Growth plans bolstered as Guzman Y Gomez secures new investor

By Nick Hall | 14 Aug 2018 View comments

Inside Franchise Business: Growth plans bolstered as Guzman Y Gomez secures new investorFast-growing casual dining restaurant, Guzman Y Gomez (GYG) has secured a new investor this week.

The burrito chain has penned a deal with Sydney-based private investment firm, TDM Growth Partners worth a reported $44 million, in exchange for a minority stake.

The new deal marks a significant milestone for GYG, with the equity boost bolstering the brand’s recently announced plans for further expansion, both in Australia and overseas.

“We are immensely proud to join GYG on the next stage of their journey,” TDM Group said in a statement posted to its Twitter page.

“We are incredibly impressed by the quality of both the management team and board. We love the passion they have for their business, and importantly, their focus on culture – a value that is at our core.”

In late 2017, it was reported that the Mexican food franchise was in discussions with several private equity backers and firms, seeking an investment that would strengthen the brand's drive-through network.

The landmark deal with TDM will see Tom Cowan, one of TDM’s founding partners join the GYG board, in addition to former head of Accent Group, Hilton Brett, however co-founder Steven Marks will continue as GYG global CEO.

The investment will allow GYG to further it's plans for global expansion, which Marks said is already in discussion.

Marks told Inside Franchise Business sibling publication, Inside Retail that the company is currently looking at around five possible locations, and plans to bring over a large contingent from its Australian head office to assist with the opening.

The new funding will also be used to strengthen GYG’s technical foundations, including its operating platform, which Marks claims to be the fastest in the industry.

“I’m a people and numbers junkie. When I was thinking of opening GYG in Australia, I realised there weren’t a lot of people and everyone eats within a certain time frame. I realised we had to be fast [to succeed],” Marks said.

“We developed one of the fastest operating platforms in the world. It allowed us to become the number one [restaurant] on Deliveroo and one of the top guys on UberEats and to do drive-throughs.”

“Our model works. It’s about taking it to the next level, and that takes constant investment.”

For TDM, the deal with GYG continues a successful run of investments in Australian privately owned companies looking to drive growth.

The private equity firm was previously a major shareholder in baby goods retailer, Baby Bunting, and saw revenue jump from $40 million to $278 million under its guidance.

GYG shareholders and franchise partners will be hoping the latest deal produces similar results, driving further expansion for the network, which boasts 80 per cent franchised stores.

GYG has a network of 120 franchise and company-owned restaurants and drive-throughs across Australia, Japan and Singapore, with reported sales in excess of $200 million annually, growing at around 30 per cent.