TIDMMEX
RNS Number : 3733X
Tortilla Mexican Grill PLC
20 December 2023
20th December 2023
Tortilla Mexican Grill PLC
("Tortilla" or the "Group")
FY23 Trading Update
Tortilla Mexican Grill PLC, the largest and most successful
fast-casual Mexican restaurant group in the UK, provides a Trading
Update for the financial year ended 31 December 2023 to date
("FY23" or the "Period").
Financial Highlights
-- Revenue for FY23 is expected to increase by 13.8% against the
comparable prior year period to GBP65.7m (FY22: GBP57.7m) and
reflects the positive impact of YTD UK LFL (like for like) growth
of +3.7% (+5.0% when adjusted for VAT) and new site openings:
o This performance is slightly behind the Board's previous
expectations due to subdued consumer confidence impacting demand
across the eating out market, in particular during Q4.
o The Group's London sites, where Tortilla enjoys stronger
levels of brand awareness, shopping centres and travel locations
have continued to perform particularly well. However high streets
have been impacted by lower footfall over the past few months and
sales have been impacted here and in smaller tertiary cities and
towns where the brand awareness is lower.
o FY23 delivery sales have remained stable as a proportion of
revenue at approximately 31%. The Group operated across multiple
delivery partners, which, whilst supporting the sales performance,
impacted margins. This delivery strategy is now being reviewed.
o The Group's franchise partnerships with Compass Group plc and
SSP Group plc have continued to perform outstandingly well in the
UK, benefiting from encouraging LFL performances as well as one new
franchise site opened during the year.
o The Group's UAE franchise business had a record year, giving
confidence to explore further franchise opportunities in the Middle
East and Continental Europe.
-- Management has maintained focus on cost control with the
benefits of multiple initiatives - in supply chain, energy, and
productivity - resulting in an improved Adjusted EBITDA margin in
H2 FY23 when compared to H1 FY23, in line with previous guidance.
The Board anticipates that the Group will experience the full year
benefit of these initiatives in FY24.
-- As a result of these factors, the Board currently anticipates
Adjusted EBITDA for FY23 will be in the range of GBP4.5m -
GBP4.6m.
Operational and Strategic Highlights
-- Continued progress on UK new store openings with seven opened
in FY23 (six equity stores and one franchise) and we've
rationalised the delivery-kitchen estate by closing two units,
taking the Group to 87 sites at the year end. The Group remains
ahead of its aim of opening 45 new sites across the five years
following its IPO in October 2021.
-- Strengthened leadership team with the appointment of Keith
Down to the Board as a Non-Executive Director as well as the
promotion of Andy Naylor, CFO, to UK Managing Director. We are
delighted to announce the appointment of Maria Denny as Group
Finance Director who has a wealth of experience in the food and
retail sector and joins the business in February 2024.
FY24 outlook
-- The Board remains excited by the Group's franchise growth opportunities both in the UK and internationally. We are delighted to confirm at least four further new store openings with SSP in FY24 as we further expand the successful partnership.
-- The eating out market is expected to continue to be
challenged by cost-of-living pressures, especially outside of
London and therefore we expect a higher level of marketing
investment to drive awareness of our brand in 2024.
-- Pressures on a significant number of the Group's costs are
expected to ease over the year ahead. This reflects favourable
contracts negotiated with key suppliers during FY23, the hedging of
key input and utility costs, and the full year benefit of cost
control initiatives implemented during FY23. However, recent
guidance on National Living Wage increases will impact staff costs
from April 2024.
-- The Group has secured an exciting pipeline of new sites in
high-footfall city centre and shopping centre locations.
-- The Group continues to refine its business model, marketing
approach and site opening strategy to respond to the market
environment whilst also ensuring it continues to capitalise on its
significant long-term growth opportunities.
-- The Board remains highly confident in the strength of
Tortilla's customer proposition and the Group's exciting future
growth opportunities. Notwithstanding the challenging trading
environment, the Group is targeting robust Adjusted EBITDA growth
in FY24 on the back of the full year benefit of cost initiatives,
the sales growth from the marketing investment and the Group's
store rollout program.
Richard Morris, Chief Executive Officer of Tortilla,
commented:
"During 2023 Tortilla has made important strategic progress. We
have continued to open new sites in line with our long-term growth
strategy, increased like-for-like sales, and implemented several
initiatives to enhance profitability during H2."
"As a management team we are taking proactive actions to adapt
to the changing market environment. We know that in buoyant eating
out markets where the Tortilla brand is well known, we outperform.
We have a strong portfolio of new sites in high quality locations
as well as additional franchise growth opportunities. In addition,
we intend to increase marketing investment to improve broader
consumer awareness of our brand and fresh, value for money
proposition whilst also taking action to optimise the profitability
and long-term potential of our delivery channel."
"We remain as confident and excited as ever about Tortilla's
long-term and sizable profitable growth opportunities both in the
UK and internationally."
Note - all figures are subject to FY23 audit
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
ENQUIRIES
Tortilla Mexican Grill PLC Via Hudson Sandler
Emma Woods, Non-Executive Chairwoman
Richard Morris, CEO
Andy Naylor, CFO
Liberum Capital Limited (Nominated Adviser, Tel: 020 3100 2222
Sole Broker)
Andrew Godber
Edward Thomas
Nikhil Varghese
Hudson Sandler (Public Relations) Tel: 020 7796 4133
Alex Brennan Tortilla@hudsonsandler.com
Wendy Baker
Charlotte Cobb
For further information , visit tortillagroup.co.uk
About Tortilla Mexican Grill plc
Tortilla is the largest and most successful fast-casual Mexican
restaurant group in the UK specialising in the sale of freshly made
Californian-inspired Mexican cuisine. The Group has 87 sites
worldwide as of 20 December 2023, comprising 69 sites in the UK
operated by the Group, five sites franchised to SSP Group in the
UK, five sites franchised to Compass Group UK & Ireland and
eight franchised sites in the Middle East.
The Group was founded in 2007 by Brandon Stephens, originally
from California who, upon his arrival in London in 2003, found it
difficult to satisfy his desire for quality burritos and tacos. As
a result, Brandon established Tortilla with a mission of offering
customers freshly prepared, customisable, and authentic
Californian-inspired Mexican food.
The brand is synonymous with an energetic, vibrant culture, and
with providing a great value-for-money proposition. It embraces
fast-growing sector trends (including eating out, healthy eating,
provenance, ethnic cuisine, delivery) across a variety of
locations, through a differentiated product offering which is
popular with a broad customer base, and a clearly defined
multi-channel marketing strategy. It benefits from flexible site
locations and formats, and a scalable central infrastructure.
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