Guzman y Gomez's US Exit Unmasks a Strong Australian Growth Story
US losses hid genuine domestic earnings power, and withdrawing from America entirely let the market finally credit the Australian business's accelerating momentum.
30 Sep 2026 · 3 min read
In short
Guzman y Gomez fell from around $26 to a low near $15 as US losses obscured strong Australian earnings, before withdrawing from the US market entirely and rallying 18% in July on short covering.
QVG Capital notes the Australian business alone was pricing at less than 15 times next year's pre-tax profit at the stock's monthly lows, with comparable sales accelerating to over 6% on an exclusive Uber delivery deal.
The US exit, covering eight restaurants, incurs one-off closure costs of US$30-40 million but drives meaningful broker upgrades to near-term earnings, alongside a $100 million domestic share buyback.
Guzman y Gomez fell from around $26 to a low near $15 as US losses obscured genuine value in its Australian business, before the company withdrew from the US market entirely and Australian comparable sales accelerated on an exclusive Uber deal, driving a strong recovery and an 18 percent July rally on short covering.
US losses mask an accelerating domestic business
Airlie Funds Management said a solid update showed marginal improvement in like-for-like sales, reaffirmed margin guidance for the year, and a $100 million share buyback, with the stock a bit soft during the quarter, an opportunity Airlie used to add to its position. Hyperion Asset Management said the first-half FY26 result was mixed, missing top-line expectations but beating on the bottom line, with the Australian segment's network sales up 17.5 percent to A$673.6 million, driven by comparable sales growth of 4.4 percent that was accelerating into the second quarter, alongside 13 net new store openings. QVG Capital said an improved comparable sales performance for the March quarter, with Australian comps accelerating to over 6 percent, meant that at its monthly lows of $15, GYG was pricing the Australian business at less than 15 times next year's pre-tax profit, with its true value obscured by US losses, the inability to deduct those losses from Australian earnings, and unusual lease accounting.
At its monthly lows of $15, GYG was pricing the Australian business on less than 15x next year's pretax profit. GYG's value is obscured by US-losses, the inability to deduct these losses from Aussie earnings and funky lease accounting.
— QVG Capital, Monthly Report, April 2026
A withdrawal from the US, and accelerating Australian momentum
Hyperion Asset Management said a solid third-quarter FY26 trading update showed network sales up 19.5 percent to A$345.9 million, with Australian comparable sales accelerating to 6.6 percent from 4.8 percent in the second quarter, driven by an exclusive Uber delivery deal, alongside continued transaction growth outpacing comparable sales and strong performance at restaurants that had rolled out a new order management system. Pendal Group said the stock rose 16.5 percent after Guzman y Gomez announced it would exit the US market entirely, where it operated eight restaurants, after failing to deliver a trajectory that would justify ongoing investment in network expansion there, incurring one-off closure costs of US$30 million to US$40 million but driving meaningful broker upgrades to near-term earnings. QVG Capital said it is not opposed to companies taking short-term hits to profitability to extend the duration of their growth, as Guzman y Gomez had attempted in the US, citing similar examples like MA Financial's US private credit capability, Lovisa's second concept Jewells, and Generation Development's loss-making annuities partnership with BlackRock.
GYG announced the decision to exit the US market, where the company had eight restaurants, after the failure to deliver a trajectory where restaurant economics would justify ongoing investment into network expansion in this market. This will incur one-off closure costs of US$30-40 million but drive meaningful broker upgrades to near-term earnings.
— Pendal Group, Newsletter, May 2026
A short-covering rally confirms the turnaround
Blackwattle Investment Partners said Guzman y Gomez was one of its largest positive contributors, rallying 18 percent in July, as earnings upgrades from the US business withdrawal, combined with supportive analyst research highlighting it as a positive risk into reporting season, forced short covering of what had been a highly shorted stock, with the company leading the modernisation of quick-service restaurants in Australia.
What fund managers say they are watching next is continued Australian comparable sales acceleration from the Uber delivery deal, delivery of benefits from the new order management system rollout, whether the market properly values domestic earnings power now unobscured by US losses, and progress on the $100 million share buyback.
Questions
Why did Guzman y Gomez's share price fall to a low near $15?
Guzman y Gomez fell as losses from its US expansion obscured genuine value in its accelerating Australian business, with QVG Capital noting the domestic operations alone were pricing at less than 15 times next year's pre-tax profit at the stock's lows.
Why did Guzman y Gomez exit the US market?
Guzman y Gomez withdrew from the US market, where it operated eight restaurants, after failing to deliver a trajectory where restaurant economics would justify continued investment in network expansion, incurring one-off closure costs of US$30-40 million.
What drove Guzman y Gomez's Australian comparable sales acceleration?
Guzman y Gomez's Australian comparable sales accelerated to over 6%, driven largely by an exclusive delivery partnership with Uber and strong performance at restaurants that rolled out a new order management system.
13 managers, 26 comments, with each manager's latest recorded position.
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