1 00:00:05,960 --> 00:00:07,960 Speaker 1: Welcome to Fear in Greed Q and A where we 2 00:00:08,000 --> 00:00:11,640 Speaker 1: ask and answer questions about business, investing, economics, politics and more. 3 00:00:11,680 --> 00:00:15,560 Speaker 1: I'm Michael Thompson and today the extraordinary enthusiasm driving the 4 00:00:15,680 --> 00:00:19,360 Speaker 1: roll out of guzmani Gomez in Australia now GYG listed 5 00:00:19,400 --> 00:00:21,319 Speaker 1: on the ASX last year and what was probably the 6 00:00:21,360 --> 00:00:24,360 Speaker 1: most exciting IPO of the year. Late last week, the 7 00:00:24,400 --> 00:00:27,760 Speaker 1: Mexican themed fast food chain delivered a twenty three percent 8 00:00:27,880 --> 00:00:30,760 Speaker 1: increase in network sales to nearly one point two billion dollars. 9 00:00:30,960 --> 00:00:34,320 Speaker 1: It doubled net profits and declared its first ever dividend. 10 00:00:34,520 --> 00:00:37,879 Speaker 1: That all sounds like good news, but investors hammered it, 11 00:00:38,000 --> 00:00:40,479 Speaker 1: with the share price tumbling more than twenty two percent 12 00:00:40,840 --> 00:00:44,160 Speaker 1: on concerns about a steady start to the new financial 13 00:00:44,200 --> 00:00:47,400 Speaker 1: year and the cost of the company's push into the US. 14 00:00:47,680 --> 00:00:50,199 Speaker 1: That's why this interview was so interesting. This is guzmani 15 00:00:50,240 --> 00:00:54,560 Speaker 1: Gomez co CEO Stephen Marx speaking to Juliet Sally on 16 00:00:54,640 --> 00:00:58,960 Speaker 1: Osby's on the day they announced their results. 17 00:01:01,760 --> 00:01:03,800 Speaker 2: What do you think, well, why do you think the 18 00:01:03,840 --> 00:01:06,280 Speaker 2: market is punishing you? What is it the first seven 19 00:01:06,319 --> 00:01:07,960 Speaker 2: weeks of this new financial year. 20 00:01:09,000 --> 00:01:10,520 Speaker 3: I think, first of all, I just wanted to say 21 00:01:10,560 --> 00:01:12,959 Speaker 3: a huge thank you to the team at GYG and 22 00:01:13,000 --> 00:01:16,280 Speaker 3: our franchisease. We had a record twelve months for fy 23 00:01:17,000 --> 00:01:19,560 Speaker 3: FY twenty five, you know, the first time we've ever 24 00:01:19,600 --> 00:01:22,760 Speaker 3: done a billion in revenue. You know, the margins of 25 00:01:22,760 --> 00:01:25,160 Speaker 3: our drive throughs have never been higher, you know, and 26 00:01:25,200 --> 00:01:27,679 Speaker 3: the team just executed so well, you know. I mean, 27 00:01:27,720 --> 00:01:31,600 Speaker 3: part of being a public company is can't control the markets. 28 00:01:31,880 --> 00:01:34,800 Speaker 3: You know, we're looking to build a generational business at GYG. 29 00:01:34,920 --> 00:01:37,480 Speaker 3: We never makes you know, short term decisions. Everything's for 30 00:01:37,880 --> 00:01:40,959 Speaker 3: the long term success of GYG, you know, I know, 31 00:01:41,040 --> 00:01:43,080 Speaker 3: part of being a public business, they look at the 32 00:01:43,080 --> 00:01:45,720 Speaker 3: first seven weeks, you know. For us, when I look 33 00:01:45,760 --> 00:01:49,279 Speaker 3: at Gyg's comp growth over say the last six years, 34 00:01:49,280 --> 00:01:52,720 Speaker 3: we've had comp growth on average of fifteen percent. But 35 00:01:52,840 --> 00:01:55,800 Speaker 3: also during that you know, say seven year period, fifteen 36 00:01:55,800 --> 00:01:57,840 Speaker 3: percent of those weeks have been less than five percent. 37 00:01:58,000 --> 00:02:00,600 Speaker 3: So you know, sometimes when you're building a retail business. 