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Guzyman y Gomez founder Steven Marks has revealed a revenue of $759 million in the 2023 financial year, a lift of 32 per cent on the previous year.

Underlying earnings rocketed 56 per cent to $32 million in what Marks described as “a phenomenal year”.

GYG reported the median weekly average unit volumes for a drive-thru restaurant was $106,000. A strip restaurant had AUV of $80,000, up 16 per cent on the previous corresponding period.

Franchisees achieved a median return on investment of 47 per cent.

Fast growing store network

Marks said: “FY24 will bring us the opportunity to innovate across all parts of our menu, drive more sales through our digital channels and sustainably grow comps across our network.”

The GYG app and website accounted for 17 per cent of Australian network sales in June 2023. The figure is a 12 per cent rise on the contribution in June 2022.

The Mexican fast food chain now boasts 200 restaurants globally with the recent launch of the Cairns outlet.

The chain was listed by GapMaps as one of the fastest-growing QSR brands by store numbers this year

Another 30 outlets, including drive-throughs, are in the plans for the Australian market. There 23 GYG restaurants in the US, Singapore and Japan.

In the new US market GYG reported $6 million in network sales. In Singapore and Japan, network sales rose 35 per cent to $50 million.

Steven Marks signals ASX listing

Marks earlier this year announced he would step back from his CEO role and the business continues its search for his replacement.

At the time he referenced his dream of an IPO. “Whenever that happens, I want to ensure I have a world class and experienced team in place to lead GYG well into the future.”

This week he has hinted at a possible listing on the Australian Stock Exchange in late financial year 2024 or 2025.

Marks told the Sydney Morning Herald that GYG was prepping for a stock listing, the timing dependent on the board and investors.

This story was originally published on Franchise Executives.

Australian tanning brand Bondi Sands is expanding its presence in the US market with a nationwide launch in Walmart. This partnership represents the eighth major US retailer to list the brand’s product range within the past six years. 

Walmart will make eight of Bondi Sand’s bestsellers available – in-store and online – including the Self Tanning Foam, Self Tanning Foam 1-Hour Express, Everyday Gradual Tanning Milk, and Self Tan Eraser. 

Through this expansion, the company said it aims to make salon-quality, affordable, vegan, and cruelty-free tanning products accessible to a broader audience.

“We are thrilled to cultivate a new relationship with Walmart and introduce our self-tanning range to a new category of shoppers,” said Blair James, co-founder of Bondi Sands.

“Propelling our global presence with Walmart is an unmatched growth opportunity for us, and we’re excited to offer the beauty consumer what they’re looking for – salon quality tanning products at an affordable price.”

Established in 2012, Bondi Sands offers a range of self-tanning and suncare products. 

The head office of Zambrero is situated in the buzzy precinct of Circular Quay, overlooking Sydney’s Harbour Bridge.

But Matthew Kenny, chief executive of Australia’s largest Mexican food chain, has his sights set further afield: on Ireland, Britain and the United States, as he oversees the franchise’s international expansion.

“Truly becoming a global brand is probably the thing that I’m excited about most,” Kenny said in his first major interview as CEO. “Even in uncertain times, what many would describe as difficult economic conditions, we still have an appetite for growth.”

Zambrero was founded in 2005 by serial entrepreneur and philanthropist Dr Sam Prince as a medical student with $16,000 in savings. He went on to start other businesses including not-for-profit One Disease (which successfully eliminated crusted scabies in the Northern Territory); Next Practice (to create a new model of GP medical centres); Shine+ (a natural energy drink); and other hospitality ventures Mejico and INDU.

Kenny, a former banking and finance lawyer, joined the business in 2018 as general counsel and chief operating officer across Prince’s entire group but found he was spending most of his time on Zambrero. He stepped into the chief executive role in 2020, at the beginning of the pandemic.

Although Kenny is at the helm, founder Prince remains very involved in the business; the Mexican food chain’s overall strategic vision and direction is set by Prince and then executed by Kenny. New Zambrero products don’t get sign-off without the approval of Prince, whose philanthropic focus remains at the core of the business: for every burrito or bowl Zambrero sells, it donates a meal. In early August, the chain celebrated a key milestone of 70 million donated meals.

