Guzman y Gomez pivots to domestic growth

• Guzman y Gomez will focus on opening 1,000 Australian stores after closing its operations in the United States.
• The fast-food chain's share price closed at $18.83 following a previous 16% decline over six months.
• The company stated that the strategic shift aims to accelerate the rollout of Australian drive-through outlets and strip restaurants.

Guzman y Gomez (ASX:GYG) has announced a strategic shift to focus on opening 1,000 stores in Australia after closing its eight locations in the United States.

This domestic expansion strategy follows a 16% decline in the company's stock price over the past six months to $18.83, which sits below its initial public offering price of $22.

“Ultimately, we made the decision that we’d already utilised the capital we had told the market we would on that journey, and therefore we didn’t feel it was right to continue that journey,” said Guzman y Gomez Chief Development Officer George Mandilis.

The company stated that the failed United States expansion will result in a one-off financial cost of between US$30 million and US$40 million, while the business also faces a class action lawsuit in the United States regarding staff closure notice periods.

Following the announcement, the Guzman y Gomez share price was unchanged at $18.83.

The fast-food chain currently operates a network of more than 270 stores, which includes 250 locations in Australia, 24 in Singapore, and five in Japan.

The business reported that its Australian comparable sales grew by 6.6% during the third quarter, finishing above market expectations of 5.1% growth.