After Guzman y Gomez’s strong earnings, its stock still plunged — is this a ‘golden buying opportunity’?

Before the ASX opened today, Aussie fast-casual Mexican chain Guzman y Gomez (GYG) $Guzman y Gomez Ltd(GYG.AU)$ released its FY2025 annual report. On paper, the results looked strong, yet the stock tanked nearly 20% right after the announcement.

GYG has been one of Australia’s fastest-growing food brands in recent years. Since its IPO in June 2024 at A$22, the stock had more than doubled to above A$45. After today’s drop, shares are now back to around A$22, almost touching IPO levels. So why the big sell-off after such strong numbers? And is this crash a fresh opportunity or a red flag?

Company Snapshot

GYG $Guzman y Gomez Ltd(GYG.AU)$ is an Australian fast-casual chain focused on healthier, customizable Mexican food. Most of its business is in Australia, with smaller operations in Singapore, Japan, and the U.S. The brand now runs 250+ stores worldwide, including 224 in Australia, across two formats: Strip (small shops in commercial areas) and Drive-Thru. The company remains firmly in expansion mode.

Warners Bay | Guzman y Gomez Mexican Kitchen

FY2025 Performance

• Total system sales: up 23% YoY (Australia +22.4%, Singapore +39.6%).

• Same-store sales: +9.6% YoY.

• New stores: 36 globally (30 in Australia).

• Revenue: up 27.4% YoY.

  Company-operated sales (Australia + Singapore + Japan): +29%.

  Franchise fees: +29.5%, delivering franchisees ~50% ROI.

  U.S. sales: down 15%.

• Adjusted EBITDA: up 35.1% YoY , Australia Segment +44.7%, but U.S. losses ballooned to A$13.2m, nearly double last year.

• Adjusted PBT: up 43% YoY.

Source: GYG FY25 Earnings

Looking ahead, GYG kept its ambitious expansion plan: ~40 new Aussie stores a year for the next 5 years (60% franchised / 40% company-owned, with 85% Drive-Thru). Management is targeting 10% EBITDA margin (as % of system sales) within five years. For FY2026, they expect ~32 new Aussie stores and EBITDA margin of 5.9%–6.3%. But in the first 7 weeks of FY26, same-store sales growth slowed sharply to just 3.7%.

Source: GYG FY25 Earnings

Why the Stock Crashed?

Investors weren’t impressed despite the growth headlines. Key concerns:

1. Same-store sales slowdown Only 3.7% growth in early FY26 vs. the 8%+ run-rate of recent years. This raised red flags about weakening organic growth.

2. U.S. drag Losses doubled to A$13.2m, far worse than expected. While management still talks up the U.S. as the next growth engine (same-store sales there hit +6.6% in early FY26), investors remain skeptical.

3. Expansion pace below target Just 30 new Aussie stores last year and only 32 planned for FY26, falling short of the 40/year target. Growth momentum doesn’t look as aggressive as promised.

4. Profit margin progress underwhelming FY26 guidance implies Aussie EBITDA margins rising from 5.7% to just 5.9%–6.3%, a very modest lift. This casts doubt on the longer-term 10% margin target.

Opportunity or Value Trap?

At ~A$22, GYG $Guzman y Gomez Ltd(GYG.AU)$ is back near IPO levels. That makes the stock look like a bargain — but the latest results also injected more uncertainty.

• Bull case: Management remains confident in the brand’s long-term growth, and the current sell-off could be a rare chance to buy into a strong consumer story at a discount.

• Bear case: The slowdown in same-store sales, weaker profitability, and U.S. drag suggest the high-growth story may be cracking. If expansion targets continue to slip, the market could completely re-rate the stock from “hyper-growth” to just another casual dining chain.

Invesight Viewpoint

GYG’s drop looks like both a test of faith and a turning point. For believers, this might be a golden entry point. For skeptics, it’s the start of a tougher chapter where execution risk is rising and the “fast growth at any cost” narrative no longer convinces. Either way, the market is sending a clear signal: GYG now stands at a critical crossroads between sustaining its growth story and losing investor confidence.