Guzman y Gomez's American dream went down in flames because it failed to find its place in the market, an expert has said.

The ASX‑listed chain confirmed on Friday that it will exit the US after struggling to compete in an already saturated market.

Marketing guru Barry Urquhart said Guzman y Gomez carved out a lucrative niche in Australia offering fast, fresh Mexican food at scale but in the US, that gap simply doesn't exist.

Instead, it walked into a crowded, mature category dominated by giants including Chipotle, Taco Bell and Qdoba, alongside thousands of cheap, authentic local taquerias, particularly in cities like Chicago.

'To a large extent it has been successful in Australia, going into America, it was fraught with danger,' Mr Urquhart told the Daily Mail.

'Australians are entrepreneurial, but they've got limited resources, so even a big company in Australia is a small company in America.

'It just wasn't ever going to work. It's better to be different than it is to be better.'

Mr Urquhart said it was rare for an Australian company to succeed overseas with bricks‑and‑mortar stores.

By contrast, startups such as Canva and Atlassian have thrived by solving universal digital problems that translate across borders, Mr Urquhart said.

They tap global demand without relying on physical stores or trying to export uniquely Australian tastes.

Guzman y Gomez launched in the US in 2020 with a flagship store in Naperville, suburban Chicago, and planned to open 15 restaurants, banking on nearby universities to drive demand for its affordable, 'healthier' offering.

But the rollout stalled at just eight stores as the brand struggled to win meaningful market share.

Founder Steven Marks said the decision was made because the financial performance of the US business was not acceptable or meeting targets.

'I have always been confident in the differentiation of our food and guest experience, however this was not translating to an improvement in sales momentum,' he said.

'I realised this was going to take significantly more time and capital than we had expected.

'The board and I have concluded that the business was unlikely to deliver the performance that would justify continued investment of shareholder capital.' 

Citi analysts Sam Teeger and Eileen Li backed the decision, saying they had long been sceptical about Guzman y Gomez's US prospects.  

They pointed to a lack of clear differentiation from Chipotle and structural challenges in Chicago.

However, they warned Chipotle's expansion into Asia could threaten Guzman y Gomez's stronger offshore markets, including Singapore and Japan, where franchised stores continue to post solid growth.

Singapore recently opened its 24th restaurant, with further expansion planned.

'Given the US exit, we continue to see Chipotle's Asian expansion as a threat to Guzman y Gomez's international operations,' Teeger wrote in a client note.

But, Mr Marks said the company remained confident about its international partners.

'We are very proud of our international partners in Singapore and Japan and see substantial growth ahead in each market,' he said.

Mr Urquhart said 'everyone wants to get into Singapore', which is widely seen as one of Asia's premier gateway markets - wealthy, English‑speaking, globally connected and obsessed with food.

However, even in this prized market, success is far from guaranteed – something Australian brands have learned the hard way. 

'Dome Coffee was in Singapore and they even had an outlet at the airport at the Maldives, but there was just no critical mass,' he said.

'They were having to rely on recognition of Australians, and unfortunately Dome was West Australian, therefore it was never national, they could never get momentum, and so they pulled back graciously.'

Closer to home, Mr Marks said there was still 'significant growth' in Australia, where Guzman y Gomez operates 237 restaurants and is targeting 1,000 long-term.

Meanwhile, the US exit has been complicated by legal action, with former staff alleging they were terminated without proper notice or pay.

'Guzman y Gomez is aware of the legal action filed in the United States, and we are confident we have met all of our legal obligations to our US employees,' a spokesperson for the Australian fast-food chain told the Daily Mail on Tuesday.

'We are not in a position to provide any further comment on this matter.'