Guzman y Gomez faces US class action over abrupt Chicago store closures
A class action lawsuit filed in Illinois alleges GyG violated federal and state labour laws by closing its eight Chicago locations without the required 60 days’ notice, seeking compensation for more than 500 former employees.
Guzman y Gomez is facing a class action lawsuit from former US employees following the immediate closure of its Chicago stores. The legal claim, filed in a US federal trial court in Illinois by Chicago firm Haseeb Legal, alleges the Australian fast-food chain terminated more than 500 staff without the required 60 days' notice or adequate pay under federal and state laws.
The closures occurred after the company abandoned its US expansion plans amid mounting losses and competition from established players like Chipotle. Workers say they first heard about the imminent closures on 21 May via an internal message posted on the company’s message platform, which allegedly read: “After careful consideration, we have made the difficult decision to exit the US market. This means we will be closing all our restaurants from today.”
The class action seeks pay and benefits for up to 60 days for every affected employee and is seeking a trial by jury. Two named plaintiffs, former baristas promoted to shift leaders earning US$21 and US$23 an hour respectively, did not receive required notice or compensation, according to the claim.
While the legal action names GyG’s US entity as the defendant, it argues that the US operations and GyG Australia constituted a “single integrated enterprise” and employer, expanding the liability. This legal strategy aims to broaden the scope of potential damages beyond the US subsidiary.
GyG had listed eight stores in the US network, all located in the wider Chicago area, prior to the closure. Its US website now states: “All GyG USA restaurants permanently closed.” The exit adds to a pattern of Australian fast-food chains struggling in the US market, a sector previously described by analysts as a “graveyard” for brands like Crust Pizza and Oporto.
Guzman y Gomez is one of the fastest-growing fast food networks in Australia and ranks among the top 10 biggest chains by store numbers. However, its plans to break into the US market officially ended last week as the company grappled with significant losses in a region already rich with Mexican food options.
