Fans of the Mexican casual food chain Guzman y Gomez were surprised to learn last week that the Australia-based competitor to Chipotle Mexican Grill had abruptly closed all of its U.S. locations.
And the chain’s customers weren’t the only ones surprised by the news. Now, some of its former employees are suing the company over the unexpected closures. Here’s what you need to know.
What’s happened?
On May 21, Guzman y Gomez abruptly announced that it was closing its U.S. locations, all of which are in Illinois.
According to the company’s Australian website, Guzman y Gomez was founded in Sydney in 2006 with the aim of bringing more authentic Mexican cuisine to Australia. The company has expanded into other countries in the Asia-Pacific region, including Singapore and Japan, and now has over 260 restaurants globally.
Until recently, those restaurants included some in America. But as of May 22, the chain’s U.S. locations have shuttered.
A visit to the company’s U.S. website states that “Effective from May 22nd, GYG USA restaurants will cease trading.”
“After six years of burritos and big dreams in Chicagoland, we’ve made the difficult decision to close our U.S. restaurants,” the website reads. “To every guest who came through our doors—you chose us, and we never took that for granted. To our team—thank you. Your passion and your purpose built something special.”
Fast Company has reached out to Guzman y Gomez for comment.
Which Guzman y Gomez locations have closed?
While the company’s website no longer lists the chain’s former U.S. locations, the Chicago Tribune reports that the first Guzman y Gomez store in the U.S. opened in Naperville, Illinois, in 2020.
The chain then opened another seven stores in the state. Guzman y Gomez’s eight locations were in the following cities:
- Buffalo Grove,
- Chicago,
- Crystal Lake,
- Deerfield,
- Des Plaines,
- Evanston,
- Naperville, and
- Schaumburg.
Additionally, the Chicago Tribune reported that Guzman y Gomez had planned to open three more locations in Illinois in 2026, but those plans have been abandoned following the company’s exit from the U.S. market.
Why did Guzman y Gomez close its U.S. stores?
It is notoriously hard for international food chains to operate in the U.S. market. Not only is the American marketplace crowded with U.S.-based rivals, but in recent years, even U.S.-based chains have struggled with declining foot traffic and rising costs as inflationary pressure bites consumers and businesses alike.
Mexican restaurants and fast food chains are also abundant in America, unlike in other parts of the world where Guzman y Gomez operates.
This means that Guzman y Gomez already had an uphill battle in a country where, for instance, Chipotle Mexican Grill already dominates, with more than 4,000 locations.
On May 21, Guzman y Gomez’s co-CEO, Steven Marks, explained the abrupt pullout on a call with investors, telling them that the chain’s poor U.S. sales didn’t justify keeping the stores open any longer.
“This means ceasing to trade at our restaurants from today and proceeding with an orderly windup of our operations in the U.S.,” the Tribune quoted Marks as saying. “Notwithstanding the progress made by the team, the financial performance of the U.S. has simply not been acceptable.”
He added: “Starting with suburban drive-thrus has made it difficult to build brands in the U.S. Chicago has also been difficult. What is important is that we make changes when we need to.”
How have Guzman y Gomez’s employees responded?
Customers weren’t the only ones shocked by the abrupt closures of Guzman y Gomez’s U.S. stores. Its employees were also reportedly blindsided by the move. As noted by The Guardian, some of those employees have launched a class action lawsuit over the closures that resulted in their job losses.
Workers were allegedly informed about the closures only on May 21 via an internal company message board. That’s the same day Marks made comments about the closures to analysts.
The class action lawsuit alleges that federal and state laws required Guzman y Gomez to give 60 days’ notice before mass layoffs—something the company allegedly did not do. The plaintiffs are seeking 60 days’ pay and benefits.
A spokesperson for Guzman y Gomez told The Guardian that the company “is aware of legal action filed in the United States and we are confident we have met all of our legal obligations to our U.S. employees,” adding it could not comment further.
How has Guzman y Gomez’s stock price reacted?
Guzman y Gomez does not trade on U.S. markets, but it is a publicly listed company in Australia, where it trades on the Australian Securities Exchange under the ticker GYG.AX.
Immediately after the company announced its U.S. withdrawal on May 21, its shares surged around 11%. This stock price boost likely reflects investor approval of the company’s decision to exit the notoriously challenging U.S. market.
However, despite this price jump, Guzman y Gomez’s shares have struggled for much of the past several years. Year to date, the company’s stock price has fallen more than 10%.
And looking back further, things are worse for the stock price. Over the past 12 months, Guzman y Gomez shares have been down more than 35%.
