👉 Background: Guzman y Gomez (aka GYG) is the Mexican fast food chain that started in Sydney in 2006 and now has more than 210 restaurants across Australia. GYG listed in 2024 at a value of $2.2 billion and it was the biggest IPO of the year.  

‍👉 What happened: Now, 20 months after its IPO, investors have got the chilli sweats after GYG revealed that sales in the first seven weeks of FY26 grew just 3.7%. This was well below market expectations of 7.6%. This news sent GYG’s shares diving 19% in a single day last week, sending their share price back near their IPO price of $22. It’s not all soggy nachos though, as GYG cracked $1 billion in sales for the very first time in FY25.

‍👉 What else: Its US operations have become a jalapeno-filled-headache after its losses doubled to $13.2 million for the last 12 months.

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‍What's the key learning?

‍💡Success at home doesn’t always translate overseas. When GYG was IPOing and pitched itself as a global contender in the Mexican fast food market, it had plans to scale in markets like Singapore, Japan, and most ambitiously, the big enchilada - the United States.  

💡Now that GYG is racking up big losses in the US, some investors are losing faith - its shares have fallen 19% in the past week. And with more store openings in the US, GYG is expected to deepen its losses even more.

💡Success at home doesn’t always translate overseas. Starbucks, which dominates in the US, came to Australia in 2000 with its American business model. After 8 years, it closed 2/3 of its shops because it struggled to adapt to the local environment. So GYG needs to balance their ambition for growth with the realities and costs of scaling abroad.