Chipotle Rival Closes All US Restaurants (And Faces Lawsuit)

A fast-rising burrito chain that had plans to take down Chipotle in the U.S. has officially crashed out-and now it's dealing with a growing legal fight from its own workers.

Guzman y Gomez (GYG), an Australian Mexican chain, has closed all eight of its U.S. restaurants, ending a six-year run centered entirely in the Chicago area.

The shutdown became effective on May 22, 2026, with the company confirming on its website that, "effective from May 22nd, GYG USA restaurants will cease trading."

What Happened?

GYG entered the U.S. market in 2020 with ambitious plans to open hundreds-if not thousands-of locations. But in reality, the brand never expanded beyond its eight Chicago-based restaurants, in suburbs like Naperville, Deerfield, and Crystal Lake.

The problem wasn't the food.

Founder Steven Marks reportedly said in a statement that he had "always been confident in the differentiation of our food and guest experience," but this was not "translating to an improvement in sales momentum," meaning the chain's quality and customer experience were strong, but sales weren't matching expectations. He added, "Having spent the last 3 months in the US, I realised this was going to take significantly more time and capital than we had expected."

After personally reviewing operations in the U.S., Marks concluded the business would require far more time and capital to fix-and ultimately it wasn't worth the investment. The company admitted its U.S. arm was unlikely to deliver the kind of returns needed to justify continued expansion.

Instead, GYG is doubling down on markets where it's already thriving. Globally, the chain operates more than 250 restaurants across Australia, Japan, and Singapore, with plans to keep growing there.

Workers Say They Got No Warning

The closure might have been a calculated business move-but for employees, it's turned into something far messier.

Despite promising, in its closure statement, that the business was "committed to supporting every member of the U.S team through this transition with the respect and integrity they deserve," its former workers have just filed a class-action lawsuit, alleging the company violated U.S. labor laws by failing to provide proper notice before the shutdown.

Under the federal Worker Adjustment and Retraining Notification (WARN) Act, companies with more than 100 employees are required to give at least 60 days' notice before mass layoffs. Workers claim GYG didn't come close-some say they found out the restaurants were closing the same day operations stopped.

On top of the legal action, former staff have already staged public protests in Chicago suburbs, underscoring just how abruptly the shutdown hit people on the ground.

According to USA News, GYG has since responded to the lawsuit, saying it was "aware of ​legal action filed in the United States," and was "confident" it had met all ⁠its legal obligations to its U.S. employees.

What Next?

The case now heads to federal court, where GYG is expected to fight back-potentially starting with a motion to dismiss. The case will likely end in settlement talks, as most WARN Act cases rarely make it to trial.

This story was originally published by Men's Journal on May 25, 2026, where it first appeared in the News section. Add Men's Journal as a Preferred Source by clicking here.

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This story was originally published May 25, 2026 at 12:09 AM.