Guzman y Gomez has scuttled plans for an ambitious expansion in the United States and will immediately shut its existing stores in Chicago, in a development that has sent its share prices soaring.

The Australian-owned Mexican-style fast food giant will instead focus efforts on local growth after it struggled to compete in an already-saturated US market.

Founder and chief executive Steven Marks said he could not justify further investment in the US after GYG's weak financial performance in the region had "not been acceptable".

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"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," Marks said in a statement to the Australian Securities Exchange (ASX).

"Having spent the last three months in the US, I realised this was going to take significantly more time and capital than we had expected.

"In assessing the trajectory of the current network, the board and I have concluded that the business is unlikely to deliver the performance that would justify continued investment of shareholder capital."

GYG will close its eight stores in Chicago immediately.

The business praised its US staff for their "passion, professionalism and conviction" and said the team would be supported throughout the exit strategy.

GYG had failed to establish a strong share of the market in the US, with the likes of Taco Bell and Chipotle dominating the country's Mexican fast food industry.

Marks said the Australian market tells a very different story and assured investors the local network of stores are performing solidly.

GYG shares soared by 20 per cent after Marks made the announcement.

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Before today, the underperforming US expansion had weakened the company's share price, falling more than 40 per cent over the past 12 months.

The Mexican-inspired fast food chain is on track to open 32 restaurants in Australia this financial year.

It currently operates around 250 restaurants in Australia. Marks said the brand is eyeing a national target of 1000 stores.

GYG expects to deliver an operating profit of about $85 million in the 2026 financial year, a year-on-year growth of 29 per cent.

The cost of exiting the US market will result in a one-off impact of at least $42 million to its 2026 full-year results.

"We have a long runway ahead of us in Australia as we progress towards our long-term target of 1000 restaurants and segment underlying EBITDA as a percentage of network sales of 10 per cent," Marks said.

"Concentrating our capital, focus and infrastructure behind this opportunity is the most effective way to compound shareholder value over the long-term."

However, the company's decision to abandon its US expansion does not diminish GYG's "global appeal", Marks added.

The brand is performing well in Japan and Singapore.

"Beyond Singapore and Japan, we continue to believe there will be the right opportunities, in the right markets, with the right models," Marks said.

"When those opportunities arrive, we will be ready.

"Today's decision is about the US specifically, it is not a statement about GYG's global potential."

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