The S&P/ASX 200 Index (ASX: XJO) share Guzman Y Gomez Ltd (ASX: GYG) is one of the latest investments I've made in my portfolio. It's a Mexican restaurant business with spicy ambitions.
There are plenty of businesses on the ASX that have a strong market position in Australia (and New Zealand), but few have successfully expanded in Asia, Europe or North America.
GYG offers a blend of grand plans in Australia, as well as the beginnings of store networks in Asia and the US.
In ten years, the business could be much larger and more profitable. I'll outline why I'm optimistic about the company's future below.
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Big plans for Australia
When I think about ASX growth shares, I want to see a clear plan of going from where it is today to something significantly bigger in the long-term.
The ASX 200 share has outlined a goal to reach 1,000 GYG restaurants in Australia in the next 20 years.
It had 227 Australian locations in the first quarter of FY26, so there is significant potential for expansion over the next decade. If it continues to open new restaurants in locations that make (profitable) sense, then the expansion plan is worthy of being executed.
The business is working hard at growing its sales outside of lunch and dinner times, such as breakfast and at night, enabling it to compete with rivals who are better known for 24-hour service. New food products can also drive sales, such as the new Caesar menu items.
In the FY26 first quarter, GYG Australia delivered 17.4% growth of network sales to $305.5 million and I'm optimistic double-digit growth can continue in the years ahead.
International growth
If it can execute on its growth plans in Australia, it could become a large business. But, the rest of the world is a much larger addressable market.
The ASX 200 share already has a presence in Singapore, Japan and the US, with 22, five and seven restaurant locations in those countries, respectively.
While the international sales are only a fraction of the size of the Australian segment, they are sizeable and growing quickly. In five and ten years, I think GYG's international division will be materially bigger. There's also potential for the ASX 200 share to expand to other countries such as New Zealand, Canada or the UK in the coming years.
In the first quarter of FY26, Asian network sales grew 29% to $20.8 million and US network sales increased 65% to $4.3 million.
Rising profit margins
I'm not just expecting network sales to grow significantly in the next few years, but the company's profit margins could rise too, delivering significant improvements to the bottom line.
In FY26 alone, the ASX 200 share is expecting its Australia segment (which includes Japan and Singapore) underlying operating profit (EBITDA) margin as a percentage of network sales to increase to between 5.9% to 6.3%. That would be a noticeable increase compared to FY25 amid its continued investment in opening dozens of new restaurants annually.
The broker UBS forecasts the company's EBIT margin could reach 16.9% by FY30, up from 9.9% in FY27.
I'm optimistic about how much profit the company could make in the long-term.
