Guzman Y Gomez reveals location of 12 new restaurants and eyes further international expansion

Mexican fast food chain Guzman Y Gomez has announced plans to open twelve new locations in Victoria, Queensland, New South Wales, and the ACT, all expected to be operational by the end of 2025.

Revealing the plan during an exclusive interview with realcommercial.com.au, the quick service restaurant’s three-month rollout will begin in October and include a mix of metropolitan and regional sites, with half of the locations to be delivered as strategically positioned drive-thru restaurants.

Half of the 12 new restaurants will be located in Victoria, including regional sites in Bendigo and Albury, along with four in Melbourne; Dandenong North, Clayton, Eltham, and Fitzroy.

A packed drive-thru during the opening of Guzman Y Gomez Canning Vale, in November 2023 – Picture: Supplied | Richard Walker/RDW Photography

Regional Queensland is slated for two new drive-thrus in Collingwood Park and Caboolture, while the Gold Coast will receive a new strip restaurant in Mermaid Waters.

In New South Wales, Sydney is set to welcome two locations in Mona Vale and Carlingford, while the Australian Capital Territory will gain it second Guzman Y Gomez restaurant in the inner-northern Canberra suburb of Dixon.

The impending launches is part of GYG’s aggressive national expansion strategy to achieve 1,000 restaurants across Australia and overseas in 20 years, with the twelve new locations keeping the chain on course to fulfil its commitment of 32 openings in FY26.

The new rollout will also welcome five new franchisee teams, three of them from the company’s internal pathway.

Crowds gathered at the grand opening of Guzman Y Gomez’s new Umina Beach restaurant on the NSW Central Coast in August 2024. Picture: Supplied

According to founder and co-CEO, Steven Marks, the new restaurants demonstrate both the strength of the GYG model and the confidence of its franchise partners.

“Our growth strategy is clear – GYG is building a long-term, sustainable restaurant business with real food, high volumes, and strong unit economics,” Mr Marks said.

Chief development officer George Mandilis echoed Marks’ commitment of sustained growth to realcommercial.com.au.

“We’re going to get to our 1000 stores, but we’re going to do it methodically and in a way that is sustainable, with a mix of strip sites and strong focus on drive-thru locations.”

Drive-thru evolution

While Guzman Y Gomez had initially focused on shopping centres for growth, the drive-thru model now makes up 85% of its portfolio, and much of the remaining are strip sites.

George Mandilis said shopping centres provided GYG the quickest and easiest way to start out, but were largely limited by lunchtime trade.

“Our menu dictates our evolution into drive-thrus because we now do breakfast, lunch, dinner, snacks and late-night offerings. And we need real estate that can deliver to customers 24/7,” he explained.

The new Punchbowl store in Sydney’s south west opened in May this year, with cars backed up along Canterbury Rd. Picture: Supplied

When it comes to securing prime real estate for drive-thru restaurants, Mr Mandilis said the company is continually on the hunt for “AAA real estate.”

“We want the best corners for our drive-thus with uninterrupted access – that’s really important. That means if you’re driving on a main road and you’re about to hit the centre lights, we want all lanes to be able to turn right and left into our site, or straight and left into our site so that we capture the maximum amount of cars on that intersection.

“We don’t want sites where you can only turn left in, left out.”

The brand won’t comprise on its AAA model, Mandilis added, despite numerous requests from customers to come to their suburb.

“We’ll never choose a B-grade site just to get more real estate. If we can’t find the best piece of real estate in a suburb, then unfortunately that area will have to wait, because we’re locking them down for a long time. Our average drive-thru lease is 20 to 30 years, so you’ve got to get them right.”

Franchise costs, market realities

With drive-thru locations now the preferred format over shopping centres, the cost of entry for GYG franchisees has also evolved.

“The shopping centre site is a lower entry price point because everything’s there – you’re basically just fitting it out. Comparatively, a drive-thru is a whole new build; you’ve got the restaurant, the big car park, the dual-lane drive-thru, and the big pylons. All those things add more costs,” Mr Mandilis said.

Since its IPO launch in June 2024, the cost of a GYG drive-thru has almost doubled, rising from $1 million in 2020 to $1.9 million.

“Yes, you invest more now for a drive-thru, but the AUV (Average Unit Volume) is much higher as well, so they’re worth the investment,” added Mr Mandilis.

The drive-thru model now makes up 85% of Guzman Y Gomez’s portfolio. Picture: realcommercial.com.au

While franchisees continue to see value in GYG’s business model, investors have taken a more cautious view.

After listing on the Australian share market in June last year, the chain’s share price shot up from $22 to $43 – a 95% increase in just a few months.

Since then, the price has dropped back down, to around $25 of Friday 19 September, at the time of publication.

GYG has 21 sites currently in Singapore and seven in Japan, where it focuses on shopping centres for growth. Picture: Supplied

Shane Oliver, chief economist at AMP, recently told news.com.au the stock had experienced a natural correction after a hype-driven IPO.

“Shares surged post-listing last year, resulting in overly optimistic expectations for earnings growth being priced in, but these expectations have been dashed by slower-than-expected sales growth locally and the reported loss in the US,” Mr Oliver said.

“So its share price is adjusting to reflect this, even though it does have a good operation. It is quite common for post-IPO euphoria to give way to a correction. It’s all about the market trying to find an appropriate valuation level for a new stock.”

International expansion

While Australia remains the company’s foundation, Guzman Y Gomez also continues to build its international presence in Asia, with 21 sites currently in Singapore and seven in Japan.

George Mandilis said these markets represent a major long-term opportunity for the brand.

“Singapore and Japan are still very mall driven. Our stores there have smaller footprints and shorter leases, but they remain successful because you can go up a few levels in their multi-level malls and everything is still vibrant.”

Guzman Y Gomez opened in Deerfield, Illinois in January as part of its global expansion. Picture: Supplied

The US, however, remains GYG’s biggest international growth frontier. Short term, the brand is focused on expanding its seven Chicago restaurants to 15.

Long term? George Mandilis believes the sky’s the limit.

“Chicago’s got something like 2.7 million people. I could see us growing from 500 stores in the city to 1,000 plus across Illinois state,” he said.

“But we’re not going to rush. I’ve still got over 800 stores to get to in Australia and we don’t want to stretch ourselves too thin. It’s all about doing it in the right way, with the right team in place, store by store. That’s how we build a sustainable business for our customers, our shareholders, and our stakeholders.”