Tortilla Mexican Grill (MEX) Trading Update summary

Acquisition overview

• Tortilla Mexican Grill is acquiring Fresh Burritos, the largest fast-casual Mexican restaurant group in France, for €3.95 million, including 13 company-owned restaurants and rights to 19 franchised locations.

• The acquisition supports Tortilla's 'Vital Five' growth strategy, focusing on international expansion and franchise growth.

• Funding comes from existing debt facilities, with a mix of cash payment (€2.71m) and bank debt rollover (€1.24m).

• Fresh Burritos' 13 restaurants are in prime French city locations, with additional franchised sites in France, Réunion Island, and South Korea.

• Completion is set for 1 July 2024, pending procedural conditions.

Strategic rationale and synergies

• The acquisition provides a strong platform for rapid expansion in France and Europe, leveraging Fresh Burritos' established footprint.

• Tortilla will rebrand Fresh Burritos' company-owned stores, aiming for faster growth and lower early-year losses compared to organic expansion.

• A new 1,400 sq m Central Production Kitchen in France will support consistent food quality and future regional growth.

• Synergies include increased buying power, operational and marketing efficiencies, and enhanced franchise opportunities.

• The acquisition is expected to deliver £2.5m additional annual adjusted EBITDA after 24 months of maturation.

Leadership and governance

• A European sub-Board committee is established, chaired by Francesca Tiritiello, with Gilles Boehringer joining as Non-Executive Director.

• An experienced European hospitality Managing Director will join in September, supported by seconded UK leadership team members.

• Fresh Burritos founder Timothée Tronet will advise the Tortilla France board on transition and franchisee relations.