Guzman y Gomez is permanently closing all 8 US restaurants in the Chicago area

Guzman y Gomez Mexican Kitchen, the Australian-born Chipotle rival that once planned to open hundreds of US locations, has abruptly closed all of its American restaurants after six years in the Chicago area.

“All GYG USA restaurants are permanently closed,” said a message on the company's US website. “Effective May 22nd, GYG USA restaurants will cease trading. Thank you for your support.”

The chain also announced the move on Instagram, thanking customers and employees in Chicagoland, where all eight US restaurants were located.

“After six years of burritos and big dreams in Chicagoland, we've made the difficult decision to close our US restaurants,” the post read. “For every guest that's walked through our doors – they've chosen you, and we didn't take that for granted.”

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Guzman y Gomez's American website only shows a message of its sudden closure on Friday.

“To our team – thank you. Your passion and purpose built something special. If you're in Australia, Singapore or Japan, come find us – we'll have your favorites waiting for you. Chicagoland, Thank you!”

The closing marks a major change for Guzman y Gomez, who recently confirmed his intention to expand into the American market. The company (ASX: GYG) was founded in Australia by New York natives Steven Marks and Robert Hazan and is making its US debut in 2020 with ambitions to build its largest American presence.

“I have been confident in our food segmentation and guest experience, however this has not translated into improved sales momentum,” Marks said in an announcement to the Australian Securities Exchange, reported Business News Australia.

A worker prepares food at Guzman y Gomez restaurant in Sydney, Australia, Wednesday, Dec. 13, 2023. (Brent Lewin/Bloomberg via Getty Images)

“Having spent the last three months in the US, I realized that it would take more time and more money than we expected.

“In assessing the current network trajectory, the board and I have concluded that the business is unlikely to deliver performance that would justify the continued investment of shareholders' funds.”

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Guzman y Gomez says adios to the US, but still works in Australia, Japan and Singapore. (Guzman Y Gomez/Instagram)

The company has chosen the Chicago area as its entry point. At the time, its founders said they intended to open “hundreds, if not thousands” of Guzman y Gomez locations across the country.

Instead, the company is completely exiting the US, which helped the stock price in Australia rise more than $3 Australian from $18.05 to $21.10 when the news broke on Friday morning.

“We have a long road ahead of us in Australia as we progress towards our long-term target of 1,000 restaurants and an EBITDA as a percentage of network sales of 10%,” Marks said.

“Putting our capital, focus and infrastructure behind this opportunity is the most effective way to maximize shareholder value over the long term.”

The setback comes as US restaurants face pressure from wary consumers, higher food costs and declining traffic.

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Guzman y Gomez (ASX: GYG), Chipotle's Australian competitor in Chicago, has been forced to close all of its Chicago restaurants. (Brent Lewin/Bloomberg via Getty Images)

TheStreet reported that three in 10 Americans have cut back on retail spending and restaurant visits compared to last year, citing S&P Global data. Prices for meals away from home increased by 39.3% from January 2019 to January 2026, faster than in the past seven years, according to the same report.

Those storms are weighing heavily on the industry as a whole, especially those trying to scale in crowded sectors.

Guzman y Gomez has positioned itself as a pure classic Mexican food, with no added preservatives, artificial flavors, no added colors and no “unacceptable additives” on its Australian website.

Its closure in the US leaves Chipotle – which has about 4,000 restaurants – without one of its smaller fast-food Mexican challenges in the US market.

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RBC Capital Markets analyst Michael Toner told Reuters that the exit could be good for Guzman y Gomez's broader business because its US operations had limited prospects and were limited by earnings.

“The US business had very low prospects for success, and the loss of business was reducing the group's earnings so exiting sooner than expected is good,” Toner said.

Reuters contributed to this report.