Guzman y Gomez sued in US after abrupt restaurant closures

A group of former U.S. employees has filed a lawsuit against Australian-listed fast-food chain Guzman y Gomez, alleging the company failed to give proper notice before abruptly closing all of its Chicago locations.

The lawsuit, filed in an Illinois court, comes just days after the Mexican-themed restaurant chain announced it was completely exiting the U.S. market due to underperforming sales. The sudden retreat marks a sharp pivot for the company, whose ambitious global expansion plans previously fueled a blockbuster stock market listing in 2024, News.Az reports, citing Reuters.

According to the court documents, Guzman y Gomez permanently shuttered all six of its Chicagoland restaurants last Thursday, immediately terminating its workforce without prior warning. Affected staff members were reportedly only notified of the mass layoffs via an internal messaging platform late that evening.

The legal complaint estimates that roughly 500 employees were impacted by the sudden closures.

The plaintiffs are seeking 60 days of unpaid wages and benefits, arguing the company violated the federal and state Worker Adjustment and Retraining Notification (WARN) Acts, which legally require employers to provide advance notice of mass layoffs or plant closures. The group is also pursuing maximum civil penalties under the act.

In response to the litigation, a spokesperson for Guzman y Gomez told Reuters, "GYG is aware of legal action filed in the United States, and we are confident we have met all of our legal obligations to our U.S. employees. We are not in a position to provide further comment on this matter."

Despite the brewing legal battle in the U.S., Australian investors initially reacted positively to the company cutting its American losses. Guzman y Gomez shares surged over 10% at the opening bell on Monday before flattening out to trade at A$19.805, holding on to a 24% overall gain since the U.S. exit was first announced on Friday.

News.Az 

By Aysel Mammadzada