Australian Fast-Food Chain GYG Accused of Failing to Warn US Staff
Synopsis
Former employees of Guzman y Gomez filed a class action lawsuit in Illinois after the company suddenly closed six Chicago-area restaurants. The lawsuit alleges nearly 500 workers were dismissed without advance notice required under federal and state WARN laws. The legal action came shortly after the Australian fast-food chain announced its exit from the US market following weak sales performance. GYG said it believes it complied with legal obligations tied to the restaurant closures.
Former employees of Guzman y Gomez filed a class action lawsuit in Illinois after abrupt Chicago-area restaurant closures allegedly affected about 500 workers without prior notice. Plaintiffs cited federal and state WARN laws. The lawsuit followed GYG’s recent exit from the US market after weak sales and rising operating costs.
Key Highlights
- Former GYG employees filed a class action lawsuit in Illinois over sudden restaurant closures.
- About 500 workers were allegedly affected across six Chicago-area restaurant locations.
- Plaintiffs claim the company failed to provide required advance layoff notices under US law.
- GYG recently exited the US market after reporting weak Chicago business performance.
Former employees of Guzman y Gomez have filed a class action lawsuit in Illinois after the company abruptly shut its Chicago-area restaurants.
The lawsuit says the company did not notify workers before it closed six stores in Chicagoland on May 22. About 500 employees became unemployed after the closures were announced via an internal messaging system, court documents said.
The case was brought under federal Worker Adjustment and Retraining Notification Act and Illinois state labor laws. The US WARN law normally requires employers to give 60 days' notice of mass layoffs or site closures for companies that employ more than a certain number of people.
The employees are filing worker's compensation claims under the WARN laws.
Former employees are claiming unpaid wages, benefits and other damages based on the alleged violations of the notice. The suit was filed in the US District Court for the Northern District of Illinois, Reuters said.
GYG said it feels it was meeting legal requirements to staff but wouldn't comment on the litigation further. The firm has not released data about how many employees of the company were affected directly by the shutdown.
Sales performance was weak, with US Exit
The lawsuit arrived days following GYG's announcement that it will leave the U.S. market as a result of weaker-than-feasible business performance in Chicago.
As per the company's statements, the shutdown will lead to between US$30 million and US$40 million in one-time costs, as reported in various news outlets. The company reported that the expansion in the US needed more capital and time than anticipated.
GYG's core markets are Australia, its biggest, and Singapore and Japan, where it has smaller operations.
The restaurant sector is still under pressure
Labor, rent, and operating expenses have been increasing in the United States' restaurant sector since 2024. Earlier this year, in early 2026, the National Restaurant Association had data indicating that restaurant operators continue to feel wage inflation and a decrease in consumer spending.
Over the past year, additional restaurants have closed in Chicago to address increased costs for staffing and occupancy.
GYG revenue grew in its core markets, despite the US shutdown. It reported 23% growth in revenue to A$261.2 million over the half year, ending in December 2025, with profit after tax growing by almost 45%.
FAQs
Q1. Why are former GYG employees suing the company?
The lawsuit alleges Guzman y Gomez failed to provide advance notice before closing six Chicago-area restaurants and laying off workers.
Q2. How many employees were affected by the GYG Chicago shutdown?
Court filings cited in reports said around 500 employees were impacted by the sudden restaurant closures.
Q3. Why did Guzman y Gomez shut down its US operations?
The company said weak sales performance and higher operating costs made expansion in the US more difficult than expected.
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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