Guzman y Gomez Closes U.S. Locations After Six Years
Guzman y Gomez, an Australian alternative to Chipotle, has unexpectedly shuttered its U.S. restaurants after operating in the Chicago area for six years. The company, which once aspired to open numerous locations across the U.S., announced that all its U.S. outlets are permanently closed.
On its website, the company stated, “All GYG USA restaurants are permanently closed. GYG USA Restaurant will be closed from May 22nd. Thank you for your continued support.” Additionally, their social media expressed gratitude to both customers and employees, especially those in Chicagoland, where all eight of its U.S. restaurants were situated.
“After six years of burritos and big dreams in Chicagoland, we have made the difficult decision to close our U.S. restaurant,” the message read. “We appreciate all the guests who have walked through our doors; you chose us, and we have never taken that for granted.”
Despite plans to expand in the U.S., this closure reflects a sharp pivot for Guzman y Gomez, which had high hopes for the U.S. market. The chain was established in Australia by Stephen Marks and Robert Hazan, originally from New York, making its U.S. debut in 2020.
Mr. Marks noted that while they aimed to offer unique food and customer experiences, this strategy didn’t translate to the sales growth they anticipated. “I’ve always believed in differentiating our food and guest experience, but that wasn’t translating into improved sales momentum,” he stated in an announcement.
Mr. Marks added, “After spending the past three months in the United States, I realized that this would take much more time and money than I expected. The current trajectory of the network leads us to conclude that the business is unlikely to achieve the type of performance that justifies continued shareholder investment.”
Interestingly, this withdrawal coincides with an increase in stock value of Guzman y Gomez in Australia, jumping from A$18.05 to A$21.10 following the announcement. Mr. Marks mentioned that they have ambitious growth goals in Australia, with a target of 1,000 restaurants and 10% EBITDA margin in the long term.
This decision surfaces in an environment where U.S. restaurants are grappling with consumer hesitance, rising food prices, and reduced foot traffic. Many Americans have trimmed their retail spending and restaurant visits, with household food costs reportedly increasing significantly over recent years.
As Guzman y Gomez steps away from the U.S., it leaves Chipotle, which has around 4,000 locations, facing less competition in the fast-casual Mexican food space. Michael Toner, an analyst at RBC Capital Markets, indicated that this exit may actually benefit Guzman y Gomez overall, as the U.S. business had limited prospects and was a drain on earnings.
