Guzman Y GOMEZ (ASX:GYG) reported what executives described as another “strong period of growth” in the first half of FY26, supported by new restaurant openings, positive comparable sales growth, and continued emphasis on transaction growth and guest value.
First-half financial highlights
Management said first-half FY26 network sales totaled AUD 682 million, up 18% versus the prior corresponding period. The company attributed the increase to 14 new restaurant openings in Australia and 4.4% comparable sales growth in existing restaurants.
- Underlying profit before tax of AUD 26.1 million
- Underlying NPAT of AUD 16.9 million
- Group segment underlying EBITDA of AUD 33 million
Australian segment underlying EBITDA rose to AUD 41.3 million, up 30%, representing 6.1% of network sales, management said.
Australia: transactions, drive-thrus, and levers for growth
Australia network sales increased 17.4% year over year, while Asia network sales rose 19.3%, according to executives. In Australia, management highlighted that transaction growth outpaced comparable sales growth, which the company framed as evidence of its “disciplined pricing” and focus on value.
Chief Operating Officer Erik stated the company focuses on five levers to drive transaction growth:
- Capacity, including its “dual linear operating model,” stickering system, and kitchen delivery system to handle higher volumes
- Daypart expansion, with breakfast and after 9 p.m. cited as outperformers; the company now has 31 restaurants operating 24/7, ahead of prior expectations due to stronger franchisee uptake
- Menu innovation, including the Caesar menu addition and the company’s “first limited time offer” in Australia, the Barbecue Chicken Double Crunch Taco
- Delivery and digital, with owned digital sales (app and website) increasing from 19% in 1H FY25 to 21% in 1H FY26; the company also discussed support from its exclusive delivery partner, Uber
- Marketing, with the Caesar campaign, an AUD 12 Brekkie Burrito bundle, and the limited-time offer cited as key activity in the second quarter
On profitability, Erik said corporate margins in Australia were 17.6%, down 40 basis points from the prior corresponding period. He attributed the margin pressure to a corporate portfolio weighted toward non-drive-thru restaurants, particularly CBD locations, which tend to have higher delivery mix and lower margins. He also said comparable sales growth was weaker in those restaurants, “dragged down by lower delivery sales growth” and “running less campaigns” year over year.
Drive-thru performance remained a central point of emphasis. Management said the average drive-thru delivered AUD 6.9 million in sales at a 22% margin, and Erik noted average drive-thru AUVs increased from AUD 6.7 million in FY25. He added that the reported year-over-year drive-thru AUV was flat versus the prior corresponding period due to mix effects as newer restaurants entered the network and ramped.
Franchise economics, pipeline visibility, and AI initiatives
Co-CEO Hilton said franchisee performance remained strong, citing a median franchisee ROI of 48%, median franchisee AUV of AUD 6 million, and franchise restaurant margins of 21.4%. He also noted the number of franchisees on royalty relief decreased compared to June 2025.
Hilton said the top 10% of restaurants by AUV delivered more than double the network’s comparable sales growth, with “average unit volumes and margins well above network average,” and that 86% of those top performers are drive-thrus.
Management also discussed technology investments and the use of AI to accelerate development. Hilton said the company’s internal technology team of 40 people is shipping guest-facing and restaurant technologies faster using AI coding tools. He highlighted the GYG Temp Food Safety System, using a Bluetooth-connected thermometer probe to temperature-check cooked chicken, and said AI-generated code helped move it from proof of concept to national rollout “in just 2 weeks.”
On development, Hilton said that as of December 31 the company had 108 board-approved sites with commercial terms agreed, with “in excess of 85%” drive-thru locations. During the half, the pipeline added 33 new sites. Management reiterated its long-term target of 1,000 restaurants in Australia.
U.S. update: sales growth, near-term transition risk, and disciplined expansion
In the U.S., management framed progress around building brand and accelerating sales as the core of its proof-of-concept strategy. Network sales increased 67% year over year, driven by the opening of two new restaurants (Des Plaines and Bucktown) and 2.9% comp sales growth from four existing restaurants. Steven noted U.S. comparable sales in the second quarter were impacted by “unseasonable weather conditions,” including major snowstorms in late November.
Steven said comps had returned to stronger growth quarter to date, but cautioned results could be affected by delivery-partner changes, including implementing an exclusive Uber Eats partnership in Australia and transitioning U.S. delivery arrangements away from DoorDash. Erik later said the DoorDash termination in the U.S. is expected in early March.
Erik said U.S. corporate restaurant margins declined in the half primarily due to new restaurant openings, while temporarily elevated protein costs pressured COGS. He said the company negotiated supplier price reductions and achieved “significant improvements in labor productivity,” with the benefits expected to be “fully realized” in the remainder of the financial year. G&A as a percentage of U.S. network sales decreased due to operating leverage on existing infrastructure.
Looking ahead, Erik said the company expects lower losses in the second half than the first half of FY26, while reiterating that U.S. losses are expected to increase slightly in FY26 versus FY25, consistent with prior commentary. Steven emphasized the U.S. is a “startup business” with a small comp base and said the company will remain disciplined, noting it has 8 restaurants and “will not go beyond 15 until we have a model that works.”
Cash flow, balance sheet, capital returns, and FY26 outlook
Erik said operating cash flow increased versus the prior corresponding period, supported by earnings expansion. First-half capital expenditure totaled AUD 23.1 million, reflecting investment in network expansion. The company invested AUD 16.9 million into the Australian restaurant network (AUD 16 million net of landlord contributions), supporting five new corporate restaurants, refurbishments, and development underway. The company said restaurant opening costs remained stable in line with prospectus disclosures.
Management also disclosed that payments relating to movements in share capital reflected a buyback program that commenced during the half. Executives said the company’s cash remains predominantly held in term deposits, and GYG had no debt as of December 25. Erik added that, given the balance sheet strength, the company expects to continue capital management initiatives through the remainder of FY26.
For FY26, GYG said it expects another strong year of growth and reaffirmed rollout guidance to open 32 restaurants in Australia (23 drive-thrus and 9 strip locations). Management also tightened guidance for Australia segment underlying EBITDA as a percentage of network sales to 6.0% to 6.2%.
About Guzman Y GOMEZ (ASX:GYG)
