Company Reports

Guzman's fiscal 2026 Australian network sales grew a strong 18%. Greater scale fractionalized fixed costs and drove EBITDA growth of 29% in the Australia segment. Underlying EBITDA of AUD 85 million and 32 gross Australian store openings were in line with guidance. Shares rallied 11% on Aug. 21.

Guzman y Gomez operates a hybrid store ownership model, running corporate-owned restaurants and licensing its brand to franchisees. The company expects around 40% of stores will be corporate-owned over the long run. Most stores are in Australia, but Guzman also has a nascent presence in Singapore and Japan through master franchisee agreements.

Guzman y Gomez announced the immediate closure of its eight US restaurants. The company will incur a one-off charge of USD 30 million-USD 40 million. Australia segment fiscal 2026 EBITDA guidance is affirmed at AUD 85 million. Shares jumped 11%.

Guzman y Gomez operates a hybrid store ownership model, running corporate-owned restaurants and licensing its brand to franchisees. The company expects around 40% of stores will be corporate-owned over the long run. Most stores are in Australia, but Guzman also has a nascent presence in Singapore and Japan through master franchisee agreements.

In the third quarter of fiscal 2026, Guzman y Gomez's Australian like-for-like sales grew 7% on last year, accelerating from 4% in the first half. US like-for-like sales lifted 2%. Shares surged 18%.

Guzman y Gomez’s first-half fiscal 2026 network sales grew 18%, underpinned by 29 net store openings. Margins expanded and net profit after tax was up 45% to AUD 11 million. In the core Australian segment, like-for-like sales rose 4%, in the US like-for like sales were up 3%. Shares fell 14%.

Guzman y Gomez operates a hybrid store ownership model, running corporate-owned restaurants and licensing its brand to franchisees. The company expects around 40% of stores will be corporate-owned over the long run. Most stores are in Australia, but Guzman also has a nascent presence in Singapore and Japan through master franchisee agreements and runs a handful of corporate stores in the United States.

Guzman y Gomez’s first-quarter 2026 network sales grew by 19% compared with last year, mostly underpinned by new stores. Australian same-store sales lifted 4%. The company also announced a share buyback of up to AUD 100 million.

Guzman's underlying earnings jumped 152% to AUD 14 million in fiscal 2025. Global network sales rose 23% and operating margins expanded. However, mounting losses in the nascent US market and slowing Australian sales momentum disappointed the market's expectations, sending shares down 18%.

Guzman y Gomez operates a hybrid store ownership model, running corporate-owned restaurants and licensing its brand to franchisees. The company expects around 40% of stores will be corporate-owned over the long run. Most stores are in Australia, but Guzman also has a nascent presence in Singapore and Japan through master franchisee agreements and runs a handful of corporate stores in the United States.

Household incomes are growing in real terms after a period of rampant inflation. With inflation back within the Reserve Bank of Australia’s target range, the focus is shifting to keeping the job market in good shape. Monetary settings are slightly restrictive, providing room for more easing.

Tariffs are softening Australian consumer sentiment and investors are preferring defensive over cyclical retailers. Since sweeping US tariffs were announced April 2, our Morningstar Australia Consumer Defensive Index is up 3%, but the Morningstar Australia Consumer Cyclical Index is flat.

Customers are flocking to Guzman y Gomez and its store rollout is on track. Global sales are up a whopping 23% in the first half of 2025. But headwinds offset operating leverage at stores, and the US market opportunity is uncertain. Falling short of investors' expectations, the stock fell 14%.

Guzman y Gomez operates a hybrid store ownership model, running corporate-owned restaurants and licensing its brand to franchisees. The company expects around 40% of stores will be corporate-owned over the long run. Most stores are in Australia, but Guzman also has a nascent presence in Singapore and Japan through master franchisee agreements and runs a handful of corporate stores in the United States.

Retail spending is rebounding due to a larger workforce, higher wages, and meaningful fiscal stimulus. Discretionary categories are benefiting more than defensives from rising household incomes. Dining out is elevated as a share of spending at the expense of supermarkets.

Trading momentum for nonessential goods is picking up. So far in fiscal 2025, sales growth is improving at Super Retail’s chains and Woolworths’ Big W discount department stores, as well as at electronics goods retailers JB Hi-Fi, Harvey Norman, and Kogan.

Guzman y Gomez operates a hybrid store ownership model, running corporate-owned restaurants and licensing its brand to franchisees. The company expects around 40% of stores will be corporate-owned over the long run. Most stores are in Australia, but Guzman also has a nascent presence in Singapore and Japan through master franchisee agreements and runs a handful of corporate stores in the United States.

Having released its prospectus only a few weeks before the end of its financial year, Guzman y Gomez’s fiscal 2024 result contained few surprises. Adjusted net profit after tax of AUD 6 million came in AUD 3 million above our expectations, due to operating leverage from slightly stronger sales.

The upcoming August 2024 reporting season will draw the line under a difficult year for Australian retailers in which they navigated soft demand and soaring labor costs. The combination results in a profit margin crunch and declining earnings for many retailers.

We initiate coverage of Guzman y Gomez with a fair value estimate of AUD 15 per share. Guzman is a Mexican-inspired quick-service restaurant operator and franchisor and one of the fastest-growing QSR brands in Australia. Through master franchise agreements, Guzman also has a nascent presence in Singapore and Japan, and runs a handful of corporate-owned restaurants in the United States.