Followers of the Mexican informal meals chain Guzman y Gomez have been stunned to study final week that the Australia-based competitor to Chipotle Mexican Grill had abruptly closed all of its U.S. areas.
And the chain’s prospects weren’t the one ones stunned by the information. Now, a few of its former staff are suing the corporate over the surprising closures. Right here’s what it’s essential know.
What’s occurred?
On Might 21, Guzman y Gomez, a series of Mexican fast-casual eating places primarily based in Australia, abruptly introduced that it was closing all of its U.S. areas.
Based on the corporate’s Australian website, Guzman y Gomez was based in Sydney in 2006 with the goal of bringing extra genuine Mexican delicacies to Australia.
Since then, the corporate has expanded into different nations within the Asia-Pacific area, together with Singapore and Japan. It now has over 260 eating places globally.
Till just lately, these eating places included some in America. However as of Might 22, the chain’s U.S. areas have now shuttered.
A go to to the corporate’s U.S. web site states that “Efficient from Might twenty second, GYG USA eating places will stop buying and selling.”
“After six years of burritos and large goals in Chicagoland, we’ve made the tough choice to shut our US eating places,” the web site reads. “To each visitor who got here by means of our doorways – you selected us, and we by no means took that with no consideration. To our group – thanks. Your ardour and your objective constructed one thing particular.”
Quick Firm has reached out to Guzman y Gomez for remark.
Which Guzman y Gomez areas have closed?
Whereas the corporate’s web site not lists the chain’s former U.S. areas, the Chicago Tribune experiences that the primary Guzman y Gomez retailer within the U.S. opened in Naperville, Illinois, in 2020.
The chain then opened one other seven shops within the state, the place all its U.S. areas have been primarily based.
Guzman y Gomez’s eight U.S. areas have been within the following cities:
- Buffalo Grove, Illinois
- Chicago, Illinois
- Crystal Lake, Illinois
- Deerfield, Illinois
- Des Plaines, Illinois
- Evanston, Illinois
- Naperville, Illinois
- Schaumburg, Illinois
Moreover, the Chicago Tribune reported that Guzman y Gomez had deliberate to open three extra areas in Illinois in 2026, however these plans have been deserted following the corporate’s exit from the U.S. market.
Why did Guzman y Gomez shut its US shops?
It’s notoriously onerous for worldwide meals chains to function within the U.S. market. Not solely is the American market crowded with U.S.-based rivals, however in recent times, even U.S.-based chains have struggled with declining foot site visitors and rising prices as inflationary stress bites customers and companies alike.
Mexican eating places and quick meals chains are additionally considerable in America, not like in different elements of the world the place Guzman y Gomez operates.
Which means Guzman y Gomez already had an uphill battle in a rustic the place, for example, Chipotle Mexican Grill already dominates, with greater than 4,000 areas.
On Might 21, Guzman y Gomez’s co-CEO, Steven Marks, defined the abrupt U.S. pullout on a name with buyers, telling them that the chain’s poor U.S. gross sales didn’t justify preserving the shops open any longer.
“This implies ceasing to commerce at our eating places from in the present day and continuing with an orderly wind up of our operations within the U.S.,” the Tribune quoted Marks as saying “However the progress made by the group, the monetary efficiency of the U.S. has merely not been acceptable.”
He added: “Beginning with suburban drive-thrus has made it tough to construct manufacturers within the U.S. Chicago has additionally been tough. What’s necessary is that we make modifications when we have to.”
How have Guzman y Gomez’s staff responded?
The abrupt closures of Guzman y Gomez’s U.S. shops weren’t solely a shock to its prospects. Its U.S. retailer staff have been additionally reportedly blindsided by the transfer. As noted by the Guardian, a few of these staff have now launched a category motion lawsuit over the closures that resulted of their job losses.
Employees have been allegedly solely knowledgeable concerning the closures on Might 21 by way of an inside firm message board. That’s the identical day Marks made feedback concerning the closures to analysts.
The category motion lawsuit alleges that federal and state legal guidelines required Guzman y Gomez to offer 60 days’ discover earlier than mass layoffs—one thing the corporate allegedly didn’t do. The plaintiffs at the moment are in search of 60 days’ pay and advantages.
A spokesperson for Guzman y Gomez informed the Guardian that the corporate “is conscious of authorized motion filed in the US and we’re assured now we have met all of our authorized obligations to our US staff,” including it was “not able to offer additional touch upon this matter.”
How has Guzman y Gomez’s inventory value reacted?
Guzman y Gomez doesn’t commerce on U.S. markets, however it’s a publicly listed firm in Australia, the place it trades on the Australian Securities Trade underneath the ticker GYG.AX.
Instantly after the corporate introduced its U.S. withdrawal on Might 21, its shares surged round 11%. This inventory value enhance doubtless displays investor approval of the corporate’s choice to exit the notoriously difficult U.S. market.
Nevertheless, regardless of this inventory value bounce, Guzman y Gomez’s shares have struggled for a lot of the previous a number of years. 12 months thus far, the corporate’s inventory value has fallen greater than 10%.
And searching again even additional, issues are worse for the corporate’s share value. Over the previous 12 months, Guzman y Gomez shares have been down greater than 35%.
