Tortilla sees revenues rise but profit take a hit

The California-Mexico burrito chain saw revenues rise by 30% to £26.9m for the 26 weeks ended 3 July 2022, compared to £20.8m in the same period the previous year.
Like-for-like (lfl) revenue grew by 19% with adjusted EBITDA (pre-IFRS) standing at £2.5m, compared to £4.9m for the comparable period last year. Profit before tax was down to £0.3m versus £2.6m in the first half of 2021.
Tortilla says that while sales in its London sites recovered to 98% of pre-Covid levels during the period, overall sales over the summer period were “more challenging than anticipated”. It says this was due to the combined impact of the train strikes, the heatwave and number of people choosing to holiday abroad over the summer, with the first two factors estimated to have cost the business around £250,000 in lost sales,
The company also says that inflationary pressures have seen its protein costs rises by approximately 40% and estimates that cost inflation will result in a three percentage point reduction in gross margin for the full year.
It is expecting a further £500,000 adverse full-year impact from increased utility costs.
“Against a backdrop of challenging macroeconomic conditions, I am really proud to report that we have continued to make great progress against our ambitious growth plans laid out at our IPO last year. Our strong top-line growth was significantly ahead of the broader market, again reflecting Tortilla’s growing reputation for great value, high quality food,” says CEO Richard Morris.
In the first half of the 2022 financial year the business acquired burrito operator Chilango ​​for £2.75m and opened five new sites and one delivery kitchen, taking its estate to 84 restaurants, including the eight Chilango sites.
A further five openings are planned for the second half of the financial year, with its new store roll-out expected to increase to 12-15 restaurants a year from 2023.
“We continue to focus on our plans for strategic expansion, accelerating our new site roll-out to locations across the UK through both our acquisition of Chilango and organic roll-out programme. We are pleased to be ahead of our expansion targets set out at IPO, adding 18 sites this year, and excited by the opportunity to increase organic roll-out to 12-15 sites per annum from FY23,” adds Morris.
“Our long-term progress will continue to be underpinned by a firm focus on consistent operational excellence, ensuring a great value proposition, and the continued broad appeal of our offer. The board is highly confident in achieving the group’s exciting long-term growth potential.”