On top of its 220-odd Australian restaurants, it has 20 in Ireland, seven in Britain and one in the US, with plans to eventually launch in mainland Europe. The British and Irish market will remain a key priority this financial year.

Towards the end of last year, Skip Capital (co-founded by Atlassian’s Scott Farquhar and his wife, Kim Jackson, an asset manager) and London-based Metric Capital Partners invested $250 million into the business, in a deal that valued Zambrero at roughly a billion dollars. Prince retains a majority shareholding of more than 70 per cent.

Homegrown

Closer to home, its aspirations are no less ambitious: Zambrero has plans to open about one restaurant a week, with a goal of reaching 400 in Australia. To court customers, it is eyeing real estate in Australia’s biggest cities in populous areas such as Sydney’s northern beaches.

But it faces a fierce rival in Guzman y Gomez, which not only has a strong brand and loyal customer base but is not shy about its own ambitions to expand rapidly, float on the ASX soon and conquer the US market. Meanwhile, smaller competitor Mad Mex, which has about 70 stores, has recently installed a new chief executive with a “ruthless focus on operational efficiency”.

Kenny claims they’re not paying too much attention to their competitors. “We’re really focused on ourselves,” he said. Part of the solution, the chief executive believes, is simply to build out. “Presence is important,” Kenny added, pointing out that the overall popularity of Mexican food has increased in the past two decades.

“The reason [Sydney and Melbourne] are so important to us and such big growth opportunities is because as soon as we put restaurants there to make it available to customers, it’s our job to attract those customers into becoming frequent users.

“Yes, people are loyal to certain brands, and it’s our job to try to attract them from those brands.”

Zambrero will also be fighting other food outlets and restaurants for hospitality workers. Kenny highlighted staffing as the Mexican food chain’s biggest challenge, not just in Australia but around the world, but said there were signs that the worker shortage was beginning to ease as Australia received the largest influx of migrants in history.

“We’re currently opening a restaurant a week across the world, which is quite frantic when you think about it. Ensuring that we have enough staff and the right staff to maintain that growth is the most important thing,” he said.

”I think everyone’s experienced challenges. Now we’re starting to see that soften. But still, I think it’s important to ensure that we continue to strive to be an employer of choice.”

Despite cost of living pressures on household budgets, which at Guzman y Gomez has led to a decline in order values as customers flock to cheaper offerings, Kenny said the business had not seen a significant drop in sales, which he described as “steady”. He declined to provide sales or revenue figures.

“People talk about fast food and [quick-service restaurants] as being kind of counter-cyclical in a downturn market ... recession-resistant. My view is that whilst that might have been happening in the past, we don’t know if that’s actually going to proceed to the future. So to me, I am cautiously optimistic about our business,” Kenny said.

“Customers are more picky with their choices. They have less tolerance for poor product or service. For us, if we ensure we deliver a great product all the time, that experience will hopefully lead us in good stead to take advantage of the market going forward.”

Krispy Kreme ANZ has appointed Nicola Steele, who has been with the company since she was 19, as its new CEO, effective immediately.

Steele has worked with Krispy Kreme since 2006, rising through the ranks from crew member to store manager and area manager. She left university in 2011 and returned to Krispy Kreme as a state manager before progressing to senior leadership positions including national operations manager and head of retail & development, where she was instrumental in the brand’s expansion into Western Australia and New Zealand. 

Steele increased Krispy Kreme’s ANZ retail footprint over the next eight years before being appointed to COO in March last year.

“My focus is to broaden the horizons of career pathways for our employees,” she said. 

“I want to be able to offer all team members development and career opportunities that were afforded to me.” 

With the new role, Steele is in charge of the brand’s expansion, including concentrating on regional growth, establishing convenience partnerships, as well as investing in e-commerce and digital platforms.

Unilever has hired Morgan Stanley and Evercore to sell a portfolio of non-core beauty and personal care brands as the company struggles with the impact of inflation.

The portfolio includes Q-Tips, Impulse, Caress, TIGI, Timotei, Monsavon, St Ives, Zwitsal, Ponds, Brut, Moussel, Alberto Balsam and Matey.