38 00:02:00,640 --> 00:02:03,080 Speaker 3: We don't layer last year versus this year on our 39 00:02:03,120 --> 00:02:06,040 Speaker 3: marketing campaigns or great additions to our menu. But we 40 00:02:06,120 --> 00:02:07,800 Speaker 3: know what we have in the pipeline coming out in 41 00:02:07,920 --> 00:02:11,239 Speaker 3: FY twenty six, and we're very confident that obviously sales 42 00:02:11,280 --> 00:02:14,240 Speaker 3: will will increase as well as our comp sales. So 43 00:02:14,600 --> 00:02:16,919 Speaker 3: as always, as I said to the team, we're here 44 00:02:16,919 --> 00:02:19,200 Speaker 3: to execute on strategy and I could not be more 45 00:02:19,240 --> 00:02:21,359 Speaker 3: proud of the team at GG in our franchise Ease. 46 00:02:21,919 --> 00:02:24,680 Speaker 2: What do you say though, to analysts that say that 47 00:02:24,760 --> 00:02:27,840 Speaker 2: your expansion into the US is too aggressive in a 48 00:02:28,000 --> 00:02:31,840 Speaker 2: very heavily saturated QSI market. 49 00:02:31,160 --> 00:02:33,600 Speaker 3: Well, I actually don't think it's aggressive. You know, everything 50 00:02:33,600 --> 00:02:36,400 Speaker 3: we do at GG is very calculated and very disciplined. 51 00:02:36,400 --> 00:02:39,400 Speaker 3: So we have border approval for fifteen restaurants in the 52 00:02:39,480 --> 00:02:42,200 Speaker 3: Chicago area. We currently have seven open and obviously in 53 00:02:42,240 --> 00:02:45,400 Speaker 3: additional eight will open. Now for US, it's all about 54 00:02:45,400 --> 00:02:47,880 Speaker 3: building brand. We've done it in Australia, so we know 55 00:02:47,919 --> 00:02:51,000 Speaker 3: what it looks like and everything's about revenue. So just 56 00:02:51,080 --> 00:02:54,520 Speaker 3: like in Australia, we're investing heavily in labor to drive 57 00:02:54,600 --> 00:02:57,520 Speaker 3: revenue and com sales, just to make sure the food 58 00:02:57,560 --> 00:02:59,560 Speaker 3: is hot and fresh and making sure we deliver that 59 00:02:59,600 --> 00:03:02,880 Speaker 3: Gyga experience. When I think about the landscape, particularly in 60 00:03:02,880 --> 00:03:06,200 Speaker 3: the US market, our food is superior than everybody else's 61 00:03:06,360 --> 00:03:09,640 Speaker 3: and nobody delivers an experience right, and we believe that 62 00:03:09,880 --> 00:03:12,040 Speaker 3: you know, the mission at GG is to reinvent fast 63 00:03:12,080 --> 00:03:14,040 Speaker 3: food and change the away the masses Z but we're 64 00:03:14,080 --> 00:03:17,400 Speaker 3: still in hospitality, so it's great to see. Obviously, you know, 65 00:03:17,480 --> 00:03:19,840 Speaker 3: comp sales increase in the fourth quarter of last year. 66 00:03:20,000 --> 00:03:22,240 Speaker 3: The first seven weeks have been six point six percent. 67 00:03:22,440 --> 00:03:24,720 Speaker 3: We've got the right team in place. You know, building 68 00:03:24,720 --> 00:03:27,200 Speaker 3: a team takes time. I've never been more confident the 69 00:03:27,240 --> 00:03:29,120 Speaker 3: team we have in the US, and now it's just 70 00:03:29,160 --> 00:03:30,840 Speaker 3: making sure we get more people through the door and 71 00:03:30,880 --> 00:03:33,560 Speaker 3: we deliver that GG experience. But everybody knows when you 72 00:03:33,560 --> 00:03:36,280 Speaker 3: build brand it takes time. But obviously, you know, we're 73 00:03:36,360 --> 00:03:39,360 Speaker 3: very optimistic in the US part of that fifteen storre 74 00:03:39,400 --> 00:03:42,120 Speaker 3: strategies to make