Guzman y Gomez exits US after succumbing to ‘graveyard’ for Australian fast food chains | Business
Guzman y Gomez is closing its U.S. business after failing to gain a foothold in a market already rich with Mexican food; This confirms the American country’s reputation as a “graveyard” for Australian fast food companies.
The Mexican-themed chain told shareholders on Friday that the performance of its U.S. stores was unacceptable despite its well-publicized plans to “become the best and largest restaurant company in the world.”
Currently, the US website lists eight stores in the Chicago area. The closures are expected to cost GyG up to US$40 million ($56 million) in one-time costs.
GyG founder and co-chairman Steven Marks said the performance of the business in the US could no longer justify the investment required.
“I was always confident that our dining and guest experience would differentiate, but that did not translate into an improvement in sales momentum,” Marks said in a statement Friday.
“Having spent the last three months in the US, I realized this would require much more time and capital than we expected.”
Some analysts did not expect U.S. business to remain stable for at least another decade.
The US has been described as a “graveyard” for Australian companies, especially fast food companies. It had previously proven too difficult for local chains like Crust Gourmet Pizza and Oporto.
Analysts have previously expressed concerns that GyG would have trouble competing with established Mexican-themed chains like Chipotle, as well as the large number of Latin American restaurants.
GyG offered larger burritos in the US than in Australia in an attempt to appeal to American customers who typically demand larger portions.
RBC Capital Markets analyst Michael Toner said the US exit was a positive development.
“Given the current unit economics, we believe the US business is unlikely to succeed and job losses are weighing on group earnings, so an earlier-than-expected exit is positive,” Toner said.
GyG said Australia remains the key focus of the business, although it has also expanded into Singapore and Japan.
There were 237 GyG stores in Australia by the end of 2025, according to data analytics company GapMaps, making it the ninth largest chain, just ahead of Oporto.
GyG and rival Zambrero are among the fastest growing chains, highlighting the popularity of Mexican-themed food in Australia.
The three major chains, Subway, McDonald’s and KFC, are also growing rapidly, while Domino’s and Red Rooster closed more stores than they opened last year.
GyG is listed on the ASX in mid-2024. After an initial period of strong performance by the stock market, the stock price fell as it struggled to meet shareholder expectations.
The share price soared on Friday following the announcement, rising more than 15% in late morning trading. But GyG shares are still priced below the $22 IPO price that retail investors paid.
