Despite the many challenges facing the restaurant sector, Tortilla Mexican Grill (MEX:AIM) served up tasty maiden full year results following its stock market listing in October 2021, with sales and profits reaching record levels.
Shares in the UK’s largest listed fast-casual Mexican restaurant group were marked up 1.5% to 168.5p as it also reported first quarter like-for-like sales growth of 20.1%, reflecting the growing appeal of its value-for-money burritos, tacos and salads to a wide demographic.
RECORD YEAR WRAPPED UP
Selling freshly made Californian-inspired Mexican cuisine, the dining group floated on AIM late last year to capitalise on further growth opportunities brought about by the pandemic.
For the year ended 2 January 2022, Tortilla Mexican Grill cooked up record sales of £48.1 million, representing 79.5% growth year-on-year, and swung from a £1.7 million loss to pre-tax profits approaching £2.3 million.
These record results were delivered despite Covid-related site closures and restrictions and were attributed to a strong performance across the existing estate and the addition of new sites.
Tortilla Mexican Grill delivered like-for-like sales growth of 23.8% in 2021 versus pre-pandemic 2019.
CEO Richard Morris commented: ‘During the year we made excellent progress in delivery of our long-term growth strategy. We opened further sites in line with our UK roll-out plans, expanded our delivery kitchen estate to fulfil growing customer demand, and both extended and launched franchise partnerships which introduced the Tortilla brand to even more customers across the UK.’
Encouragingly, despite the cost of living squeeze and Omicron disruption, this strong trading momentum has continued into 2022 with like-for-like sales growth of 20.1% in the first three months of 2022 versus 2019.
With an average price per main meal of around £8 to £9, Tortilla Mexican Grill may suffer less than more expensive fast food outlets should consumers decide to spend less to cope with the rising cost of living.
The company remains on track with its accelerated expansion strategy and continues to target further franchising and licensing opportunities.
This is demonstrated by the recent launch of a franchise partnership with food service group Compass (CPG) to open at least 14 sites at UK universities over the next five years.
THE LIBERUM VIEW
Liberum believes the dining group is ‘set to be a long-term winner in a post-Covid world’ and is ‘perfectly positioned to benefit from structural multi-channel growth opportunities via the food-to-go, dine-in and delivery markets. In addition, the offer chimes with accelerating consumer trends towards health, cost and convenience, which supports ongoing outperformance in the coming months and years.’
The investment bank also regards Tortilla Mexican Grill as ‘well positioned to navigate the challenging inflationary environment given its value-for-money offer, simple supply chain and upside from recent supplier renegotiations.’
