Guzman Y Gomez Ltd (ASX: GYG) shares are on the move on Tuesday.
In morning trade, the Mexican fast food company's shares are up 3.5% to $31.09.
Why are Guzman Y Gomez shares jumping?
Investors have been buying the company's shares following the release of its quarterly update this morning.
According to the release, the company continued to drive strong sales growth during the third quarter as it executes its vision to reinvent fast food and change the way the masses eat.
The company notes that global network sales increased, demonstrating guest demand for clean, fresh food, supported by solid operational execution.
Restaurant network expansion also continued, with three new Guzman Y Gomez restaurants opening in Australia and two in the United States during the period.
Furthermore, strong operational and marketing initiatives during the quarter included the introduction of a new menu item, Street Corn, the expansion of 24/7 trading, and the continuation of the Good Mornings Start with GYG campaign.
Management also notes that its long-standing commitment to ethically sourced, high-quality ingredients continued in the quarter with the launch of the Clean is the New Healthy campaign in the US.
In Australia this ongoing commitment has continued into the start of the fourth quarter, with a new marketing campaign highlighting its 100% Free Range Chicken.
Sales growth
The release notes that comparable sales growth in the Australia segment continued across all channels, dayparts, formats and ownership types.
Daypart growth was a highlight during the quarter, with an acceleration of sales growth in breakfast and after 9pm trading.
In the US segment, network sales increased during the quarter, largely due to the opening of two new restaurants. Guest experience metrics improved throughout the quarter, driven by a deliberate investment in restaurant labour.
This ultimately led to total network sales reaching $289.5 million for the third quarter, up 23.6% on the prior corresponding period. Comparable store sales were up 11.1% in Australia.
In light of this, management has reaffirmed its guidance for the Australia segment in FY 2025. It also expects to exceed its FY 2025 net profit after tax prospectus forecast.
Dividend plans
Also giving Guzman Y Gomez shares a lift today is news that it is planning to reward shareholders with dividends in the near term.
The company has announced the implementation of a dividend policy, supported by its strong balance sheet position and cash flow generation.
Commenting on the policy, the company said:
The dividend policy considers GYG's future funding requirements, including restaurant network expansion, operating results, cash flows and the financial position of GYG, as well as the availability of franking credits. It is GYG's expectation that the application of this policy will result in the distribution of the majority of earnings to shareholders, while retaining significant flexibility for continued investment in growth.
This dividend policy is expected to be applied following the release of its full year results in August. It then anticipates its maiden dividend being paid in September.
