Tortilla flags slower-than-expected sales growth as consumers remain stretched

Tortilla Mexican Grill, which has nearly 70 stores in the UK and several franchised outlets in the United Arab Emirates, said revenues are set to increase by nearly 14 per cent to £66m over 2023, compared with 2022.

On a like-for-like basis, which strips out the impact of new stores opened during the year, sales are expected to grow by 3.7 per cent year on year.

The performance is slightly below the firm’s previous predictions due to subdued consumer confidence affecting demand for eating out, especially during the last few months of the year, Tortilla said.

It comes as UK inflation fell sharply in October and November, but consumers and businesses continue to grapple with higher food and electricity prices.

High streets have been affected by fewer visitors in recent months, especially in smaller cities and towns outside London, Tortilla said.

But the burrito and tacos chain revealed that its London stores, which total more than 40, are more well-known to consumers and have performed well.

The company has been taking steps to cut costs after swinging to a loss during the year, including across its supply chain, energy spending and productivity.

But it flagged that the national minimum wage increasing from April will bump up staff costs.

As a result of cost-saving measures, Tortilla said it expects to report adjusted earnings in the range of £4.5m to £4.6m for the full year.

Chief executive Richard Morris said: “During 2023 Tortilla has made important strategic progress. We have continued to open new sites in line with our long-term growth strategy, increased like-for-like sales, and implemented several initiatives to enhance profitability during the second half.”

“As a management team we are taking proactive actions to adapt to the changing market environment.

“We know that in buoyant eating-out markets where the Tortilla brand is well-known we outperform.”

Tortilla said it is planning to spend more on marketing to help improve its brand awareness next year, as cost-of-living pressures continue to affect demand for eating out.

It also revealed it has secured an “exciting pipeline” of new stores in busy city centres and shopping centres, which is expected to help drive earnings growth next year.

Earlier this week, shares in Superdry plummeted after the retailer warned its profits will be worse than expected. It blamed a tough consumer retail market and abnormally warm autumn weather delaying sales of its crucial autumn and winter range.

The business has been cutting costs, clearing stock and selling off assets this year as part of efforts to boost profits.