Guzman y Gomez makes sizzling debut on the ASX, with shares surging nearly 40 per cent to $30

Mexican-themed restaurant chain Guzman y Gomez has made a sizzling start to life on the Australian Securities Exchange, soaring to a market valuation of more than $3.3 billion on debut.

The stock — under the ticker code GYG — opened at $30 on Thursday, a 36 per cent premium to its $22 issue price that originally valued the company at $2.2b.

Shares hit as high as $30.85 at noon before closing up 36.4 per cent to $30. Guzman y Gomez’s debut marks the biggest float on the ASX since 2021.

Speaking at the IPO ceremony in Sydney, Guzman y Gomez founder and co-chief executive Steven Marks said it was a “big milestone” for the company.

“It’s very emotional, and we’ve been working so hard for 20 years, and the values and culture is so strong, and we’re building this amazing business, and hopefully, you can see that today,” he said.

Guzman y Gomez was founded in Sydney in 2006 by Mr Marks, a former hedge fund manager, and Robert Hazan. Both were from New York.

Since then, the business has grown to 185 outlets in Australia, with about 120 owned by franchisees and 62 corporate-owned. It wants to grow that number to 1000 in the next 20 years.

Globally, there are 16 in Singapore and five in Japan owned and operated by separate master franchisees and four corporate restaurants in the US.

The Mexican-themed restaurant chain has a varied mix of store models — some featuring drive-thru ordering, others in suburban shopping strips as well as some in food courts and on university campuses.

The board is chaired by Guy Russo, the former managing director of Kmart and chief executive of McDonald’s Australia. He is currently a director of Westfield owner Scentre Group.

Guzman y Gomez plans to open another 30 restaurants in Australia in the 2025 financial year, with this number expected to grow to 40 a year within five years.

Asset manager TDM Custodial Services remains Guzman y Gomez’s top shareholder at 28.2 per cent, followed by Barrenjoey at 10.4 per cent.

Superannuation investor Aware Super holds 6.1 per cent, with the entity associated with Mr Marks owning 7.4 per cent.

Ahead of its debut, the quick service restaurant’s float attracted some criticism from analysts given its lofty price tag, with investors warned to be cautious.

Sydney-based TAMIM Asset Management in a note last week said Guzman y Gomez’s rich valuation in comparison to other quick service restaurant players raised questions about whether the hype surrounding the offering was justified.

“Rather than getting caught up in the frenzy, prudent investors may be better served by waiting on the sidelines to see how GYG’s growth story unfolds as a public company,” it said.

Morningstar analysts also questioned the value of Guzman y Gomez shares just two weeks out from its ASX launch.

Analyst Johannes Faul told clients in a note that Guzman y Gomez was yet to carve out an “economic moat” — those quick service restaurants which manage to carve out a durable competitive advantage typically do so by building intangible brand assets and cost advantages through scale.