Tortilla Mexican Grill (MEX) H1 2024 earnings summary

Executive summary

• Achieved strategic European expansion with the acquisition of Fresh Burritos, providing a platform for growth and international presence.

• Focused on product quality, new recipes, revitalised menu, and technology investments including a new loyalty app and self-order kiosks.

• Improved profitability through operational efficiencies, cost management, and a revised delivery strategy.

• Ended H1 FY24 with 89 stores, including 20 franchised, and plans to accelerate franchise-led growth with a record year for UK franchise sales.

• Board remains confident in long-term growth opportunities in the UK and internationally.

Financial highlights

• H1 FY24 revenue was £31.5m, down 3.7% year-over-year, mainly due to a revised delivery strategy and challenging trading environment.

• Adjusted EBITDA held steady at £1.8m, with margin improving to 5.7% of revenue.

• Loss before tax improved to £0.2m, a £0.4m improvement compared to the same period last year.

• Gross profit margin increased by 70bps to 77.7% year-over-year.

• Net debt at period end was £3.3m, with £2.8m of debt facilities undrawn.

Outlook and guidance

• In-store LFL sales up 4% in September period-to-date, with current trading in line with management expectations.

• Margin improvements expected to continue in H2 FY24 as cost-saving and sales initiatives take effect.

• No further own store openings planned for H2; focus on converting Fresh Burritos stores and rolling out kiosks.

• Franchise partners expected to open three new stores in H2, on track for five new franchise sites in FY24.

• No interim dividend declared; capital remains focused on growth and international expansion.