Guzman y Gomez struggling to break into US market despite offering bigger burritos

The Guardian

21-02-2025

Mexican-themed chain Guzman y Gomez has reported bumper profits since it began trading on the Australian stock exchange but is struggling to expand in the US despite offering Americans bigger burritos.
The fast food chain has opened 16 new stores in Australia since July but a push to break into the competitive US market with four stores in Chicago has not fared as well. Guzman y Gomez reported on Friday that its US six-month sales had decreased by 12.7% to $4.9m.
'The US sales aren't growing as fast as we'd like … we're building brand and it takes time,' the founder and co-chief executive officer, Steven Marks, told investors on Friday.
Marks said he was 'excited' about a new store opening near the Northwestern University campus in Chicago.
'We are confident that … the US restaurants will reach target economics. It will just take some time, just like it did here in Australia,' he said. 'Overall, GYG remains very confident in its ability to demonstrate proof of concept in the US.'
The US has long been a graveyard for Australian food retailers due to different tastes, supply chains and portion sizes.
Guzman y Gomez's standard US burritos weigh 560g compared with 480g in Australia.
Franchise consultant Grant Garraway said Guzman y Gomez would find that the US was 'not exactly short of Mexican food options'.
'You're competing for the best sites, you want the best franchise owners for your sites and they're going to struggle to get both,' he said. 'I'm not saying they're going to fail, I'm saying it's going to be a really difficult battle.'
Shares in Guzman y Gomez fell sharply on Friday after reporting its half-yearly earnings but were still up more than 40% since debuting on the ASX mid-2024.
At the time, the company won over investors by announcing plans to increase the number of its Australian stories from less than 200 to more than 1,000 – a figure chosen to rival McDonald's – and build its international network.
Challenges in the US contrast with the strong profits derived from its Australian business, which has disrupted the fast food market by enticing diners to eat its burritos.
Guzman y Gomez made $538m in revenue at its Australian stores in the six months to 31 December, up 22.7% from the previous year, according to its first public financial results since listing.
The company, which also has a small number of stores in Singapore and Japan, reported a 23% boost in sales across its network and a 91% increase in profit over the half-year to $7.3m.