REG - Tortilla Mexcn.Grill - H1 2022 Trading Update

Tortilla Mexican GrillAnnouncement

18/07/2022 07:00

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RNS Number : 7076S  Tortilla Mexican Grill PLC  18 July 2022

18(th) July 2022

Tortilla Mexican Grill PLC

("Tortilla" or the "Group")

H1 2022 Trading Update

Further strong sales growth and continued strategic progress

Tortilla Mexican Grill plc ("Tortilla"), the largest and most successful
fast-casual Mexican restaurant group in the UK, provides a Trading Update for
the half year ended 3 July 2022 ("H1 2022", the "Period").

Highlights

·     Group revenue increased 60% when compared to the same period in
2019.

·     LFL revenue(1) increased 19% which is materially ahead of the
industry Peach Coffer Tracker benchmark reported at 5.6%(2).

·    Strategic acquisition of Chilango for £2.75m, strengthening the
Group's position as the UK's leading fast-casual Mexican chain and
accelerating its expansion across the UK.

·    Continued roll-out with six new sites opened during the Period,
taking the total number of Group sites including the eight acquired Chilango
sites to 84 (H1 2021: 58).

·    Net cash of £3.1m as at 3 July 2022, enabling the Group to
effectively fund future expansion.

Tortilla achieved further strong top-line growth during the first half of the
FY22 financial year, delivering a 60% increase in Group revenue to £26.9m (an
increase of 55% excluding the impact of the Chilango acquisition). This
performance was underpinned by growing customer demand for Tortilla's healthy
and value-for-money food as well as the Group's roll-out of new sites.

The Group completed the strategic acquisition of Chilango on 23 May 2022 for a
total consideration of £2.75m, adding eight sites to the Group's estate plus
one delivery kitchen. The integration is progressing well, and the acquisition
strengthens the Group's position as the UK's leading fast-casual Mexican chain
and accelerates its expansion across the UK to further capitalise on growing
consumer demand for healthy, convenient and customisable cuisine.

During the Period the Group opened a further six sites: Bath, Cheshire Oaks,
Bournemouth, Portsmouth, Birmingham New Street, and a delivery kitchen in
Maida Vale. SSP Group also opened a Tortilla site in Bristol Airport and the
Group commenced a franchise partnership with Compass Group with four sites
trading.

All new sites are performing well and in line with expectations since opening.
These openings bring the total number of Tortilla sites to 84 (H1 2021: 58
sites), with 41% of company-run sites located outside of the M25. The Group
remains on track to deliver against the target outlined at the time of its IPO
to open 45 new sites over the coming years, with the eight sites acquired
through the acquisition of Chilango supplementary to this.

The Group's net cash position as at 3 July 2022 was £3.1m, providing
sufficient liquidity to effectively fund its future expansion plans.

Outlook

As has been widely documented, the Period saw challenging operating conditions
across the restaurant sector, notably significant levels of cost inflation,
which became more pronounced towards the end of the Period and these
macro-economic headwinds are expected to persist over the coming months. As
ever, the Group's full year profit performance will be weighted towards the
second half of the financial year.

As well as maintaining tight cost control, the Group has already taken
proactive and decisive steps to help mitigate against these external
pressures. This includes updating pricing, driving operational efficiencies,
and adopting a multi-platform delivery proposition by partnering with Uber
Eats and Just Eat, as well as Deliveroo, to access more customers choosing to
stay at home. Notwithstanding the macro-economic backdrop, the Board remains
highly confident that Tortilla is well positioned in the competitive
landscape, underpinned by its reputation for great value, strong delivery
proposition, and successful roll-out strategy.

Richard Morris, CEO of Tortilla, commented:

"We are pleased to report further strong growth and strategic progress during
the first half supported by our strong reputation for great value and our
growing UK presence. During the period we sold more than 3.2m burritos and
completed the exciting acquisition of Chilango to bolster our leadership
position in the UK's fast-casual Mexican market. Chilango hold leases in
several strong London locations and provide a high-quality supplementary food
offer".

"We have continued to outperform the sector according to relevant industry
benchmarks and remain confident in the Group's long-term growth prospects. Our
site-roll out continues as planned in line with the target set out at IPO,
with further opportunities supported by the favourable rental environment."

"Whilst the macroeconomic environment remains challenging, we are working hard
to mitigate cost pressures as much as we can and are mindful of the impact on
the consumer of the cost-of-living crisis. However, we remain very confident
that supported by our strong reputation for outstanding value, excellent
delivery proposition, and growing UK presence we are well positioned for long
term growth."

The Group intends to announce its Interim Results for the six months ended 3
July 2022 in mid-September 2022.

ENDS

(1) LFL revenue calculated on Group sales excluding Chilango (acquired on
23(rd) May 2022)

(2) Average of available data points for Jan 22 - May 22, restaurant sales.

 

 

ENQUIRIES

 

 Tortilla Mexican Grill PLC                                Via Hudson Sandler
 Richard Morris, CEO
 Andy Naylor, CFO

 Liberum Capital Limited (Nominated Adviser, Sole Broker)  Tel: 020 3100 2222
 Andrew Godber
 Edward Thomas
 Nikhil Varghese

 Hudson Sandler (Public Relations)                         Tel: 020 7796 4133
 Alex Brennan                                              tortilla@hudsonsandler.com (mailto:tortilla@hudsonsandler.com)
 Lucy Wollam
 Charlotte Cobb

 

For further information, visit tortillagroup.co.uk
(https://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 had 84 sites worldwide as of 3 July 2022,
comprising 68 sites in the UK operated by the Group, four sites franchised to
SSP Group in the UK, four 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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