Guzman y Gomez exits US after succumbing to ‘graveyard’ for Australian fast food chains

Guzman y Gomez is closing its US business after failing to establish itself in a market already rich with Mexican food, confirming 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 US stores had not been acceptable, despite its well-publicised plans to “become the best and biggest restaurant company in the world”.It currently lists eight stores in the Chicago area on its US website. The closures are expected to cost GyG up to US$40m (A$56m) in one-off costs.The GyG founder and co-chief executive, Steven Marks, said the performance of the US business could no longer justify the required investment.“I have always been confident in the differentiation of our food and guest experience, however this was not translating to an improvement in sales momentum,” Marks said on Friday.“Having spent the last three months in the US, I realised this was going to take significantly more time and capital than we had expected.”Some analysts had not expected its US business to break even for at least another decade.The US has been described as a “graveyard” for Australian companies, especially those in fast food. It has previously proven too tough for local chains such as Crust Pizza and Oporto.Analysts had previously raised concerns that GyG would struggle to compete with established Mexican-themed chains such as Chipotle, along with numerous Latin American restaurants.GyG offered bigger burritos in the US than it does in Australia in an attempt to woo American customers, who typically demand larger portions.The RBC Capital Markets analyst Michael Toner said the US exit was a positive development.“On current unit economics, we believe the US business had very low prospects of being successful, and the losses of the business were weighing down the earnings of the group so the sooner exit than anticipated is positive,” Toner said.GyG said that Australia remains the core focus of the business, although it is also expanding in Singapore and Japan.At the end of 2025, there were 237 GyG stores in Australia, according to data analysis 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 big three chains, Subway, McDonald’s and KFC, are also expanding rapidly, while Domino’s and Red Rooster closed more stores than they opened last year.GyG listed on the ASX in mid-2024. After an initial period of strong share market performance its stock price slumped after struggling to meet shareholder expectations.Its share price rocketed on Friday after the announcement, rising more than 15% by late morning trading. However, GyG stock is still priced below the $22 initial public offer price that retail investors paid.