Closure of Guzman y Gomez U.S. Locations

Guzman y Gomez Mexican Kitchen, an Australian competitor to Chipotle, has unexpectedly shut down its U.S. locations after six years operating in the Chicago area.

In a statement, the company announced, “All GYG USA restaurants are permanently closed.” They mentioned that their last day of operation was May 22nd and expressed gratitude for customer loyalty.

The chain also took to Instagram to thank its workforce and patrons in the Chicago region, where all eight U.S. outlets were situated. They expressed, “After six years of burritos and big dreams in Chicagoland, we have come to the hard decision to close our U.S. restaurants. To all our guests who have walked through our doors, you chose us, and we never took that for granted.” The post emphasized the importance of their team’s dedication, inviting customers in Australia, Singapore, or Japan to visit their establishments.

This closure is particularly striking since Guzman y Gomez had recently emphasized its plan to grow within the U.S. market. Founded in Australia by Stephen Marks and Robert Hazan, the chain made its U.S. debut in 2020, hoping to establish a significant presence here.

Marks noted in an Australian Stock Exchange announcement that while they aimed to differentiate their food and customer experience, it did not translate to better sales performance. He mentioned, “After spending the last three months in the United States, I realized this would take much more time and money than I anticipated.” Evaluating the ongoing situation, Marks and the board determined that continued investment was not justified.

Initially, they chose Chicago as their launch city, intending to open “hundreds, if not thousands” of outlets across the country. Now, however, they have decided to withdraw entirely from the U.S., a move that surprisingly led to an increase in their Australian share price, rising over A$3.

Marks additionally commented, “Australia still has a long way to go toward our long-term goal of 1,000 restaurants and 10% segment underlying EBITDA as a portion of network sales.” He stressed the necessity of concentrating their resources on this region to enhance shareholder value over time. This exit coincides with a challenging landscape for U.S. restaurants, compounded by cautious consumer behavior, rising food prices, and decreased customer traffic.

Data from S&P Global indicates that approximately 30% of Americans have cut back on retail spending and dining out compared to last year. Additionally, household food costs surged by 39.3% from January 2019 to January 2026, marking a far more pronounced increase than in the preceding seven years. These challenges are impacting many chains trying to scale within competitive markets.

Guzman y Gomez presents itself as a healthier version of fast-casual Mexican cuisine, promoting a menu free of preservatives, artificial flavors, colors, and what they term “unacceptable additives.”

With their departure, Chipotle, which operates around 4,000 locations, is losing one of its smaller rivals in the fast-casual Mexican sector.

Michael Toner, an analyst at RBC Capital Markets, suggested that this exit could be beneficial for Guzman y Gomez overall, as their U.S. operations had limited potential and were impacting earnings negatively. He noted, “The prospect of a successful U.S. operation was very low, and losses were weighing on group earnings, so an earlier-than-expected exit is a good thing.”