y Gomez beats sales expectations in Australia

The Mexican-themed fast food chain has bolstered its credentials as a high growth stock to post better than expected sales growth in its flagship Australian operations, as diners swarm its $3 tacos and brekkie burritos.

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

Mexican-themed fast food chain Guzman y Gomez has bolstered its credentials as a high-growth stock, saying its sales were above expectations for the first quarter, putting it on track to hit prospectus forecasts for earnings in 2025.

Guzman y Gomez, whose shares have raced ahead by 33 per cent since its stock market debut in June, said on Thursday that comparable sales growth in the Australia segment – its key region with the most number of stores – had been better than expected.

This was helped by strong delivery performance, successful execution of the ‘Clean is the New Healthy’ campaign and guest demand for value menu items such as the $12 Chicken Mini Meal, the fast food chain said in an ASX statement.

The company, which now has a market capitalisation of nearly $4bn, has booked 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 stores spread across Singapore, Japan and a burgeoning presence in the US.

Total sales rose to $278.8m from $230.9m a year earlier.

Guzman y Gomez said in its trading update that the US segment had performed in line with expectations during the quarter, with the prior corresponding period benefiting from initial higher sales associated with new restaurant openings. US sales were down slightly to $2.6m from $2.7m.

Sales in Japan rose to $2.5m from $2m and in Singapore sales lifted to $13.6m from $11.4m. Overall, the company said it expects to meet its prospectus forecasts for the 2025 financial year, including the opening of 31 new restaurants in Australia.

Julie Berdugo and Sebastian Lopez at Guzman Y Gomez city store opening. Picture: Mark Calleja

According to its prospectus, Guzman y Gomez is forecasting fiscal 2025 sales of $428.2m, earnings of $59.9m and a net profit of $6m.

Shares in the Guzman y Gomez float were offered to the public at $22 each and last traded at just under $39.

At its full-year results in August, the company showed it was stripping away diners from rival fast-food chains, especially younger people, as its breakfast burritos proved a smash hit with tradies in the morning and its cheap menu items hit a “sweet spot” in terms of pricing amid the high cost of living.

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 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.

Originally published as Guzman y Gomez beats sales expectations in Australia