|
|
|
Wed 20th Dec 2023 - Update: Tortilla trading, inflation falls to lowest level for two years, Universal Studios plots UK theme park |
|
Tortilla ‘excited’ by future growth opportunities but ‘subdued consumer confidence impacting demand across the eating out market’: Tortilla, the UK’s largest fast-casual Mexican restaurant brand, has said it is excited about its future growth opportunities but said FY23 performance was “slightly behind” expectations due to “subdued consumer confidence impacting demand across the eating out market”, in particular during the fourth quarter. Tortilla said the eating out market is expected to continue to be challenged by cost-of-living pressures, especially outside of London and therefore expects a higher level of marketing investment to drive awareness of its brand in 2024. The business said it was “excited” by its franchise growth opportunities both in the UK and internationally and said there would be at least four further new store openings with SSP in FY24. Tortilla said it has also secured an “exciting” pipeline of new sites in high-footfall city centre and shopping centre locations. Tortilla said it has strengthened the leadership team with the appointment of Maria Denny as group finance director “who has a wealth of experience in the food and retail sector” and joins the business in February 2024. It follows the appointment of Keith Down as a non-executive director as well as the promotion of Andy Naylor to UK managing director. The company stated: “The board remains highly confident in the strength of Tortilla's customer proposition and the group's exciting future growth opportunities. Notwithstanding the challenging trading environment, the group is targeting robust adjusted Ebitda growth in FY24 on the back of the full year benefit of cost initiatives, the sales growth from the marketing investment and the group's store rollout programme. Pressures on a significant number of the group's costs are expected to ease over the year ahead. This reflects favourable contracts negotiated with key suppliers during FY23, the hedging of key input and utility costs, and the full year benefit of cost control initiatives implemented during FY23. However, recent guidance on national living wage increases will impact staff costs from April 2024.” The company added: “Revenue for FY23 is expected to increase by 13.8% against the comparable prior year period to £65.7m (FY22: £57.7m) and reflects the positive impact of year-to-date UK like-for-like growth of 3.7% (up 5.0% when adjusted for VAT) and new site openings. This performance is slightly behind the board's previous expectations due to subdued consumer confidence impacting demand across the eating out market, in particular during the fourth quarter. The group's London sites, where Tortilla enjoys stronger levels of brand awareness, shopping centres and travel locations have continued to perform particularly well. However high streets have been impacted by lower footfall over the past few months and sales have been impacted here and in smaller tertiary cities and towns where the brand awareness is lower. FY23 delivery sales have remained stable as a proportion of revenue at approximately 31%. The Group operated across multiple delivery partners, which, while supporting the sales performance, impacted margins. This delivery strategy is now being reviewed. The group's franchise partnerships with Compass Group and SSP Group have continued to perform outstandingly well in the UK, benefiting from encouraging like-for-like performances as well as one new franchise site opened during the year. The group's UAE franchise business had a record year, giving confidence to explore further franchise opportunities in the Middle East and continental Europe. Management has maintained focus on cost control with the benefits of multiple initiatives – in supply chain, energy, and productivity – resulting in an improved adjusted Ebitda margin in the second half of FY23 when compared with the first half, in line with previous guidance. The board anticipates that the group will experience the full year benefit of these initiatives in FY24. As a result of these factors, the board currently anticipates adjusted Ebitda for FY23 will be in the range of £4.5m-£4.6m. The group has made continued progress on UK new store openings with seven opened in FY23 (six equity stores and one franchise) and we've rationalised the delivery-kitchen estate by closing two units, taking the group to 87 sites at the year end. The group remains ahead of its aim of opening 45 new sites across the five years following its initial public offering in October 2021.” Chief executive Richard Morris said: “During 2023, Tortilla has made important strategic progress. We have continued to open new sites in line with our long-term growth strategy, increased like-for-like sales, and implemented several initiatives to enhance profitability during the second half. As a management team we are taking proactive actions to adapt to the changing market environment. We know that in buoyant eating out markets where the Tortilla brand is well known, we outperform. We have a strong portfolio of new sites in high quality locations as well as additional franchise growth opportunities. In addition, we intend to increase marketing investment to improve broader consumer awareness of our brand and fresh, value for money proposition whilst also taking action to optimise the profitability and long-term potential of our delivery channel. We remain as confident and excited as ever about Tortilla's long-term and sizable profitable growth opportunities both in the UK and internationally.”