Two years ago, Unilever hired Credit Suisse to divest Elida Beauty portfolio but later scrapped its plan as other companies cherry-picked brands from the portfolio and did not satisfy the multinational FMCG company’s expectations.

Now the plan has been revived under the leadership of new CEO Hein Schumacher, who focuses on streamlining the business due to inflation, Reuters said in an exclusive report.

The report noted that Elida Beauty booked revenue of about $760 million in FY22, according to sources of the newswire.

Morgan Stanley and Evercore have already reached out to potential buyers to measure interest for the portfolio, which could be a multibillion-dollar deal, the sources said.

Bega Cheese says it has gained market share and margin momentum in the second half of the year following significant cost increases in the first quarter.

For FY23, the dairy company achieved a revenue of $3.4 billion, marking a 12 per cent rise from the previous year. It closed the fiscal year with a net debt of $203.6 million and a reduced leverage ratio of 1.6 times.

Statutory EBITDA (earnings before interest, tax, depreciation, and amortisation) was $144.1 million, with a post-tax loss of $229.9 million significantly impacted by non-cash asset impairment of $230 million.

Meanwhile, normalised EBITDA was $160.2 million, with a profit after tax of $28.5 million. 

According to Bega, its strategic decisions in the past five years played a pivotal role this year as it navigated “difficult and rapidly changing” conditions.

The implementation of price adjustments, cost reduction initiatives, and a stream of new products significantly improved the financial performance of the Branded segment, particularly in the latter part of the year.

However, the continued decline of milk production and excess milk manufacturing capacity have created a highly competitive environment and a disconnect between returns from globally treated commodity markets and Australian farm gate milk prices.

Bega said this scenario will continue for some time, resulting in a non-cash impairment and a strategic decision to right-size some of its commodity assets.

Reflecting on the results, executive chairman Barry Irvin emphasised the company’s strategy to shift to a predominantly branded business model.

“The non-cash impairment of our bulk commodity assets reflects industry circumstances and reinforces the importance of our strategy to transform to a predominantly branded business,” said Irvin.

“The right-sizing of our commodity assets and their further integration with our branded business creates a great platform for the support and growth of our brands while maintaining the capability to respond to changing market circumstances.”  

Looking ahead, Bega has outlined a restructuring and simplification program to accelerate its transition to an integrated, predominantly branded business.

Listed Australian olive oil grower and processor Cobram Estate Olives, has recorded a 21 per cent year-on-year boost in sales, to $169 million for the last financial year as its foray into the US pays off. 

The majority of the sales – $117 million – were from its Cobram Estate brand – the top-selling olive oil in Australian supermarkets – and its newer Red Island brand, which collectively rose by 17 per cent. 

Sales of Cobram Estate in the US surged 69 per cent and turnover in the market reached $43 million, up by 46 per cent. 

In a results presentation, the company reported a higher-yielding crop last year to 12.5 million litres, offset by a lower margin as the price of producing packaged goods rose. 

However, looking forward, the company says the Australian olive oil crop is down this year, however, it still expects to have sufficient oil for its packaged goods targets. 

“The sales outlook remains positive, benefiting from a global shortage of olive oil and record high global prices of European olive oil flowing through to both Australia and the US,” the company said.

Established in 1988, Cobram Estate Olives is Australia’s largest producer and marketer of premium quality extra virgin olive oil and owns more than 2.6 million olive trees across 7000ha of farmland in Victoria, and a further 334,000 trees on 558ha in California.

Maggie Beer Holdings’ new chief executive says the gourmet food producer will be able to withstand lower consumer spending after posting a drop in sales and cutting the value of its gifts and hampers business.

Kinda Grange, who took the helm in March, said the strength of the Maggie Beer brand in sauces, cooking stock and bone broth would help offset a trend where shoppers are trading down to cheaper products in other categories as higher interest rates and energy bills hit household budgets. But she acknowledged there were uncertainties in the economy and fluctuations in different product segments.

“It’s up and down across the business,” she said. Ms Grange said the lead-up to Christmas would be crucial for the company’s fortunes because of its natural skew toward gift-giving.

