Guzman y Gomez slides as McDonald’s gains ground
Soon KFC, Guzman y Gomez and McDonald’s could all be competing for customers in the morning economy for eating out for breakfast.
Shares in burritos merchant Guzman y Gomez slumped 11 per cent on Friday as one analyst said cut-price competition from McDonald’s is attracting more consumers battling cost of living pressures.
GYG’s Australian same-store sales growth climbed 4.4 per cent over the six months to December 31 - only slightly ahead of inflation - to suggest its Mexican food stores aren’t attracting many new customers, at the same time as existing customers fail to order more regularly.
According to Sam Teeger, a Food & Beverage Analyst at investment bank Citi, McDonald’s Australian restaurants posted same-store sales growth in the mid-to-high single percentage digits over the final quarter of 2025 to be ahead of GYG in comparable growth rates.
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Mr Teeger said McDonald’s renewed focus on promotional offers and menu innovation under a new management team is likely impressing price-sensitive customers and pointed to the recent ‘Chicken Big Mac’ and ‘McWings’ promotion as evidence of its success.
The analyst added that rising interest rates and food price inflation in 2026 also have the potential to force Australians to cut back on the amount they dine out at all forms of restaurants this year.
While the soaring popularity of weight loss drugs known as GLP-1’s is also encouraging high-end restaurants and fast food alternatives to adapt menus, according to Mr Teeger.
“[The drugs] may require more rapid menu innovation,” he said. “Such as reduced sugar beverage options and higher protein content items.”
Despite the share market hype around GYG, Mr Teeger suggested the US-founded burger and fries group is defending its position as Australia’s most successful fast food brand.
Fast-food and innovation
Founded in the inner-west Sydney suburb of Newtown in 2006, GYG built a reputation for breakneck sales growth rates as some investors believed its recipe for affordable and healthy Mexican food positioned it as the next massive winner in a global fast-food industry worth an estimated $US1.1 trillion.
The investor mania for the burritos merchant saw its shares surge 36.4 per cent on their first day of trade on the ASX in June 2024, before they climbed to a record high of $45.99 in February 2025 as share traders bet it could even conquer the giant US Mexican food market.
However, the stiff competition and waning consumer enthusiasm brought the shares back to earth with a bump as they traded as low as $17 on Friday.
Shares in ASX-listed budget pizza delivery business Domino’s Pizza are down nearly 80 per cent over the past five years as its Australian and global growth also slid to a halt after initial success.
The pizza group’s management team has conceded part of its problems came about as it refused to join powerful food delivery apps such as Uber Eats, or DoorDash, which have positioned themselves as fee gougers between customers and restaurants.
GYG boss confident in growth story
Despite the shifting dynamics in the local fast food market, GYG’s US-born founder and co-chief executive Steven Marks told investors on Friday that he still sees it rapidly growing store numbers in Australia, the US, and Asia over the next decade.
“Australia and Asia continued to deliver, achieving $674 million in network sales for the half, up 17.5 per cent, demonstrating the strength of our brand and the obsession our teams have with delivering the best guest experience,” Mr Marks said.
GYG expects to open 32 new restaurants in Australia over the 12 months to June 30, 2026. Its total Australian restaurant numbers stood at 237 as at the end of 2026, with 272 stores globally that exist on a company-owned or franchisee model.
Mr Marks said he still believes it can grow to more than 1,000 stores in Australia over the long term.
The entrepreneur also defended its push into the US as a long-term project that will require investor patience.
“Building a brand from scratch takes time. We want to remind everyone that took it from us from 2006 to 2008 for our Australian restaurants to average $40k per week in sales,” Mr Marks said. “It then took seven years for our average weekly sales to reach $100k.”
The fast food group is also focusing on the drive-thru model to boost profit margins as these stores have lower overheads in terms of rent, cleaning, and staff.
KFC eyes morning economy
Another GYG business target is to have more stores offer 24-hour a day trading, with a focus on a breakfast offering as many Australians shift to eating out in the morning, rather than traditional evening hours.
As at the end of 2026, GYG had 31 restaurants trading 24-hours a day in an outcome it says boosts incremental sales and profits.
Citi’s Mr Teeger flagged that KFC franchise operator Collins Foods could soon join McDonald’s and GYG in pushing into the growing breakfast market in Australia, after it opened a trial morning menu at Sydney Airport in the final quarter of 2025.
The analyst added that success for KFC in offering breakfast items could put more pressure on GYG and the broader market to capture the morning economy.
Elsewhere, UBS analyst Shaun Cousins said GYG’s result missed the market’s high expectations for Australian sales growth. The investment bank last had a neutral rating on shares.
