Guzman y Gomez boss Steven Marks buys $1 million in shares of Mexican food chain

Guzman y Gomez’s co-founder says the group has a 20-year growth journey ahead of it after buying $1 million of shares last week, an investment he hopes will dispel doubts about the burrito chain.

Steven Marks, a Wall Street trader-turned-Mexican food entrepreneur, told The Nightly he thought the shares were grossly undervalued after falling 40 per cent this year to $23.15. Known as GYG, the company plans to open hundreds of outlets across Australia, the US and parts of Asia.

“I’ve been doing this for 20 years and we’ve got an amazing team and an amazing business and I thought the stock was very undervalued, and that was my decision to buy,” Mr Marks said today.

Shares on rollercoaster

The homegrown food chain served-up Australia’s best equity market listing of 2024, when shares surged 36 per cent on their first day of trade before reaching $45.99 last February.

Mr Marks argued the former market darling’s dramatic collapse is an opportunity to buy, like him. The entrepreneur pointed to the company’s decision to launch a $100 million share buyback as more evidence that the doubters are wrong to sell. A buyback is when a company uses its profits to buy its shares on the stock exchange market, usually because it believes they are undervalued.

“When we look at FY (financial year) 2030 for instance and where we’re going to be and you discount it (the company’s potential valuation) backwards we just thought the stock was very undervalued, and we believe the (buyback) was the right thing to do for our shareholders and GYG,” he said.

Regulatory filings reveal Mr Marks’ bought 45,000 shares at $22.35 each on November 19 for a total of just over $1 million, adding to his already large stake. Most founders tend to do the opposite and use a public listing to sell down shareholdings, so Marks’ vote of confidence helped the stock rise on Thursday.

Future of Mexican food

In Australia, GYG plans to grow its store count from around 227 today to more than 1,000. The majority of the new stores will be drive-thru style, which operate on higher profit margins as costs are lower for operators.

The shares tumbled in 2025 as its revenue and same-store sales growth rates missed expectations in the first half of 2025.

Some investors doubt Australia is large enough to sustain GYG’s ambitious growth targets without stores competing with each other in the same suburbs or towns. Many doubt GYG will succeed in the US fast-food market, where GYG will need to challenge Mexican food giant Chipotle.

In response to the doubters, Mr Marks suggested GYG had done the hard part in growing over the last 20 years and that he remained confident it has another 20 years of growth ahead.

He added that the US is a long-term project as building a brand takes a lot of time, with the company happy to get a small number of stores on a sound financial footing over the next couple of years, before it potentially moves to expand more aggressively.

On October 9, broker UBS issued a neutral rating on GYG and said concerns about the short-term slowdown in Australian same-store sales growth need to be offset by the positive long-term outlook and fact that the buyback suggests management is still confident.

UBS also pointed to GYG’s net cash position of $282 million as the investment bank raised its 12-month price target on the stock to $27 per share.

According to Dow Jones, the 12 professional analysts that cover the stock have a median share price target of $30.10.