Maggie Beer Holdings suffered a 1.4 per cent drop in revenues to $88.7 million for the year to June 30. The online hampers business, Hampers & Gifts Australia, acquired for $40 million in 2021, recorded a 7.5 per cent fall in sales.

The company reported a net profit of $462,000 compared with a loss of $12.3 million a year earlier when its finances were affected by one-off expenses.

The online Hampers & Gifts business provided a one-off $14 million injection to bottom-line profits this year because it did not meet financial hurdles agreed upon with the vendors, resulting in a reversal of a provision the company had previously made for an expected earn-out payment.

But Maggie Beer Holdings wrote down the value of the Hampers & Gifts by $12.5 million.

Maggie Beer Holdings shares slipped 10 per cent to 13.5¢ by mid-afternoon on Monday.

The shares have halved in the past year from 33¢ at the end of August last year and were as high as 60¢ in February 2022.

Ms Grange said she kept an eye on the share price but that, ultimately, a disciplined implementation of growth plans would turn things around.

The strategy was set, and strong disciplines on cost would help mitigate inflation, she said. “The share price will hopefully follow.”

Ms Grange also wants to find a way to further harness the star power of celebrity chef Maggie Beer, who is a director of the ASX-listed company.

Ms Grange said Maggie Beer Holdings hadn’t lost faith in Hampers & Gifts, which she described as a good growth business for the long term that would be an important platform in the future. Users weren’t cutting back on the size of orders despite the more difficult economic conditions, she added.

The company is banking on an expansion of Maggie Beer-branded ice creams into larger supermarkets, scheduled for October, to contribute to higher sales this year.

Ms Grange, a former Goodman Fielder executive, wants to more than triple annual sales in five years to $300 million and expand into lifestyle, entertaining and gardening products.

The company is already expanding its range of baking and cooking products under the Maggie Living banner, through which it is selling wooden spoons and rolling pins.

Maggie Beer Holdings has retained its troublesome Paris Creek Farms premium milk and dairy products business after being unable to find a buyer at the right price. It generated a 10.5 per cent increase in sales in 2022-23 to $16.3 million, but margins shrunk.

The Maggie Beer business was established by the chef in the 1970s, selling through a small shop beside her Pheasant Farm restaurant in the Barossa Valley in South Australia.

They sold the gourmet foods business to the ASX-listed Longtable group in a two-tranche deal in 2016 and 2019, and it later changed its name to Maggie Beer Holdings.

Marley Spoon boss Rolf Weber says Australians are hanging onto their meal kit subscriptions, but they are also switching to budget pre-made food brands in another sign of penny-pinching among cost-conscious shoppers.

Weber said better customer retention rates and larger-value orders at Marley Spoon are a sign of strengthening consumer confidence, although he says the meal provider’s most affordable brand, Dinnerly, is becoming more appealing as the economy slows.

“Marley Spoon customers who see value in meal kits but may have to tighten the belt a notch, we see them moving to Dinnerly,” Weber said.

“They still get great value food, high-quality ingredients, but it’s a little bit simpler where we can offer [a] different value price point.”

Weber will look to expand Dinnerly’s ‘saver’ meal range that he said was seeing higher customer adoption. In April, Marley Spoon implemented a price freeze on Dinnerly’s subscription rates until the end of September, though the chief executive hinted at an extension.

“[The price freeze] certainly has been very well accepted, and while we may not put an official number to it, we will continue to hold our prices which we’ve been holding now for over a year,” he said.

“We are very confident that we won’t be increasing prices. If anything, we probably give something back to the customer, be it more on the plate, or lower cost.”

Climbing interest rates and inflation over the past 18 months have seen Australians shut their wallets to major retailers like Myer and flock to Kmart and Target instead, making retail bosses like JB Hi-Fi chief Terry Smart wary about further challenges in the trading environment ahead.

The trend of ‘trading down’ has seen people opt for private label brands at the supermarket and move from dining out to eating at home.

“[Customers] are telling us they are reducing spend on things like visits to the hairdresser and beauty services, entertainment, and gifts. Eating out, takeaway and coffees from the cafe are increasingly being seen as treats for a special occasion,” Coles chief executive Leah Weckert said last Monday.

