The Guzman Y Gomez Ltd (ASX: GYG) share price is down 20% after announcing its FY25 result and weak FY26 sales.
GYG is a Mexican restaurant business with a presence in Australia, Japan, Singapore and the US.
Guzman Y Gomez FY25 result
Here are the main numbers from the 2025 financial year result compared to the underlying (pro forma) numbers from FY24:
- Network sales grew 23% to $1.18 billion
- Revenue rose 27.4% to $436 million
- EBITDA (EBITDA explained) grew by 45.5% to $65.1 million
- Profit before tax (PBT) increased 79.3% to $29.2 million
- Net profit after tax (NPAT) jumped 151.8% to $14.5 million
- First dividend per share of $0.126
GYG reported that the Australia segment, which includes Singapore and Japan, achieved comparable sales growth of 9.6%.
The business reported that 39 new locations were opened, including 32 in Australia, four in Singapore, one in Japan and two in the US.
At the end of FY25, it had 81 corporate Australian locations, 143 franchised Australian locations, 21 franchised Singapore locations, six corporate US locations and five franchised Japan locations.
Pleasingly, its profit margins continue to rise. Its corporate restaurant margin increased from 17.4% in FY24 to 17.9% in FY25, while the ‘segment underlying EBITDA’ as a percentage of network sales rose from 4.8% to 5.7%.
GYG said its strong network performance was driven by expansion in after 9pm trading, breakfast and solid growth in lunch and dinner. GYG had 18 restaurants operating 24/7 as at 30 June 2025.
Challenging start in the US
As the business tries to gain a foothold in the huge American market, losses have increased.
While network sales increased 13% to $12.2 million, the segment underlying EBITDA loss doubled to $13.2 million.
There were some positives in the fourth quarter, which helped deliver comparable sales growth of 2.8% and total network sales growth of 57.3% in the fourth quarter.
During the year, GYG added two urban strip (non drive-through) restaurants to its network. This helps it expand in a higher density part of Chicago, though the recent opening hurt the company’s profitability.
GYG intends to open up to 15 restaurants in total in the Chicago area.
The business saw comparable sales growth of 6.6% in the first seven weeks of FY26.
Weak sales growth in FY26
While the business expects to open 32 new restaurants in Australia in FY26, its Australian, Singaporean and Japanese comparable sales growth was just 3.7%.
However, GYG expects sales momentum to improve throughout the year with “menu innovation, daypart expansion, operational excellence, marketing and digital initiatives.”
GYG dividend
Guzman Y Gomez said it will consider its funding requirements, balance sheet and cashflow as it considers what size dividend it will pay each year.
The first dividend is $0.126 per share, which is a solid start, in my view.
Final thoughts on the Guzman Y Gomez share price
It’s disappointing that the business has had a rough reaction to the report, with slow comparable sales growth in Australia.
Time will tell whether this represents a longer-term slowing of comparable growth, or whether it’s just a short-term situation following strong comparable sales growth in previous years.
GYG has clear potential to become a large business with more restaurants in Australia and other countries. However, it also needs to be careful it’s not cannabalising sales from other nearby existing locations if it’s opening too many close by.
At this stage, I think it could be a buy-the-dip idea for the long-term, as long as this isn’t the new normal for comparable sales growth.
