Mexican Fast Food Chain Stuns on Listing Debut

Shares soared 36 percent to a market capitalisation of $3 billion on day one.

Guzman Y Gomez branding pre-game ahead of the round 14 Super Netball match between NSW Swifts and Adelaide Thunderbirds at Ken Rosewall Arena in Sydney, Australia on June 17, 2023. Jason McCawley/Getty Images

Mexican-themed fast food restaurant chain Guzman y Gomez has stunned on its debut on the Australian Stock Exchange (ASX), surging 36 percent on the market on its first day of trade.

The company joined the ASX at 12 p.m. on June 20 with an initial public offering price (IPO) of $22 per share.

By the close of trade, Guzman y Gomez’s shares had rocketed by 36 percent to $30, and the company is now worth more than $3 billion.

The listing has been dubbed by investors as the biggest public offering on the Australian market in three years.

Guzman y Gomez opened its first restaurant in Sydney in 2006 and has now increased its network to 210 restaurants globally (pdf).

In Australia, the company has 185 restaurants including 62 corporate restaurants and 123 franchise restaurants.

Further, the company has 16 restaurants in Singapore and four in Japan, along with four corporate restaurants in the United States.

Founder and co-CEO Steven Marks says of the company, “We are on a mission to reinvent fast food for the better, changing the way the masses eat one burrito at a time. Who said fast food has to be bad food.”

The company is planning to open 1,000 stores in Australia over the next 20 years including 30 per year in the immediate future.

At an IPO ceremony at the ASX building in Sydney on June 20, Mr. Marks described the listing as “emotional.”

“We’ve been working so hard for 20 years, and the values and culture is so strong, and we’re building this amazing business, and hopefully, you can see that today,” he told media.

“This is a big milestone for all of us, and it’s truly just the beginning.”

The company’s IPO valued the company at a market capitalisation of $2.2 billion, before it surged to more than $3 billion.

Ahead of the listing, Guzman y Gomez (GYG) said proceeds of the IPO would be used to fund GYG’s growth strategy over coming years.

Mr. Marks said over the last 18 years, the team at GYG have been obsessed with providing guests with the freshest, cleanest, and fastest made-to-order Mexican-inspired food.

“I am incredibly proud to say that we now do this across more than 200 restaurants in Australia, Singapore, Japan and the U.S. And the most exciting part is that we are just getting started,” he said (pdf).

Co-CEO Hilton Brett said he expects GYG’s sales growth to continue via the opening of new restaurants and increasing sales in existing restaurants.

“In addition to our delicious food, that growth has been underpinned by compelling restaurant economics which has allowed us to invest in our restaurant network, our teams and our systems,” he said.

GYG says one of its core values is “it’s all about the food,” providing customers with Mexican-inspired clean food.

“The quality of its food is central to its operational model, with every item of food on its Australian menu prepared using 100 percent clean ingredients from September 2019,” the company said ahead of its IPO.

The company’s global network sales rose from $101 million to $759 million between the 2015 and 2023 financial year.

GYG’s fast food peers on the ASX include Collins Foods, operator of  KFC and Taco Bell, and Domino’s Pizza Enterprises.

Domino’s shares rose 0.44 percent on the ASX to $36.48 on June 20, while Collins Foods shares leaped 0.54 percent to $9.30.