Guzman y Gomez – Results

The fast food Mexican is not a listed company but reported results today with a 1H loss of $3m on global sales that reached $471m in the half, up more than 30% on the same period a year ago. It opened 13 restaurants in Australia in the 6-months, and closed one, taking the network to 183 local stores across franchised and corporate-owned sites – same-store sales were up 11%. Aside from liking their burrito bowls, why should we care?  It’s a great business and at some stage, they will IPO, and if GyG can replicate the success of the much larger Chipotle Mexican Grill (CMG US) in the US, it will be an IPO not to be missed.

We own CMG US in the International Equities Portfolio, directly and indirectly through a holding we have in Pershing Square (PSHZF US) and it has done phenomenally well for us. While CMG is a lot bigger business, operating in a lot bigger market, and there are some clear differences in their structure (CMG owns their 3k odd stores while GyG is primarily a franchised model), the economics of these businesses at scale are very good.

• We love Chipotle Mexican Grill (CMG US) in our International Portfolio, and given the dearth of quality IPO’s on the ASX, it would be great to see GyG come to market at some point. In the meantime, Harry will continue to support their sales growth!