Hungry for returns? Are Dominos or Guzman y Gomez ASX shares a better buy in 2025?

Pizza or burritos? Why not both?

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Comparing ASX shares from two of Australia's favourite fast/casual food chains is a mouthwatering proposition. 

But after looking past the cheesy, meaty goodness, these ASX shares appear to be more different than alike. 

Guzman y Gomez Ltd (ASX: GYG)

Market capitalisation: $4.02 billion

Guzman y Gomez has come a long way since its first store opened in Australia in 2006. It now operates more than 220 restaurants in Australia, Singapore, Japan, and the United States. 

However, the Mexican fast-food company only listed on the ASX in June 2024. Its initial public offering (IPO) of $22.00 per share raised eyebrows as some analysts labelled it as overpriced. 

Investors were apparently less concerned, as trading closed on the first day at $30.00 per share. 

Since then, it has been (mostly) smooth sailing for shareholders, with Gusman y Gomez shares increasing 82.2% since their ASX debut. 

GYG shares briefly hit a high of almost $45.00 apiece in December. 

Created with Highcharts 11.4.3Guzman Y Gomez PriceZoom1M3M6MYTD1Y5Y10YALL1 Jun 20248 Jan 2025Zoom ▾Jun '24Jul '24Aug '24Sep '24Oct '24Nov '24Dec '24Jan '25Jul '24Jul '24Sep '24Sep '24Nov '24Nov '24Jan '25Jan …Jan '25Jan …www.fool.com.au

How high can a burrito fly?

After such a strong start, it's no surprise some were happy to take their guac-covered profits and run. 

QVG portfolio manager Chris Prunty sold off his shares last September despite being one of the backers of Guzman y Gomez during its IPO. 

Meanwhile, analysts at Morgans suggested the GYG share price could reach $62 apiece in the long term. 

This prediction was largely based on GYG's potential expansion to more than 500 stores in the United States. 

And it would coincide with the company's current goal of having 1000 stores in Australia over the next 20 years. Here's what the company had to say in its GYG FY24 Performance Report:

In Australia, GYG is targeting to open 30-40 new restaurants per year over the long term and believes there is the opportunity locally for the company to expand fivefold, given the strength and demand for GYG's offering.

Long-term estimates on the company are mixed, depending on where you look. But the GYG share price has marched forward despite experts' hesitancy

The execution of this long-term plan of expansion in Australia and abroad may be a factor to monitor for future buyers. 

Domino's Pizza Enterprises Ltd (ASX: DMP)

Market capitalisation: $2.73 billion

The tale for Dominos Pizza Enterprises Ltd (ASX: DMP) shares has been quite different over the last 12 months.

Launching at $2.20 per share in 2005, the pizza juggernaut reached an all-time high of $164.35 in 2021. However, it has tumbled year on year since then, including a drop of 49.4% in the last 12 months. 

Created with Highcharts 11.4.3Domino's Pizza Enterprises PriceZoom1M3M6MYTD1Y5Y10YALL1 Jan 20058 Jan 2025Zoom ▾200620082010201220142016201820202022202420052005201020102015201520202020www.fool.com.au

This could be viewed as a tempting buy-low option for investors hungry for ASX shares that could turn around in 2025. 

Despite Goldman Sachs's optimism about the appointment of new CEO Mark van Dyck on 6 December, Dominos was one of the highest shorted stocks on the ASX the following week.

It seems investors are pessimistic about a short-term turnaround. Meanwhile, Bell Potter advisor Chris Watt listed Dominos as a hold, saying: (courtesy of The Bull)

Recent sales have lagged internal targets, possibly hinting at slower short term growth. However, there is room for cautious optimism led by a new chief executive officer.

In our view, cost controls, more efficient media spending and aggregator partnerships could support earnings before interest and tax margin targets of between 10 per cent and 12 per cent. But near-term uncertainty suggests a wait-and-see approach.

Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Domino's Pizza Enterprises. The Motley Fool Australia has recommended Domino's Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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