Updated ,first published
Guzman y Gomez has shut down its eight Chicago stores and pulled the plug on its ambitions to conquer the American market after years of spending tens of millions of dollars and defending it as a long-term investment.
The burrito chainโs founder Steve Marks said on Friday that despite his efforts to turn around the chainโs US expansion, the Australian-born Mexican burrito seller was not hitting the sales targets needed to justify the investment.
โHaving spent the last three months in the US, I realised this was going to take significantly more time and capital than we had expected,โ Marks said in a statement to the ASX.
โIn assessing the trajectory of the current network, the board and I have concluded that the business is unlikely to deliver the performance that would justify continued investment of shareholder capital.โ
Guzman y Gomez expects the exit will result in a hit of up to $US40 million ($56 million), with $15 million of this sum set aside in cash to pay future staff entitlements, leases and other costs.
Marks, a former Wall Street hedge fund manager, opened the first GyG store in Sydneyโs Newtown in 2006 with co-founder and fellow New Yorker Robert Hazan. He has claimed at various times that it was named after two of his Mexican childhood friends, and that the faces on its logo were inspired by a melange of men he met in his youth and did not resemble particular individuals.
Australia, which remains the chainโs biggest market at 242 stores, is performing strongly and continues to grow, with a further 32 restaurants set to open before the end of the financial year, GyG said.
โWe have a long runway ahead of us in Australia as we progress towards our long-term target of 1000 restaurants,โ said Marks.
Marks had long signalled ambitions to expand internationally, including selling Mexican food to Mexicans.
Guzman y Gomez opened the first Chicago outlet in 2020. There are also 24 stores in Singapore and five in Japan.
The chain listed on the stock exchange in mid-2024 at a blockbuster float where burritos were served, Marks grew emotional and Guzman y Gomezโ market value soared to over $3 billion.
However, the companyโs share price has been on a steady decline since.
More to come.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect via X or email.
