US closure bill costs GYG, business posts $26m annual loss

Guzman Y Gomez has copped a $26m loss after abandoning hopes of expansion in the US.

The Sydney-founded, Mexican-inspired outlet delivered full-year financial results on Friday. The business posted a $26.7m statutory net loss, plunged into the negative by a $67.3m cost to get out of its US operations.

Co-chief executives Steven Marks and Hilton Brett penned a letter to accompany the financial returns, saying expansion in Singapore and Japan is still promising.

The business held itself to a “very high standard” in supporting US staff as the eight Chicago restaurants shut, the chief executives said.

A Chicago law firm filed a lawsuit alleging Guzman Y Gomez failed to provide the legally required 60 days notice before sacking 300 staff. The class action has since been abandoned.

In their letter on Friday, the chief executives reiterate earlier comments that US expansion was costing too much money.

“From the outset, we were clear about the hurdles we would need to meet to validate the proof of concept and committed to remaining disciplined with our investment.

“Notwithstanding the progress made by the team, the financial performance did not meet those targeted hurdles and were not expected to without significant further investment and time.”

Guzman Y Gomez announced in May the Chicago stores would be shuttered, and that has now been completed. Friday’s returns show the business accounted for $US15.2m ($A21.3m) in lost trade and $US32.8m ($A46m) in one-off closure costs.

“While we take with us many learnings, our conviction in the success of GYG outside Australia has not changed,” the bosses said.

“We are proud of the strong performance our master franchise markets of Singapore and Japan continue to deliver, with 18 per cent total network sales growth this year.”

Excluding the US stores, GYG’s total sales rose 17.9 per cent for the financial year to $14bn.

Across Australia, Singapore and Japan, there are now 284 restaurants, with 35 new openings over the past year.

The business also built in-house a Bluetooth-enabled probe that measures the temperature of every single piece of grilled chicken, “addressing a key food safety risk in our business”.