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

Guzman y Gomez is shutting down its US business after failing to achieve acceptable performance in a market crowded with Mexican food options. The company told shareholders that its US store results did not meet expectations despite plans to become a leading global restaurant company. The chain currently lists eight Chicago-area stores. The closures are expected to cost up to US$40 million in one-off costs. Founder and co-chief executive Steven Marks said the differentiation in food and guest experience was not translating into improved sales momentum and would require more time and capital than expected. Analysts had previously warned the US market would be difficult for Australian fast-food brands, including competitors like Chipotle.

"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."

"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 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."

"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."

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