Burrito blowout! Guzman y Gomez shares tumble 20% on disappointing FY25 results

We are about to close out Week 3 of this August ASX reporting season, with around two-thirds of companies having now delivered results. As always, there have been surprises – some good, with The A2 Milk Company (ASX: A2M), Brambles (ASX: BXB), Nick Scali (ASX: NCK), Seek (ASX: SEK), The Lottery Corporation (ASX: TLC), and Zip Co. (ASX: ZIP) notable standouts – and some downright terrible, including James Hardie (ASX: JHX), which collapsed 28% on its earnings day, and CSL (ASX: CSL), which shed 17% after its messy update.

Today’s shocker belongs to Guzman y Gomez (ASX: GYG). The Mexican fast-food chain released its FY25 earnings this morning, only its second full-year report as a listed company. Despite strong top-line growth, the market has savaged the result, with GYG’s shares plunging 20% in early trade. Below, we dig beneath the seemingly sound headline result, break down the numbers, the guidance, and what it all means for investors. Why have GYG’s shares been hit so hard, and is this a potential buy-the-dip opportunity?

Key Earnings Data

• Revenue: A$436.0m (Consensus: A$450.6m)
• EBITDA: A$65.1m (Consensus: A$64.1m)
• Segment underlying EBITDA: A$52.8m (Consensus: A$54.5m approx.)
• NPAT: A$14.5m (151.8% higher year-on-year, pro forma)
• EPS: $0.137 (Consensus: $0.155)
• DPS (Final): $0.126, fully franked (maiden dividend, payable September 2025)

Guidance

• FY26 restaurant growth: 32 new Australian stores planned (20 franchised, 12 corporate), 23 drive-thru and 9 strip formats.
• Australia Segment underlying EBITDA margin: Expected 5.9–6.3% of network sales, compared to 5.7% in FY25. Consensus was at 6.3%, so midpoint implies a miss.
• Comparable sales growth: First 7 weeks of FY26 showed +3.7% growth, well below market expectations of ~7–8%.
• US operations: Loss of A$13.2m in FY25 (vs consensus -$10.5m). Management is still targeting US$3.0m average unit volume as proof of concept but expects losses to widen in FY26.
• Capital management: Strong cash balance ($282m) with no debt; maiden dividend initiated and board may consider further capital management in FY26.

Key Takeaways

• Revenue miss despite strong top line: GYG grew group revenue 27% and global network sales 23% to A$1.18bn, but still fell short of consensus expectations, raising concerns over execution.
• Margins under pressure: The Australian segment EBITDA margin outlook (5.9–6.3%) fell short of consensus, implying cost pressures and lower operating leverage than hoped.
• Disappointing trading update: Comparable sales growth of just 3.7% in the first weeks of FY26 was less than half of market expectations, undermining confidence in the company’s growth trajectory.
• US proving a drag: Losses in the US business widened, with EBITDA of -A$13.2m vs market’s -A$10.5m forecast. Management remains optimistic but proof of concept is likely still years away (there’s plenty of competition over there for good burritos!).
• Investor sentiment crushed: Brokers are already flagging forecast downgrades, with RBC Capital Markets warning that consensus sales expectations for FY26 will need to be revised lower. The immediate market reaction – a 20% plunge in the share price – underscores the lack of tolerance for earnings misses this reporting season.

Outlook

GYG’s long-term vision is ambitious: To become the “best and biggest restaurant company in the world.” The Co-CEOs letter that accompanied today’s results emphasised the GYG’s differentiated model of clean, fresh food, strong restaurant economics, and scalable operations. Australia remains the growth engine, with capacity for 1,000 restaurants over time (vs just 224 today) and an aspiration to lift EBITDA margins towards 10% over five years (vs 5.9–6.3% today). Pipeline strength (98 Australian sites) and a push into 24/7 trading, breakfast, and late-night segments are put forward as supporting pillars of these goals.

However, the near-term challenges are clear. FY26 has begun with weaker-than-expected comparable sales, softer margins, and uncertainty around international expansion. The US operations in particular remain a drag, with management signalling losses will widen before improving. While the long-term runway remains compelling, the company faces the twin hurdles of investor scepticism and execution risk. GYG started with such a big bang on the ASX last year, but it hasn’t taken it long to disappoint analysts. Until GYG can deliver both growth and margin expansion in line with expectations, it may struggle to regain market confidence.

Conclusion: There were warnings signs! ⚠️

GYG’s FY25 result was strong on paper, but in the unforgiving reality of reporting season, it badly disappointed the market. A revenue miss, weaker comp sales, softer margins, and wider US losses combined to shake investor faith in the growth story. The 20% share price collapse shows once again that in this season, any misstep is savagely punished.

As a technical analyst, I can’t help but note that GYG’s chart in the lead up to these results foreshadowed disappointment. The ASX 200 has been hitting high after high, and as one would expect, there are no shortage of stocks achieving a similar feat. Yet, the short and long-term trends in GYG’s share price were clear: Down and Down.

But it’s not like I’m telling you this now as Mr Harry Hindsight. I’ve been warning investors about the problems with GYG’s technical trends since May in my ChartWatch ASX Scans series I publish daily on Livewire's sister site Market Index. GYG has appeared as a Feature Downtrend, i.e., my highest conviction rating for a stock in a downtrend, six times since 26 May.

With the addition of today’s long, black candle (a surefire sign of excess supply for the company’s shares), to me, GYG resembles a falling sword. My technical model requires the exact opposite of the chart above to consider a purchase. Technical analysis or fundamental analysis alike, it appears it may be wise to wait until the dust settles before deciding if GYG represents a buy-the-dip opportunity.

GYG's long-term story of clean food and scalable economics remains intact, but for now, the market has made its view clear: Disappoint, and you will be dealt with mercilessly!

This article first appeared on Market Index on 22 August 2025.