“Unsurprisingly, they are looking for more specials, more affordable brands, and more affordable cuts of meat. Many of them are meal planning, stretching out the time between purchases of less urgent items such as cleaning and household items. And they are looking to catalogues, loyalty programs, and in-store markdowns to make their budgets go further,” she added.

At the same time, supermarket giants Coles and Woolworths have flagged double-digit spikes in shoplifting, a trend happening around the globe.

NAB chief executive Ross McEwan said the bank was seeing many people budgeting for the first time and saving $300 on average a month.

“A story close to home at NAB – in our offices we’re seeing long queues at the complimentary coffee machines as our colleagues swap a $5 takeaway for a free office brew. Nobody was using these machines a year ago! But I am delighted they want to be back in the office, so no complaints,” McEwan said in a speech last Thursday.

Shoppers will be forking out more for grocery basket staples owned by Bega Group, including its Dairy Farmers and Pura Milk products, Vegemite and its flagship cheese brand, in the months ahead as the food group faces higher operational costs.

Bega Group’s executive chairman Barry Irvin said impending price rises would be “nothing as dramatic as we’ve seen in previous years”, but that operating costs like energy, logistics and fuel were still putting pressure on the company, which was unprofitable for the 2023 financial year.

“There are some rises in our business. Obviously, we look to try on each of them, but inevitably, some of them do have to be passed through,” Irvin said.

Irvin declined to comment on the size or percentage of the expected price rises, but said the increases would be spread across its portfolio of brands.

“I wouldn’t say that any of them are actually more protected than any other. They all absorb a share of costs,” he said. “We obviously consider carefully how we can mitigate the cost to the consumer and indeed, even how we can effectively take opportunity of promotions of products.”

Spikes in global dairy prices, dwindling milk supply, and escalated costs in fuel and energy saw Bega Group’s earnings and profits nosedive over the past year.

While revenue rose 12 per cent to $3.4 billion, higher interest rates and a 30 per cent increase in the farmgate milk price were responsible for driving Bega’s normalised profits down 38 per cent to $28.5 million and earnings down 11 per cent to $160.2 million for the 2023 financial year. Two of its bulk commodity plants were revalued, leading to a $230 million write-down that resulted in a statutory loss of $229.9 million.

The losses haven’t deterred investors, however, who sent the share price 1.25 per cent higher to close at $3.23.

The dairy and cheese giant will pay a fully franked dividend of 7.5 cents per share for the 2023 financial year, which is down from 11 cents the year before. The final dividend will be paid on September 21.

In a tightening economic environment where shoppers are turning to private-label brands, Bega’s well-know brands managed to hold its own, according to its results.

“We retained our market leading position in the yoghurt, milk-based beverages and spreads categories, with our yoghurt brands now accounting for more than 25 per cent of the high-growth yoghurt market,” executive chairman Barry Irvin and CEO Pete Findlay wrote in a joint address.

The dairy giant is paying attention to the popular trend of plant-based products. Earlier this year, it launched a plant-based cheese range that attracted online criticism from some shoppers.

After being pushed out of the plant-based beverages market, Bega has struck a deal with Milklab maker Noumi, another loss-making ASX-listed company, to distribute the popular plant-based milk to 30,000 customers a week.

The $1 billion business is considering how else it can enter the plant-based space, with Irvin earmarking Dare iced coffee as one of the brands that could release a plant-based milk offering.

However, the ASX-listed company expects more difficulty on the road ahead, warning of “relatively flat” financial performance for the 2024 financial year, normalised earnings to fall between $160-170 million (similar to what it unveiled this year) and expects a more positive outlook in the “medium term”.

UBS director Evan Karatzas said Bega’s 2024 financial year profit guidance was “broadly in line” with pre-reported commentary. “Cash generation improvement in FY24 [will be] a high focus after disappointing this year,” he wrote in a note.

E&P Capital retail analyst Phillip Kimber noted Bega’s share price had recovered 12 per cent since its June trading update and anticipates the share price will remain around current levels.