Guzman y Gomez faces US class action lawsuit over store closures

American workers at Guzman y Gomez’s shuttered US stores have launched a class action lawsuit against the Mexican-themed Australian fast food chain over allegations staff were terminated without adequate pay or notice.

The legal claim, filed in a US federal trial court in Illinois, was sparked by GyG’s decision last week to immediately close its string of Chicago stores after giving up on its highly vaunted plans to expand in the US.

Workers say they first heard about the imminent closures on 21 May via an internal message posted on the company’s message platform, according to the lawsuit filed by Chicago firm Haseeb Legal.

The message 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 claims that GyG was required under federal and state laws to provide 60 days’ advance written notice before conducting a mass layoff.

It is seeking pay and benefits for up to 60 days for every affected employee – estimated by the law firm to number more than 500 – and is seeking a trial by jury.

GyG was contacted for comment.

The Australian-listed food chain has recorded significant growth in its home country and now boasts one of the fastest growing fast food networks in the country.

It ranks among the top 10 biggest fast food chains in Australia according to store numbers.

But its plans to break into a US market already rich with Mexican food and established competitors including Chipotle officially ended last week amid mounting losses.

Analysts have described the US market as a “graveyard” for Australian fast food chains after failed expansion attempts by Crust Pizza and Oporto.

Last week, GyG listed eight stores in its US network, all of which were located in the wider Chicago area. Its US website now reads: “All GyG USA restaurants permanently closed.”

The class action has two named plaintiffs, both of whom had been baristas who were promoted to shift leaders. One earned $US21 an hour and the other $23 an hour, according to the claim.

Neither received the required notice, nor required compensation, according to the class action allegations.

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.