Tortilla trades in line as it expands store count

Fast-casual Mexican restaurant operator Tortilla Mexican Grill reported a 22% increase in group revenue in a trading update on Monday, reaching £32.7m.

The AIM-traded company said the growth reflected growing demand for its high-quality and value-for-money customer proposition.

Its like-for-like revenue increased 8.4% , surpassing the industry benchmark set by the Peach Coffer Tracker.

Tortilla said its franchise sites experienced exceptional performance, achieving record sales across all SSP locations.

The firm said it was planning to expand further on that success by adding more franchise sites in the near future.

As at the end of the period, Tortilla operated a total of 85 sites under the Tortilla and Chilango brands, compared to 82 at the end of the 2022 financial year.

During the period, Tortilla successfully opened new sites in Derby and Greenwich, as well as an additional SSP franchise site at Manchester Piccadilly.

All of those locations were showing promising performance.

Tortilla noted that it was set to open its first-ever restaurant in Northern Ireland this week in Belfast, with another location in Bracknell scheduled to open in the coming weeks.

Tortilla also reported solid financial management, with net debt pre-IFRS 16 of £1.6m as at 2 July, , aligning with expectations.

The company said it had implemented efficiency and cost-saving initiatives, including utilities hedging, which supporting profitability.

It said it was confident that the initiatives would continue to drive positive financial results in the second half of the year.

Looking ahead, Tortilla said it remained focussed on delivering strong strategic progress and driving revenue growth.

Despite the economic pressures affecting the sector, the company said its management had effectively implemented measures to mitigate costs and support profitability.

Additionally, Tortilla had introduced new strategic initiatives, such as the ‘Tortilla Sunsets’ menu and ‘Happy Hour’ offers, to further stimulate customer demand, particularly during evening trade.

The board of Tortilla said it was confident in the company's ability to deliver results in line with market expectations for 2023.

“We are pleased to have delivered good revenue growth and further strategic progress in the first half,” said chief executive officer Richard Morris.

“Our strong like-for-like sales growth has been ahead of industry comparatives reflecting the appeal of our high quality, healthy and customisable great value propositions.”

Morris said Tortilla was continuing to deliver on its “disciplined but ambitious” approach to new site openings and strategic expansion, with all of its new openings performing well and meeting our expectations.

“Our franchise sites also continue to perform well with our SSP sites achieving record results and we remain hugely excited by the significant franchise growth opportunities in the UK and overseas.”

At 1202 BST, shares in Tortilla Mexican Grill were up 1.79% at 82.96p.

Reporting by Josh White for Sharecast.com.