Premium subscribers to receive next UK Food & Beverage Franchisee Database today: The next edition of the UK Food & Beverage Franchisee Database will be sent to Premium subscribers today (Wednesday, 20 December), featuring ten new entries and updates to existing entries. The database is updated every two months and the latest version features 120 businesses and almost 50,000 words of content. Among the new entries are large-scale Subway franchisee Daljo Group, which supports circa 340 stores and more than 100 franchisees, and Domino’s franchisee Domino’s West Country, which operates 11 stores and two mobile units across Devon. Roadside forecourt operator Ascona Group – which has partnerships with the likes of Costa, Greggs and Subway across its 62 sites – is also included. Premium subscribers also receive access to five other databases: the Multi-Site Database, which is produced in association with Virgate; the New Openings Database; the Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; and the Who’s Who of UK Food and Beverage. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription. Premium subscribers are also being given exclusive access to the recording and slides to Propel Multi-Club Conferences. They also receive their morning newsletter 11 hours early, at 7pm the evening before; regular video content and regular exclusive columns from Propel group editor Mark Wingett.
Inflation falls to lowest level in two years as food prices drop: UK inflation eased back to its lowest level for more than two years last month as falling petrol prices helped drive a bigger-than-expected fall, official figures show. The Office for National Statistics (ONS) said the rate of Consumer Prices Index inflation fell to 3.9% in November, down from 4.6% in October, and the lowest level since September 2021. Most economists had been expecting inflation to fall to 4.3% last month. Grant Fitzner, chief economist at the ONS, said: “Inflation eased again to its lowest annual rate for over two years, but prices remain substantially above what they were before the invasion of Ukraine. The biggest driver for this month’s fall was a decrease in fuel prices after an increase at the same time last year. Food prices also pulled down inflation, as they rose much more slowly than this time last year. There was also a price drop for a range of household goods and the cost of second-hand cars.”
Bank chief warns of interest rates staying higher for longer: Interest rates will have to stay higher for longer, a senior Bank of England official has warned, dashing expectations of monetary easing next year. Sarah Breeden, in her first speech as the Bank’s newly appointed deputy governor for financial stability, said the risks of inflation remaining stubbornly high were greater than the chances of a significant fall, reports The Times. Her comments come a week after the bank’s rate setting monetary policy committee (MPC), which includes Breeden, kept the base interest rate unchanged at 5.25% for a third consecutive meeting. The MPC warned there were still “upside risks to the outlook for wage growth”, which could warrant another increase to the base rate if this were to translate to higher inflation. Annual consumer prices inflation has fallen from a peak of 11.1% in October 2022 to 3.9%. The committee will be monitoring the inflation data and subsequent figures on wage growth before taking its next policy decision in February. Although inflation has fallen significantly in recent months, measures of wage growth are falling only gradually to about 7.3%. Breeden said Britain was suffering from higher price and wage inflation than both the United States and the eurozone, but the bank was not targeting any particular rate of earnings growth or unemployment to bring inflation back to its target, a level that it thinks will be reached in early 2025. The deputy governor said that a period of prolonged high inflation would have “damaging” consequences for the economy, households and businesses, delaying investment decisions and increasing the volatility of price changes.
Universal Studios plots UK theme park: Universal Studios has confirmed planning is under way for its first UK theme park – and the company has already bought a huge patch of land for the resort. Universal currently has attractions in the United States and Asia, and it’s now set their sights on Bedford for its first UK one. Speaking to Sky News, a Universal destinations and experiences spokesperson confirmed the company has “acquired land” and is “at the early stages of exploring its feasibility for a potential park and resort at this site”. “It will be many months before we are ready to make a decision to proceed and we look forward to engaging with all relevant stakeholders and the local community,” they added. Universal said it is always on the lookout for new locations that could become homes for potential projects. The Bedford site covers acres of land either side of Manor Road and Kempston Hardwick station. Universal theme parks celebrate the studio's most successful films and franchises, with rides dedicated to movies including Fast & Furious, Despicable Me and Jurassic World. Its parks in Hollywood and Osaka, Japan, are home to entire areas themed around Harry Potter and Super Nintendo, but executives are yet to decide which movies could inspire attractions at the Bedford location.
|
|
|
|
|
|
|
