The Australian Mexican food chain Guzman y Gomez has announced its withdrawal from the United States market, citing disappointing sales performance in what was considered a crucial expansion opportunity.
This marks a dramatic shift from the restaurant company’s previous commitment to the American market, which it had reaffirmed as recently as February. The chain had planned a slow expansion beginning in Chicago while pursuing ambitious goals to match McDonald’s store count in Australia. The U.S. market, with its 350 million consumers, represented significant potential in a space where competitor Chipotle operates roughly 4,000 locations.
However, operational challenges proved overwhelming as rising costs for fuel, food supplies, and labor severely impacted profit margins. Market analysts had begun characterizing the U.S. operations as a drag on short-term financial performance and stock value, which has remained below the 2024 initial public offering price.
Following the exit announcement, company shares surged as much as 20 percent and maintained a 14 percent increase at A$20.61 during midday trading, though still below the A$22.00 offering price. Analysts revised their projections to reflect both a reduced market opportunity and the elimination of ongoing U.S. losses.
RBC Capital Markets analyst Michael Toner commented on the development: “The U.S. 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 had previously indicated in a client analysis that departing the U.S. market would boost GYG’s gross profit by 15 percent.
Co-CEO Steven Marks explained in a company statement that anticipated sales improvements never materialized and the organization required “significantly more time and capital” to achieve meaningful scale in the American market.
During a conference call with analysts, chief financial officer Erik Du Plessis avoided discussing how the Iran war might be affecting the U.S. economy, stating only that “there’s obviously a lot happening in the markets” which had been incorporated into company projections.
The withdrawal will result in a one-time financial impact between $30 million and $40 million in results for the fiscal year ending in June, pending audit completion. Company officials noted this expense should not affect the planned final dividend for 2026.
Despite the U.S. setback, the company reported positive expectations for its home market, projecting underlying pre-tax profit of approximately A$85 million for Australia during the year, representing a 29 percent increase from the previous year.