sure that we get our auv's up 75 00:03:42,160 --> 00:03:45,040 Speaker 3: to three million US, which will give us similar economics 76 00:03:45,120 --> 00:03:48,440 Speaker 3: we have here in Australia. But as always, you build brand, 77 00:03:48,480 --> 00:03:51,800 Speaker 3: it takes time. But we're definitely on the right path now. 78 00:03:51,680 --> 00:03:55,000 Speaker 2: When you come to the Australian market. Since we last spoke, 79 00:03:55,120 --> 00:03:59,080 Speaker 2: Wingstop has also into the arena, huge queues at some 80 00:03:59,120 --> 00:04:02,400 Speaker 2: of the stores in Sydney. How are you viewing some 81 00:04:02,520 --> 00:04:05,200 Speaker 2: of the disruptors and competitors. 82 00:04:04,680 --> 00:04:07,080 Speaker 3: Well, I mean Wingstop's got one store, and I think 83 00:04:07,120 --> 00:04:09,800 Speaker 3: maybe Australians were very excited to have it when they's 84 00:04:09,840 --> 00:04:12,119 Speaker 3: has one store. You know, Australia is a different marked 85 00:04:12,120 --> 00:04:14,080 Speaker 3: to the US. I think sometimes these competitors come in 86 00:04:14,120 --> 00:04:15,840 Speaker 3: think they're going to open up a number of stores. 87 00:04:16,040 --> 00:04:18,080 Speaker 3: When I look at Gyg's pipeline, you know, we have 88 00:04:18,160 --> 00:04:21,080 Speaker 3: ten full time real estate people that have been with GG. 89 00:04:21,200 --> 00:04:24,200 Speaker 3: We opened up thirty two restaurants this year, mostly drive throughs. 90 00:04:24,360 --> 00:04:27,200 Speaker 3: We got a pipeline of ninety eight restaurants. Eighty eight 91 00:04:27,240 --> 00:04:29,479 Speaker 3: of those are drive throughs, and it's just not easy 92 00:04:29,480 --> 00:04:32,080 Speaker 3: to pick them up. You need a dedicated team and 93 00:04:32,360 --> 00:04:35,680 Speaker 3: obviously real planning. So as always, man, anybody that comes 94 00:04:35,720 --> 00:04:37,359 Speaker 3: into market, I wish them the best of luck. But 95 00:04:37,440 --> 00:04:38,640 Speaker 3: Gg's not stopping. 96 00:04:39,200 --> 00:04:42,599 Speaker 2: And are you confident of hitting these store targets the 97 00:04:42,680 --> 00:04:44,280 Speaker 2: new store rollouts. 98 00:04:44,279 --> 00:04:46,400 Speaker 3: Oh, without a doubt. Man. As we said to the market, 99 00:04:46,440 --> 00:04:48,279 Speaker 3: you know, over the next five years we'll be opening 100 00:04:48,360 --> 00:04:50,840 Speaker 3: up forty stores per annum, and this year we did 101 00:04:50,880 --> 00:04:53,839 Speaker 3: thirty two. We'll match that next year on a road 102 00:04:53,880 --> 00:04:56,200 Speaker 3: to forty. But I think what people forget is you 103 00:04:56,320 --> 00:04:59,120 Speaker 3: need to have a strong pipeline and everything at GYG 104 00:04:59,240 --> 00:05:01,479 Speaker 3: is about triple a real estate, but you have to 105 00:05:01,520 --> 00:05:03,880 Speaker 3: have the pipeline to open up the restaurants. That's what 106 00:05:03,880 --> 00:05:07,040 Speaker 3: people forget, and GYG has the pipeline and adding more 107 00:05:07,080 --> 00:05:09,920 Speaker 3: and more restaurants to it. So when we approve restaurants, 108 00:05:09,960 --> 00:05:12,039 Speaker 3: say this month, those are the restaurants that are going 109 00:05:12,120 --> 00:05:14,400 Speaker 3: to open up in two years time. So we're very 110 00:05:14,440 --> 00:05:17,400 Speaker 3: confident in our real estate strategy and obviously very confident 111 00:05:17,600 --> 00:05:19,920 Speaker 3: in our pipeline to open up the restaurants we say 112 00:05:19,920 --> 00:05:20,560 Speaker 3: we're going to open. 113 00:05:20,960 --> 00:05:24,680 Speaker 2: Well, speaking of that pipeline, Steven, what's your capex looking like? 114 00:05:24,839 --> 00:05:26,400 Speaker 2: Are you planning to increase this? 115 00:05:27,160 --> 00:05:29,240 Speaker 3: No, So our catpacks for a drive throughs are now 116 00:05:29,360 --> 00:05:31,800 Speaker 3: obviously they're in line. That cost us about two million 117 00:05:31,839 --> 00:05:34,640 Speaker 3: dollars to open up a drive through, which obviously you know, 118 00:05:34,680 --> 00:05:36,360 Speaker 3: as we said during our call, I mean, one thing 119 00:05:36,360 --> 00:05:39,239 Speaker 3: we're very proud about is our ROI for our franchisease. 120 00:05:39,440 --> 00:05:41,880 Speaker 3: You know in the medium that is fifty percent, so 121 00:05:42,080 --> 00:05:45,560 Speaker 3: we've got cost in line. Obviously, you know, our auv's 122 00:05:45,640 --> 00:05:48,440 Speaker 3: for a drive through on average about six point eight million. Mean, 123 00:05:48,520 --> 00:05:51,400 Speaker 3: it's obviously incredibly high. You know, I think the only 124 00:05:51,400 --> 00:05:54,080 Speaker 3: person in the country that has higher AUVs is probably McDonald's. 125 00:05:54,160 --> 00:05:56,720 Speaker 3: We're and we're closing in on them on our strip side. 126 00:05:56,800 --> 00:05:58,960 Speaker 3: So whenever we can find a Triple A drive through, 127 00:05:58,960 --> 00:06:00,520 Speaker 3: we open up Triple A strip. We have the number 128 00:06:00,560 --> 00:06:02,640 Speaker 3: one strips in the country. So I think it all 129 00:06:02,680 --> 00:06:05,039 Speaker 3: comes down to what I said earlier. Our team is 130 00:06:05,040 --> 00:06:07,520 Speaker 3: a very high performing team here at GYG, and the 131 00:06:07,560 --> 00:06:10,360 Speaker 3: only thing we're relentless on is making sure we nail 132 00:06:10,400 --> 00:06:12,720 Speaker 3: our food, and we nail that guest experience and that 133 00:06:12,760 --> 00:06:14,679 Speaker 3: internal drive revenue and com sales. 134 00:06:15,120 --> 00:06:17,599 Speaker 2: And speaking of revenue, when we last spoke, I asked 135 00:06:17,640 --> 00:06:20,440 Speaker 2: you whether or not you would be delivering a dividend, 136 00:06:20,520 --> 00:06:22,839 Speaker 2: and you have your maide and dividend, what would you 137 00:06:22,880 --> 00:06:26,240 Speaker 2: say to shareholders about what they can expect in regards 138 00:06:26,279 --> 00:06:28,320 Speaker 2: to or with regards to future payouts. 139 00:06:28,680 --> 00:06:31,039 Speaker 3: Well, we'll leave that to the end of the financial year. 140 00:06:31,160 --> 00:06:33,840 Speaker 3: I mean, obviously GG is an incredibly strong balance sheet 141 00:06:34,200 --> 00:06:36,920 Speaker 3: and whatever we need to use that balance sheet obviously 142 00:06:37,200 --> 00:06:40,040 Speaker 3: with the businesses generating profit and generating care to open 143 00:06:40,120 --> 00:06:42,400 Speaker 3: up these restaurants. But I'll leave that to the board. 