After the Australian-born Mexican chain Guzman y Gomez shut it’s U.S. operations last week, U.S. incumbents with a higher market share, Chipotle Mexican Grill Inc. (NYSE:CMG) and Yum! Brands Inc.’s (NYSE:YUM) Taco Bell are in focus after GyG’s exit.

Eliminating An Ambitious Challenger

With the closure of its stores, effective May 22, Chipotle and Taco Bell have successfully neutralized a well-capitalized international threat.

Backed by massive success in Australia, Singapore, and Japan, GyG entered the U.S. with plans to expand. However, GyG’s leadership eventually admitted that the U.S. market required significantly more time, brand awareness, and capital than they had anticipated.

The Guardian reported that over 500 employees at GyG launched a class action lawsuit alleging they received zero notice before termination.

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Impenetrable Market Moats

GyG co-founder Steven Marks told the Guardian that breaking into the U.S. market “was going to take significantly more time and capital than we had expected,” and that it didn’t justify the “continued investment of shareholder capital.”

The incredibly steep capital required to secure prime real estate, build robust supply chains, and market against established giants like CMG and YUM acts as a massive defensive barrier. This protects domestic leaders from foreign disruption.

GyG's failure to capture sales momentum, even after strategically inflating ...