Tortilla weathers strikes and inflation as expansion drives 22 per cent revenue spike
Tortilla Mexican Grill revenues jumped 22 per cent year-on-year to £32.7m as the fast-casual group continued to expand its sites across the UK.
The popular Mexican chain reported a slight dip in pre-tax earnings amid headwinds from inflation and rail strike action and swung to a £600,000 loss, down from £300,000 profit last year.
However this was in line with market expectations and factored in the removal of £1.1m in government support received over its full year results in 2022.
Net debt sat at £1.6m for the period, also in line with expectations and with a further £7m of liquidity available from the group’s existing debt facilities.
Tortilla chief Richard Morris hailed the group’s continued expansion drive, which has seen it open a range of new sites for its popular Mexican inspired dishes, including in Derby, Greenwich and Manchester Picadillidy.
In May, last year, it snapped up rival Mexican restaurant business Chilango – which operated around eight UK restaurants across the UK – in a £2.75m deal from investment firm RDCP group
“Despite the challenging economic backdrop, during the first half Tortilla demonstrated its resilience and showed consistent progress, with revenue growth of more than 20 per cent,” Morris said, up from £26.9m in 2022
“We continued to expand our store estate and have successfully embedded the Chilango acquisition,” he added.
A quieter summer, hit by industrial action and “uninspiring weather” tempered expectations but Morris was bullish for the year ahead, with the group opening two new sites in Belfast and Bracknell in July and August and with the former “doubling the opening revenue expectations.”
“A further three sites are expected to open in H2 FY23, taking the total to eight new sites in the year as we continue to deliver our stated roll-out plans,” Morris added.
That expansion drive keeps Tortilla ahead of its IPO aim of 45 new sites in five years.
It comes despite a challenging backdrop for the restaurant sector, which has struggled amid ongoing disruption on Britain’s rail network and rampant inflation.
HospitalityUK chief Kate Nicholls told Morning Wire last week that strike disruption had already cost the sector “£3.5bn in lost sales and there is no doubt that figure will increase as a result of further strike days” expected this week as RMT and ASLEF Union plan coinciding walk-outs.
Headwinds including utility, staffing and food costs and Brexit-related issues have also pummelled the sector, with some fellow highstreet chains, such as Franco Manca, opting to exit London markets in favour of greener pastures.