Guzman y Gomez shares surge as much as 20% after fast-food chain says it will exit U.S. market
Guzman y Gomez has announced its exit from the U.S. market, ceasing operations in Chicago immediately. Analysts have expressed support for this decision, citing challenges in differentiating the brand from competitors like Chipotle. The company plans to focus on growth in Australia, where it aims to expand its restaurant count significantly.
- ▪Guzman y Gomez will cease operating its restaurants in Chicago immediately.
- ▪Citi analysts noted skepticism about the company's prospects in the U.S. market.
- ▪The company has a long-term target of 1,000 restaurants in Australia, where it currently operates 237.
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The company, which will cease operating its restaurants in Chicago with immediate effect, also said that it will support its U.S. team through this transition "with the respect and integrity they deserve." "We are supportive of today's decision to exit the US market given we had been skeptical about the company'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 U.S. 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 likely return to Australia to focus on local operations," the analysts said.
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