Guzman y Gomez exits US market after failed expansion, facing class action lawsuit
Consensus Summary
Guzman y Gomez abruptly exited the US market on 21 May 2026, closing all eight Chicago stores after failing to meet sales targets and achieve profitability. The companyâs founder, Steven Marks, who had spent three months in Chicago attempting to revive the struggling US operations, confirmed the decision on 22 May 2026, citing underperformance and the need to cut losses. The US exit is expected to cost up to $40 million in one-off costs, with GyG having invested at least $115 million in the failed expansion. Analysts had previously warned the US market was a 'graveyard' for Australian fast food chains, and GyGâs US stores were not forecast to break even until 2037. The companyâs share price surged by around 9% following the announcement, reflecting investor relief. Meanwhile, US workers at the shuttered stores have launched a class action lawsuit alleging GyG failed to provide legally required 60 daysâ notice before mass layoffs, affecting over 500 employees. GyGâs Australian business, with 242 stores and strong growth, remains its core focus, while the company also operates in Singapore and Japan.
â Verified by 2+ sources
Key details reported by multiple sources:
- Guzman y Gomez closed all eight US stores (all in Chicago) on 21 May 2026, ending its US expansion.
- The company announced the US exit on 22 May 2026, citing underperformance and lack of sales momentum.
- The US exit is expected to cost GyG up to $40 million (A$56 million) in one-off costs.
- GyG founder and co-CEO Steven Marks spent three months in Chicago attempting to turn around the US business before its closure.
- GyG had invested at least $115 million in its US expansion, which was not forecast to break even until 2037.
- The US stores were required to hit sales targets of $60,000 per week per restaurant to succeed, but underperformed expectations.
- GyGâs Australian business has 242 stores (with 32 more opening before the end of the current financial year) and remains its core focus.
- GyGâs share price rose by approximately 9% to $19.81 on 22 May 2026 after the US exit announcement.
- The US class action lawsuit alleges GyG failed to provide 60 daysâ advance written notice before mass layoffs, affecting over 500 workers.
- The US website now states: 'All GyG USA restaurants permanently closed.'
Points of Difference
Details reported by only one source:
- The class action lawsuit was filed in a US federal trial court in Illinois by Chicago firm Haseeb Legal.
- The lawsuit claims GyG was required under federal and state laws to provide 60 daysâ advance written notice before conducting a mass layoff.
- The class action seeks pay and benefits for up to 60 days for every affected employee, with two named plaintiffs (former baristas promoted to shift leaders earning $21 and $23/hour).
- The lawsuit argues that GyGâs US operations and GyG Australia constituted a 'single integrated enterprise' and employer, expanding liability.
- GyGâs US stores offered bigger burritos than in Australia to attract American customers.
- GyG is the ninth largest fast food chain in Australia, just ahead of Oporto, with 237 stores at the end of 2025.
- Steven Marks told investors the US exit was not a reflection on the American staff, who had 'delivered genuine progress'.
- GyGâs Australian business has been subsidizing US losses for years, with the US market valued at $420.5 billion.
- GyGâs stock price initially soared over 18% before settling at a 9.6% gain to $19.81.
- GyGâs first Chicago outlet opened in 2020, and it also operates 24 stores in Singapore and five in Japan.
- GyGâs IPO in mid-2024 saw a market value peak above $3 billion, but its share price has since declined.
- Analysts described the US market as a 'distraction' and believed the Australian business has 'strong economics and a long growth runway'.
- GyGâs US stores were not forecast to break even until 2037, according to RBC Capital Markets analyst Michael Toner.
Contradictions
Conflicting information between sources:
- The Guardian states the class action lawsuit was filed on 21 May 2026, but the SMH does not mention the lawsuit or its filing date.
- The Guardian reports GyGâs US stores were closed 'last week' (21 May) and the lawsuit was filed in response, while the SMH states the closures were announced on 22 May 2026 without mentioning the lawsuit.
- The SMH states GyGâs US exit will result in a hit of up to $56 million to its annual results, while the Guardian states the one-off costs are up to $40 million (A$56 million).
Source Articles
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