- The fast food chain said its half-year profits fell 93% to just £156,500.
- No Covid Restrictions and Adding Sites Increased Sales by 30%
- Tortilla has warned that protein costs will rise by about 40% this year.
Tortilla Mexican Grill acknowledged that profits were negatively impacted by higher protein prices caused by Russia’s full-scale invasion of Ukraine.
The fast food chain showed profits fell about 93% to just £156,500 in the 26 weeks to early July from £2.29m the previous year, even as trading remained relatively strong.
Revenue rose 30% to £26.9m on the back of the absence of Covid-related restrictions on non-essential outlets, the addition of new sites and strong sales growth.
Earnings: Tortilla Mexican Grill reported profits fell about 93 percent to just £156,500 in the 26 weeks to early July from £2.29 million the previous year.
But the London-based firm said its gross profit fell, primarily due to a temporarily reduced VAT rate on supplies to hotel establishments that ended in March.
He also blamed the growing share of in-store orders, which are priced around 20% to 35% less than when delivered to customers, and the rise in protein prices as a result of the war in Ukraine.
Tortilla has warned that its protein spending, which makes up about one-third of all its expenses, will rise by about 40% this year, with utility bills up by £500,000.
While the company said it has taken steps to minimize cost increases, the group expects inflationary pressures to weigh on its full-year gross of £1.8m and is wary of price hikes or significant discounts.
“Times remain tough for the industry as a whole, reflecting the extent of the recent pressure on costs,” said Richard Morris, chief executive of the company.
After this announcement, Promotions Tortilla Mexican Grill fell by a third to 97.4p on Monday, meaning their value has fallen 46% since listing 12 months ago.
The Mexican food retailer has used a portion of the proceeds from its initial public offering to expand its holdings, growing from 62 sites in September 2021 to 84 in the UK, Ireland and the Middle East.
Many of the new outlets are owned by former rival Chilango, which the business acquired in May for £2.75m, while others are franchises operated by foodservice giant Compass Group and Upper Crust owner SSP Group.
Tortilla said it plans to open 12 to 15 more sites next year to take advantage of the “depressed” commercial real estate sector and its strong sales outside of London.
However, the AIM-listed company also noted that trading in the capital was impressive, with sales at “Zone 1” destinations just below pre-pandemic levels.
Richard Morris added: “In a challenging macro environment, I am truly proud that we continue to make significant progress on our ambitious growth plans set out during our IPO last year.
“Our strong revenue growth has outperformed the broader market by a significant margin, again reflecting Tortilla’s growing reputation for providing high-quality, value-for-money food.”
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