Guzman y Gomez Ltd (ASX: GYG) shares dominated headlines during their listing earlier this year.
Shares in the Mexican quick service restaurant (QSR) now trade at $29.38 per share, up more than 33% since their initial float.
As GYG prepares to release its first ASX results on August 27, investors might want to consider what the popular fast-food chain has in store.
Here's a recap of GYG's financial estimates and what might be expected in the coming months.
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Recap of GYG's projections
GYG's prospectus provides a detailed forecast for its financial performance up to FY24 and FY25. For the current financial year, the company expects the following:
- Revenue to reach $339.7 million from $171.8 million in FY22
- Earnings before interest, tax, depreciation and amortisation (EBITDA) to be $43 million versus $21.7 million in FY22
- Net profit after tax (NPAT) is forecast to be $3.4 million, which is modest growth when compared to the $3.2 million it did in FY22
The primary drivers of GYG's growth include the opening of new restaurants and strong comparable sales growth.
It plans to open 26 new restaurants in FY24. Of this, 20 will have a specific focus on drive-through at the locations.
This includes 5 new corporate restaurants and nine new franchise restaurants in the second half of FY24.
GYG's strategy also includes increasing the implied royalty rate it charges to franchisees from 7.8% this financial year to 8.3% in FY25.
GYG does not intend to pay a dividend to ASX investors at this point.
What's next for GYG's ASX journey?
GYG's franchise model plays a crucial role in its growth strategy. The company has seen strong profitability within its franchise network, with all franchisees in Australia reporting profits in the first half of FY24.
According to Firetrail Investments, the median franchisee return on investment (ROI) is 51%, built by a 22% operating margin, which could bode well for future expansion.
Internationally, GYG's largest market is Singapore. It says it holds around 2% market share there. Moreover, it is exploring further opportunities in the USA and Japan.
Looking ahead, GYG's focus will likely remain on expanding its restaurant footprint and improving profitability across its existing locations.
With plans to open 30 new restaurants annually and a potential increase to 40 within five years, GYG has set the bar high for itself.
But the company's sales growth and franchise growth might indicate it is well placed leading into FY24 earnings.
Foolish takeout
Investors should watch for GYG's upcoming ASX financial results, with particular attention to any updates on expansion plans.
The market will be keen to see if GYG can maintain its growth momentum and deliver on its ambitious forecasts. If the company can continue to execute its strategy effectively, its stock price could be rewarded.
As always, remember to conduct your own due diligence and contact a professional when needed. Past performance is no guarantee of future results.
