TL;DR
Guzman y Gomez, an Australian-founded Mexican fast-casual chain, has closed all eight of its U.S. restaurants after six years in Chicago. The move marks a complete withdrawal from the U.S. market, citing sales challenges and high costs.
Guzman y Gomez, the Australian-born Mexican fast-casual chain, has closed all of its U.S. restaurants, ending its six-year presence in the Chicago area. The company’s U.S. website confirmed the closures, effective immediately, citing business challenges.
The chain’s U.S. operations, consisting of eight restaurants in Chicago, were abruptly shut down, with a message on its website stating, “All GYG USA restaurants permanently closed.” The company also announced the closures via its Instagram account, thanking customers and employees for their support over the years.
Founded in Australia by New Yorkers Steven Marks and Robert Hazan, Guzman y Gomez had originally planned to expand extensively across the U.S., with ambitions to open hundreds of locations. However, the company recently decided to exit the market after assessing its performance, citing sales difficulties and the need for more capital than initially expected, according to statements from Marks on the Australian Securities Exchange.
Why It Matters
The closure signifies a setback for Guzman y Gomez’s U.S. expansion ambitions and highlights the difficulties faced by fast-casual Mexican chains amid rising food costs, cautious consumer spending, and intense competition. The move also impacts the broader fast-casual Mexican segment, leaving Chipotle as the dominant player with roughly 4,000 locations in the U.S.
Analysts suggest this retreat could benefit Guzman y Gomez’s broader business, as its U.S. operations reportedly weighed on earnings, according to RBC Capital Markets analyst Michael Toner. The shutdown may reflect wider industry pressures, including inflation and declining restaurant traffic, which have affected many chains nationwide.
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Background
Guzman y Gomez entered the U.S. market in 2020, targeting rapid growth with plans for hundreds of locations across the country. The Chicago area was its initial foothold, with the company expressing confidence in its differentiation through fresh, preservative-free ingredients.
Despite these ambitions, the company faced mounting challenges. Recent statements from the company’s founder indicated that the business was unlikely to generate the performance needed to justify further investment. The decision to exit U.S. operations comes amid a broader slowdown in restaurant growth and increased economic headwinds for casual dining chains.
“Having spent the last three months in the US, I realized this was going to take significantly more time and capital than we had expected.”
— Steven Marks, Guzman y Gomez founder
“The U.S. business had very low prospects of being successful, and the losses of the business were weighing down the earnings of the group.”
— RBC Capital Markets analyst Michael Toner
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What Remains Unclear
It is not yet clear whether Guzman y Gomez plans to return to the U.S. market in the future or if this closure is permanent. Details about the company’s future expansion strategies remain undisclosed.
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What’s Next
The company will focus on its core markets in Australia, Japan, and Singapore, where it continues to operate and expand. Further updates on Guzman y Gomez’s strategic plans in other regions are expected in upcoming earnings reports or investor communications.
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Key Questions
Why did Guzman y Gomez close its U.S. locations?
The company cited sales challenges, higher-than-expected costs, and the need for more capital as reasons for closing all U.S. restaurants, as stated by founder Steven Marks.
Will Guzman y Gomez return to the U.S. in the future?
It is currently unclear whether the company plans to re-enter the U.S. market or if this closure is permanent. No specific future plans have been announced.
How does this affect the competitive landscape for Mexican fast-casual food in the U.S.?
The shutdown leaves Chipotle as the dominant player in the fast-casual Mexican segment, with Guzman y Gomez’s exit reducing competition in the space.
Source: Google Trends
