Guzman y Gomez is facing a class action lawsuit in the US over allegations it failed to give its employees enough notice after shutting down operations.
The lawsuit claims more than 500 workers were impacted after the news of the company exiting the US market was accidentally leaked in an internal memo.
Chicago-based law firm Haseeb Legal shared excerpts of the class action filed in the US federal district court, which director of corporate operations and culinary Scott Bayne posted in the staff communication platform used by the company on Thursday evening local time.
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"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 message said.
Under US law, employees must be given at least 60 days' notice in writing before their employment at the business is terminated.
Haseeb Legal has set up a website where people who have been impacted can sign up and receive updates on the progress of the lawsuit.
The website suggests some employees were informed via an email on the WorkVivo app.
Guzman y Gomez has been approached for comment.
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The chain announced its shutdown last week in an announcement to the Australian Securities Exchange, saying it was shutting its Chicago-based restaurants with "immediate effect".
"Having spent the last 3 months in the US, I realised this was going to take significantly more time and capital than we had expected," founder and CEO Steve Marks said in the statement.
"The financial performance of the US business has not been acceptable and is not meeting targeted hurdles."
It comes as the company's share price plummeted earlier in the year due to the struggles of the expansion into the USA, a crowded market for Mexican-style fast food.
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After lower-than-expected profits in the first half of the financial year, the company's value dropped 10 per cent, or $200 million.
Investors received the news of Guzman Y Gomez's exit from the US market positively, with its share price soaring 20 per cent on Friday, and it has risen by 14 per cent in the last five days.
Marks said the company was now looking to consolidate its expansion in Australia, and focusing on its outlets in Asian nations like Japan and Singapore.
"We have a long runway ahead of us in Australia as we progress towards our long-term target of 1000 restaurants," he said last week.
