Guzman y Gomez shares emergence after fast-food chain says it will exit US market

Shares of Guzman and Gomez rose as a lot as 20.58% on Friday, after the Mexican-themed fast-food chain mentioned it would exit the US market and refocus on Australia.

“Having spent the last 3 months in the US, I realized this was going to take significantly more time and capital than we had expected, said Steven Marks, founder and co-CEO of the Australian food company.

He added that the current performance of the US business could not justify continued investment of shareholder capital.

The company reiterated that the decision to exit the US business “doesn’t alter the Board’s conviction within the world attraction of the GYG model, or within the long-term alternative to increase into new geographies in a disciplined and deliberate method.”

Shares closed 9.57% higher at 19.81 Australian dollars ($14.13).

The company, which will cease operating its restaurants in Chicago with immediate effect, also said that it will support its US team through this transition “with the respect and integrity they deserve.”

“We are supportive of right this moment’s choice to exit the US market given we had been skeptical in regards to the firm’s US prospects,” said Citi analysts Sam Teeger and Eileen Li in a note.

They added that the likelihood of long-term success in the US is low, citing the lack of differentiation between GYG and rival Chipotle as well as structural challenges in Chicago.

“Pleasingly, the US exit means the Co-CEO, Steven Marks, will seemingly return to Australia to deal with native operations,” the analysts said. They added that there is still “important development” in Australia, where the company has 237 restaurants, with a long-term target of 1,000.

Guzman and Gomez first entered the US market in 2020. Besides Australia, the chain also operates in Singapore and Japan. The company aims to open more than 40 restaurants globally each year.