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  • Writer's pictureMark Watson-Mitchell

Tortilla Mexican Grill – Update confirms full year performing to market expectations

Richard Morris, Chief Executive of Tortilla Mexican Grill (LON:MEX), in announcing a Trading Update for the full year to 1 January, declared that:


"We have a proven and highly popular customer proposition. During difficult economic times, restaurants that offer great, consistent food at competitive price points will be the winners, and we sit comfortably in this space.”


It goes without saying that times have been tough out there in the hospitality sector over the last six months or so.


Therefore the confidence of Morris rings more hopeful than many would have expected.


The £35m capitalised Tortilla Mexican Grill group now has some 82 fast-casual sites worldwide selling freshly made Californian-inspired Mexican cuisine, 65 of which are in the UK operated by the group, 9 are franchised out in the UK and 8 are franchised sites in the Middle East.


The last year was one of high resilience, especially in the face of so many challenges.


The group stated that it was helped by the ongoing strength of its customer proposition and the demand for its sector-leading brands.


Despite the Q4 rail strikes and weather disruptions the group actually saw a 16% like-for-like sales advance over the same period in 2019.


Analyst Anna Barnfather at Liberum Capital rates the group’s shares as a Buy at the current 87p, with a Target Price of 170p.


Her estimates for the last year suggest sales of £58.4m (£48.1m) and an EBITDA of £4.0m (£8.7m).


For the current year Barnfather is going for £69.8m takings and an EBITDA of £5.0m.


The ability of the group to fund itself through current pressures is seen by her estimate of current year end cash of £2.3m (est £0.4m debt).


The group’s management remains confident in its outlook for this year and beyond, and its ability to continue to implement its proven growth strategy.


Richard Morris stated that:


"Looking ahead, we remain as motivated and enthusiastic as ever about Tortilla's significant organic growth opportunities in the UK, with the added excitement of growing our already successful franchise partnerships both in the UK and abroad."


Understandably, with so many external pressures over which its management had no control, this group has withstood and now is ready to push forward again.


The group’s shares reflect the balance sheet ability to resume growth and the continuation of new sites and franchises being rolled out this year.



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