(Reuters) -Mexican-themed fast food chain Guzman Y Gomez ( GYGLF ) reported annual profit ahead of expectations on Friday, but rising U.S. expansion-related costs and a subdued start to the new business year in Australia sent its shares down 21%.

Guzman y Gomez ( GYGLF ) made its ASX debut in June 2024, marking the largest listing in Australia in three years. Regarded as a bellwether for the country's IPO market, its performance is also viewed as a yardstick for the quick-service restaurant industry.

The company posted an operating loss of A$13.2 million ($8.48 million) for its U.S. division in 2025 and flagged that the losses are expected to widen and margins to come under pressure in the current fiscal year as it embarks on expansion in the greater Chicago area.

"This investment ... is expected to offset ongoing improvements in the profitability of existing restaurants, and as a result U.S. losses are expected to increase slightly in FY26," the company said.

Network sales in Australia rose 3.7% in the first seven weeks of the current business year, sharply lower than the 7.6% growth forecast for the first half by Visible Alpha consensus.

Shares of GYG plunged 21% to a lifetime low of A$22.740, a few pips shy of their issue price of A$22 apiece. The stock marked its worst intra-day session on record.

Craig Sidney, a senior investment advisor at Shaw and Partners, estimates GYG is "highly priced, so there is a view that they have got to achieve very strong growth in order to substantiate the share price".

"So anything that slightly misses in this environment is being sold down quite heavily."

In Australia, robust demand for its popular breakfast menu lifted sales 22% to a record A$1.09 billion in the year ended June 30, while sales in its secondary markets rose as well: up 40% in Singapore and 16% in Japan.

That propelled its full-year net earnings to A$14.5 million, more than double of the A$5.7 million it earned last year, and ahead of its own and market expectations.

The company also announced its first dividend payout of 12.6 Australian cents per share, citing strong balance sheet and cash flow generation.

For the current business year, GYG forecast operating earnings from its Australia segment, which includes its operations in Singapore and Japan, to expand up to 6.3%, compared with a 5.7% growth in 2025.

($1 = 1.5567 Australian dollars)