GYG Expects $85 Million EBITDA in Australia After US Market Exit

US Market Exit Catches Investors Off Guard

Guzman y Gomez Limited (ASX:GYG) has pulled the plug on its US venture, ceasing operations of all Chicago outlets immediately. The decision comes as a surprise given the company’s previous efforts to build brand presence and operational standards stateside. Despite the US team’s commitment and progress in guest experience, the financial returns fell short of the company’s thresholds, prompting a strategic retreat.

Founder and Co-CEO Steven Marks, who spent the last three months in the US, acknowledged that the sales momentum was insufficient and that the capital and time required to turn the US business around would exceed initial expectations. “The Board and I have concluded that the business is unlikely to deliver the performance that would justify continued investment of shareholder capital,” he said.

Australian Operations Remain the Growth Engine

While the US exit is a setback, GYG’s Australian segment remains robust. The company expects underlying EBITDA of approximately $85 million for FY26, a 29% increase on the prior year, underpinned by plans to open 32 new restaurants this financial year. This strong outlook builds on the company’s solid unit economics and an expanding real estate pipeline, which supports its ambitious long-term target of 1,000 restaurants nationwide.

GYG’s Australian growth momentum has been evident in recent quarters, with network sales up 19.5% in Q3 FY26 and multiple new store openings contributing to the expansion. This focus on Australia aligns with the company’s strategy to concentrate capital and infrastructure where returns are most promising, a move likely to resonate with investors after the costly US experiment.

International Franchise Partners Drive Global Potential

Despite the US withdrawal, GYG remains bullish on its international franchise model, particularly in Asia. Master franchise partners in Singapore and Japan continue to deliver strong sales growth and healthy unit economics, with Singapore recently opening its 24th restaurant. Both markets are planning further expansion over the next 12 months, reinforcing the company’s belief in disciplined and deliberate global growth.

Marks emphasised that the US exit does not diminish confidence in GYG’s global brand appeal. Instead, it reflects a recalibration of focus and capital allocation. The company continues to monitor opportunities beyond its current markets, aiming to enter new geographies under the right conditions.

Financial Impact and Shareholder Considerations

The US exit will hit GYG’s 2026 full year results with a one-off P&L charge estimated between US$30 million and US$40 million, subject to audit. Cash-related exit costs are expected to be capped at US$15 million, covering lease liabilities, employee costs, and contractual obligations. Importantly, the company does not anticipate these charges will affect its final dividend for FY26.

GYG has also adjusted its blackout period, now commencing after ASX trading closes on 30 June 2026, while reaffirming that its previously announced $100 million buyback program remains active. This buyback, initiated in Q2 FY26, has been a key part of the company’s shareholder value strategy amid ongoing network expansion and operational improvements.

This strategic pivot follows a period of strong performance, including a 23% revenue increase and network growth in Australia and the US during the first half of FY26, as well as a recent exclusive delivery partnership with Uber Eats in Australia that boosted delivery sales to over a quarter of total Australian sales. Such moves highlight GYG’s ability to adapt its operations and partnerships to evolving market conditions.