Tortilla raises UK revenue forecast, delays France rebranding
By Josh White
Date: Tuesday 10 Dec 2024
(Sharecast News) - Fast-casual restaurant chain Tortilla Mexican Grill reported a strong performance in its core UK market in a trading update on Tuesday, as well as strategic developments in France.
The AIM-traded company raised its UK revenue forecast to between £64m and £64.3m, surpassing earlier guidance.
It put the growth down to a robust recovery in UK in-store like-for-like sales, which improved significantly from a 4.2% decline in the first quarter to a 4% increase in the fourth quarter.
The recovery followed the implementation of Tortilla's 'Vital 5' strategic plan in April, which the board said delivered encouraging results.
Tortilla outperformed the CGA Coffer benchmark for the sector, which showed weaker sales trends during the same period.
In France, Tortilla's strategic expansion was progressing, with a fully-recruited management team and the construction of a central kitchen in Lille nearing completion, set to be operational by January.
The company said it had delayed the rebranding of French restaurants to incorporate a refreshed brand and interior design.
While this postponement would impact French profitability in 2025, the company said the enhanced proposition was expected to strengthen the group's long-term performance in the market.
At the group level, trading for the 2024 financial year was in line with expectations, with adjusted net debt projected at £7.3m by year-end.
Tortilla's management said it was optimistic about the company's growth trajectory, as it capitalised on its recovery in the UK and positioned itself for expansion in France.
"We are delighted to report that we have gained further momentum in the UK, with a strong fourth-quarter sales performance," said chief executive officer Andy Naylor.
"We have had an incredibly busy eight months, working on numerous initiatives which form part of our 'Vital 5' strategy - we have overhauled our food offer, recruited a new food director, successfully landed our first limited time offers in many years, purchased new equipment enabling us to sell better quesadillas all day, launched a new loyalty system, implemented self-ordering kiosks across 11 additional restaurants and transformed the internal culture to focus on career development.
"We will also further expand our partnership with SSP with openings of Tortilla units in both Stansted Airport and Liverpool Street Station in the coming weeks."
Naylor noted that the company completed the acquisition of its largest European competitor, Fresh Burritos, in July, adding that since acquisition, the company had built the central team to run that business and nearly completed building works in its central kitchen in Lille to see the facility operating from January.
"Our decision to revise the timing of the store rebranding, whilst causing a short-term profit impact in the 2025 financial year, is, we believe, the right long-time decision to ensure the success of the acquisition.
"We have confidence in the long-term project underway in France, which should also provide a base for further expansion in Europe in due course.
"We are pleased with our achievements this year and I want to thank all the team for all their hard work, enthusiasm and drive which has helped us deliver some significant goals."
At 0809 GMT, shares in Tortilla Mexican Grill were up 2.91% at 53p.
Reporting by Josh White for Sharecast.com.
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