144 00:06:42,440 --> 00:06:45,400 Speaker 3: In our CFO and my fellow co c O, Hilton 145 00:06:45,440 --> 00:06:47,279 Speaker 3: Bill decide on that in a later date. 146 00:06:47,640 --> 00:06:49,800 Speaker 2: And speaking of you and your co CEO, you've written 147 00:06:49,800 --> 00:06:53,880 Speaker 2: a letter to shareholders and talking about I guess how 148 00:06:53,880 --> 00:06:57,120 Speaker 2: you're the fast food for this generation and you've got 149 00:06:57,160 --> 00:06:59,520 Speaker 2: your back. It's up to us. Talk us through about 150 00:06:59,560 --> 00:07:03,280 Speaker 2: the healthy options and why you think you're surviving in 151 00:07:03,320 --> 00:07:06,560 Speaker 2: this environment amidst a cost of living crisis where people 152 00:07:06,640 --> 00:07:08,520 Speaker 2: may not want to spend as much eating out. 153 00:07:08,920 --> 00:07:11,400 Speaker 3: Well, I think that's a great question. Mean, what GG 154 00:07:11,520 --> 00:07:15,800 Speaker 3: is figured out is basically never compromising on quality. Obviously 155 00:07:16,040 --> 00:07:18,800 Speaker 3: our menu is clean, but what people forget is that 156 00:07:19,280 --> 00:07:23,679 Speaker 3: GG offers real value besides value for our normal product offerings. 157 00:07:23,680 --> 00:07:26,760 Speaker 3: We have many sized portions. We have three dollar tacos, 158 00:07:27,000 --> 00:07:29,400 Speaker 3: we have a twelve dollars chicken mini meal deal. But 159 00:07:29,720 --> 00:07:32,160 Speaker 3: what I think people are realizing is that fast food 160 00:07:32,160 --> 00:07:34,560 Speaker 3: doesn't have to be bad food. And everybody thinks it 161 00:07:34,560 --> 00:07:36,800 Speaker 3: comes out of such a premium to traditional fast food, 162 00:07:36,840 --> 00:07:39,520 Speaker 3: but it doesn't. And I think as a food business, 163 00:07:39,520 --> 00:07:42,280 Speaker 3: you have a social responsibility to serve real food to 164 00:07:42,360 --> 00:07:46,640 Speaker 3: your guests. And that's obviously resonating heavily with our guests. 165 00:07:46,880 --> 00:07:49,200 Speaker 3: And when you see GYG restaurants, they're packed and it's 166 00:07:49,240 --> 00:07:52,680 Speaker 3: with all different demographics. But what I love Modo about 167 00:07:52,720 --> 00:07:55,440 Speaker 3: the youth of Australia and the world is they want 168 00:07:55,440 --> 00:07:57,520 Speaker 3: to eat food that makes them feel good. It's a 169 00:07:57,680 --> 00:08:00,560 Speaker 3: very simple philosophy and obviously it's resonating. You can see 170 00:08:00,560 --> 00:08:03,920 Speaker 3: it in our average unit volumes and obviously in our 171 00:08:03,920 --> 00:08:06,920 Speaker 3: comp sales. It's not a fat and people want to 172 00:08:06,960 --> 00:08:09,760 Speaker 3: eat real food. That's nothing new. Gyg's just figured out 173 00:08:09,960 --> 00:08:12,000 Speaker 3: how to do it at traditional fast food speed. 174 00:08:12,600 --> 00:08:14,800 Speaker 2: And are you sticking to your knitting or your burritos 175 00:08:14,800 --> 00:08:17,080 Speaker 2: so to speak, or are you continuing with menu innovation? 176 00:08:17,720 --> 00:08:19,360 Speaker 3: Oh? We got I think we have one of the 177 00:08:19,400 --> 00:08:21,880 Speaker 3: best menu innovations that's going to hit in the second 178 00:08:21,960 --> 00:08:25,160 Speaker 3: quarter this year and I've just had it for lunch 179 00:08:25,200 --> 00:08:28,120 Speaker 3: today and it is exceptional. So we're very excited. Second 180 00:08:28,200 --> 00:08:30,440 Speaker 3: quarter this year we're going to be offering but I 181 00:08:30,480 --> 00:08:32,200 Speaker 3: think it will be one of the best menu items 182 00:08:32,240 --> 00:08:33,640 Speaker 3: we've ever edited at GYG. 183 00:08:34,800 --> 00:08:37,200 Speaker 2: How are you coping though? And I mentioned the cost 184 00:08:37,200 --> 00:08:41,320 Speaker 2: of living crisis with the overall macroeconomic trends, are you 185 00:08:41,440 --> 00:08:43,880 Speaker 2: seeing a pullback? I mean, certainly when it look when 186 00:08:43,920 --> 00:08:46,760 Speaker 2: you look at the market, the valuation of your shares 187 00:08:47,000 --> 00:08:49,199 Speaker 2: is lower than where we were six months ago. 188 00:08:49,640 --> 00:08:51,120 Speaker 3: Yeah, you know the way we look at me. And 189 00:08:51,120 --> 00:08:53,640 Speaker 3: obviously our revenue continues to be strong. But when I 190 00:08:53,640 --> 00:08:57,120 Speaker 3: think about cost pressure, I mean last year GYG took 191 00:08:57,200 --> 00:09:00,120 Speaker 3: one percent price increase. You know, most of our our 192 00:09:00,120 --> 00:09:02,920 Speaker 3: competitors took bigger price increases and where we might have 193 00:09:02,960 --> 00:09:05,240 Speaker 3: suffered a little bit on margin. Because of that, we're 194 00:09:05,240 --> 00:09:08,120 Speaker 3: building a long term business and for us, the last 195 00:09:08,120 --> 00:09:11,360 Speaker 3: thing we do with GG is passed off obviously costing 196 00:09:11,400 --> 00:09:14,040 Speaker 3: pressure to our guests. You know, we're not making short 197 00:09:14,120 --> 00:09:16,800 Speaker 3: term decisions. We're making long term decisions and that'll come 198 00:09:16,880 --> 00:09:19,360 Speaker 3: through in the years to come. That when GG, when 199 00:09:19,360 --> 00:09:22,000 Speaker 3: they think about GYG. Besides, obviously the quality of food 200 00:09:22,280 --> 00:09:25,240 Speaker 3: is the value that we provide our guests. So once again, 201 00:09:25,320 --> 00:09:27,400 Speaker 3: even though we're a public company, we still act the 202 00:09:27,400 --> 00:09:29,920 Speaker 3: way we've always acted. Is the last thing we move 203 00:09:30,040 --> 00:09:32,480 Speaker 3: is priced because we want real value passed on to 204 00:09:32,559 --> 00:09:33,120 Speaker 3: our guests. 205 00:09:34,040 --> 00:09:36,760 Speaker 2: And you don't worried about the big foal that you've 206 00:09:36,760 --> 00:09:38,200 Speaker 2: seen on the ship price today. 207 00:09:38,920 --> 00:09:41,319 Speaker 3: Listen, man, I look at the markets, but as I 208 00:09:41,360 --> 00:09:43,640 Speaker 3: say to the team, you know the value of GYG 209 00:09:43,760 --> 00:09:47,280 Speaker 3: we will be represented in time and we can't control it, 210 00:09:47,720 --> 00:09:49,480 Speaker 3: you know. Like I said, we had a record year 211 00:09:49,559 --> 00:09:51,760 Speaker 3: last year. I could not be more proud of this team. 212 00:09:51,960 --> 00:09:54,520 Speaker 3: And as long as we stick to our strategy and execute, 213 00:09:54,880 --> 00:09:56,520 Speaker 3: then everything will take care of itself. 214 00:09:59,000 --> 00:10:02,040 Speaker 1: That was Goozmni Going is co CEO Stephen Marx speaking 215 00:10:02,040 --> 00:10:05,280 Speaker 1: to Juliet Sally on Osby's, which is Australia's leading provider 216 00:10:05,320 --> 00:10:07,480 Speaker 1: of live and on demand video of the latest news 217 00:10:07,520 --> 00:10:10,720 Speaker 1: in Australian business, markets, economy and startups. Sign up for 218 00:10:10,720 --> 00:10:13,280 Speaker 1: free at Osby's dot com dot Au and if you've 219 00:10:13,320 --> 00:10:15,160 Speaker 1: got something you'd like to know, a question you'd like 220 00:10:15,200 --> 00:10:17,080 Speaker 1: us to dig into on this show, then please send 221 00:10:17,080 --> 00:10:20,160 Speaker 1: through your question on LinkedIn, Instagram, Facebook, or at Fearandgreed 222 00:10:20,240 --> 00:10:22,599 Speaker 1: dot com. Today you are Michael Thompson and this is 223 00:10:22,720 --> 00:10:23,880 Speaker 1: Fear and Greed Q and a