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Mexican quick-service restaurant chain Guzman y Gomez (GYG) has secured a $134.5 million capital boost to support its growth plans over the next three years with the share purchase by new and existing investors valuing the group at $1.725 billion.
New investors comprise Cooper Investors, Hyperion Asset Management, Firetrail Investments and QVG Capital, while existing investors participating in the annual liquidity round include Athletic Ventures, Aware Super and TDM Growth Partners.
While the $134.5 million share issue remains subject to shareholder approval, GYG says the fresh capital will be used to help the group expand both in Australia and offshore.
In February, GYG announced global sales of $471 million in the December half, up 31 per cent from a year earlier, after adding 16 new restaurants in the first six months of FY24.
GYG operates 183 restaurants in Australia and 26 in Singapore, Japan and the US, where it is currently targeting the Chicago area with just four stores.
The company has revealed plans to open between 30 and 40 new restaurants per year over the long term with ambitions to open 800 more stores in Australia alone.
Coopers Investors, a Melbourne-based specialist equities fund manager that oversees a $13.5 billion portfolio, says its focus on “culture and long-term outlook” made GYG an appealing investment.
The prospect of a potential ASX listing may also have enticed the group to invest, although these plans are on the backburner for now. GYG says it “continues to review the possibility of an IPO in the next 12 months”.
Coopers Investors Portfolio managers Justin O’Brien and Geoff Di Felice note that their knowledge of the quick-service restaurant (QSR) industry also attracted them to GYG.
“We did extensive analysis of GYG’s business, including sending our QSR expert to meet the GYG team in Chicago,” the portfolio managers say in a joint statement.
“Throughout this process the quality of founder Steven Marks and his team has shone through.
“Having analysed and invested in QSR businesses globally for over a decade, the Cooper Investors team believe GYG has all the hallmarks of success – a customer obsessed culture combined with the systems and processes to deliver at scale. We’re excited to be on this journey with GYG.”
The Brisbane-based Hyperion Asset Management is another equities investor with a long-term view.
“Having successfully invested in the QSR space over many years, we are attracted to the company's superior unit economics, underpinned by an innovative ‘fresh and fast’ consumer offering,” say Hyperion’s lead portfolio managers Mark Arnold and Jason Orthman in a joint statement.
“We are impressed with their strong, founder-led culture and track record of success. GYG has a well-defined growth pathway which we anticipate will see it scale well beyond its current footprint within Australia in the coming years.
“Over time, GYG has the potential to become a significant global business.”
The Sydney-headquartered GYG was co-founded by Marks in 2006 with a single store in the inner suburb of Newtown.
The group’s major shareholder is private equity group is TDM Growth Partners, which last year appointed its representative Hilton Brett as co-CEO after a leadership reshuffle that saw Marks stand down temporarily.
In FY23, GYG reported total network sales of $759 million, up 31 per cent from a year earlier. The latest half-year sales of $471 million represent 62 per cent of the FY23 total.
The group's underlying EBITDA of $32 million for FY23 was up 56 per cent from a year earlier.
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