Mexican-themed Guzman Y Gomez struggles to interrupt | Australian Markets
Guzman Y Gomez’s fashionable $8 breakfast burrito has as soon as again been credited for driving gross sales growth in Australia, however cracking a heavily-saturated market within the US is proving a problem.
The company’s Australian phase — which additionally contains eating places in Singapore and Japan — achieved 9.4 per cent same-store gross sales growth within the first-half, driving $573 million in gross sales. The end result was pushed by its greater push into the breakfast phase and expanded all-day trading hours at 11 shops.
“(For) $8 I don’t think you can get that high quality clean food at that value anywhere in Australia,” founder and co-chief government Steven Marks instructed The Nightly of the breakfast burrito.
“It’s just a huge part of growth for us. Obviously we’re always focused on lunch, dinner, late night but breakfast is obviously performing extremely well and we’re really proud of it.”
The Mexican-themed restaurant chain on Friday stated it was on observe to beat its full-year revenue prospectus forecast of $6m as gross sales momentum translated to sturdy earnings growth.
Group earnings earlier than curiosity, tax, depreciation and amortisation was 3 per cent under market consensus at $26.8m, with internet revenue at $8.1m, an enchancment from the $4.3m loss recorded a 12 months in the past. Group income jumped 27 per cent to $212.4m.
Guzman — set up in 2006 in Sydney by Mr Marks, a former hedge fund supervisor, and Robert Hazan — has bold plans to open 1000 shops in Australia over the following twenty years.
The company opened 19 new shops within the half to take its whole to 239 throughout Australia, Singapore, Japan and the US, working in a selection of codecs together with at universities and drive-throughs.
It goals to open 31 eating places in Australia this financial 12 months.
Guzman can be taking what it says is a measured method to enlargement within the US, the place it needs to have 15 shops over the following few years.
“We know things take time and I think where brands get it wrong is they rush,” Mr Marks stated.
Community gross sales within the US — the place Guzman at the moment has 5 shops — fell 12.7 per cent to $4.9m, a end result Mr Marks conceded was “a little lighter than we’d like”.
However Mr Marks is assured in its capacity to crack the US, the place it’s going through stiff competitors from main gamers like Chipotle and different unbiased Mexican eating places.
“We think our food is far superior . . . we have breakfast, lunch and dinner, we have drive-throughs, so there’s so many points that differentiate us from Chipotle,” he stated.
“And the people that have been to Guzman says they love it, we’ve just got to get more and more people into the restaurants like we did here in Australia, Singapore and Japan.”
Guzman will open its sixth US store in Evanston, Chicago subsequent month.
Guzman listed on the Australian Securities Trade final June, with shares this week hitting $45 — more than doubling its IPO price of $22. The softer end result within the US despatched Guzman shares down 14.2 per cent to $38.58.
Mr Marks stated he had not seen the impacts of larger cost-of-living pressures on its clients.
“When people are doing it tough, they trade out of fine dining into GYG. When things are going great, they still love GYG,” he stated.
“(Customers) can have minis, we got $3 tacos, we do a $12 chicken mini meal deal so there’s great value.
“We play an integral role regardless of what the economy is doing and I think that’s why we really enjoy this business.”
Within the first seven weeks of the second half, the Australian phase’s comparative gross sales growth was above expectations at 12.2 per cent.
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