Mexican-themed chain Guzman y Gomez plans to open at least 15 restaurants in the US despite doubling its losses on its “relentless” bid to expand into the competitive American market.
Despite its struggles in the US, GYG recorded more than $1bn in sales across its network for the first time and more than doubled its net profit to $14.5m in the 12 months to July – its first year on the Australian Stock Exchange (ASX).
Australian investors were rattled even though Guzman y Gomez lifted its overall revenue by 23% to $1.181bn, with GYG’s share price plummeting by nearly 20% by close of trade on Friday after it published its yearly financial results.
The company’s co-chief executive officers, Steven Marks and Hilton Brett, told investors their ambition was to “become the best and biggest restaurant company in the world”.
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Marks and Brett said they were committed to their North American expansion and were “relentlessly focused on demonstrating proof of concept” in the US.
The duo said each American restaurant would need to make at least US$3m a year in order to be sustainable and “while it will take time, we are seeing momentum”.
Guzman y Gomez lost A$13.2m on its US stores in the 12 months to 30 June, up from a $6.5m loss in the 2023-2024 financial year.
There have been considerable doubts over whether the Sydney-headquartered company can crack the US market, which is notoriously difficult for Australian food retailers due to different tastes, supply chains and portion sizes.
During the year, Guzman y Gomez added two urban strip restaurants to its network in Chicago, taking the total number of restaurants in the Illinois capital – where the company is beginning its foray into the American market – to seven.
The company’s strategy focuses on building density in the Chicago market by “expanding inwards from the suburbs” in a bid to “to deepen penetration and strengthen brand presence”.
In February, Marks conceded to investors the company’s US sales weren’t “growing as fast as we’d like”.
Nevertheless, Guzman y Gomez plans to open two new US stores in the 2025-26 financial year and expects its losses in the American market to increase slightly during the 12-month period.
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Marks and Brett told investors they were optimistic given it took them 12 years for their Australian restaurants to average $40k per week in sales and another seven years to reach $100k.
The company fared much better at home over the past year, reporting network sales of nearly $1.1bn in Australia, partially driven by an increase in night-time and breakfast trading with the increased rollout of 24/7 stores.
When it debuted on the ASX in June last year, the company won over investors by announcing plans to increase the number of its Australian stores from fewer than 200 to more than 1,000 – a figure chosen to rival McDonald’s – and build its international network.
Marks and Brett said Guzman y Gomez was “on track” to open 40 new restaurants in Australia a year within four years and remained confident they could reach 1,000 stores.
The company had 256 restaurants around the world as of 30 June after opening 39 new restaurants in the 12 months prior, including 32 in Australia, four in Singapore, one in Japan and the two new US stores.
