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Tortilla FY lfls up 3.6%, Q1 lfls down 4.7%, launches new strategic approach: Tortilla, the UK’s largest fast-casual Mexican restaurant brand, has reported a 3.6% increase in like-for-like sales for the year ending 31 December 2023, as it launched a new strategic approach to drive “disciplined profitable growth and expand Tortilla in the UK and overseas”. For the year to the end of 2023, the business said revenue increased by 14% to £65.7m, driven by new openings, the annualisation of the previous year’s openings and the full year impact of the 2022 Chilango acquisition. It reported like-for-like revenue growth of 3.6%, equivalent to 4.9% growth when adjusted for the Q1 VAT benefit from 2022. Adjusted Ebitda (pre-IFRS 16) saw a 16% year-on-year increase to £4.6m (2022: £4.0m), while gross profit margin stood at 77.3% (2022: 76.4%), with the increase attributable to effective negotiations with the group’s main food suppliers, securing favourable commercials across 76% of the food portfolio. It also posted a pre-tax loss of £1.1m (2022: £0.9m). The company said that during the 12 months progress was made on UK new store openings, with six group-operated sites and one franchise site added, taking total to 87 sites – still in line with its IPO growth aspiration. Franchise sales were up 26% for 2023. The company said that current trading is in line with management expectations and that its profit conversion is improving. It said: “Our like-for-like sales are 4.7% down, which is in line with expectation and reflecting the anticipated impact of change in delivery strategy in February this year. The early indications of the change to a dual delivery model are encouraging. We expect the favourable upside in profitability to continue throughout 2024 as we leverage on initiatives implemented in 2023 and launch new ones. Our key focus is to drive sales growth and that underpins our investment in product quality, with the upcoming appointment of a director of food, and our deployment of cash for a big drive in raising brand awareness through marketing initiatives. We have already made progress towards our targeted expansion plans with a site in Manchester Arndale expected to open in May, and our franchise partners expected to exceed the previous store opening plans with at least five new stores now expected for 2024.” It said that under its new management team, the business Under the new management, will be focusing on the following strategic pillars, ‘Tortilla’s Vital 5’: Improve UK profitability; invest in brand to drive growth; invest in team and tech, double down on franchise, and develop brand internationally. It said there are plans in place to accelerate growth via franchising, whilst continuing own store roll out in grade A locations, at least five openings are planned in 2024 with its partners. Andy Naylor, chief executive of Tortilla, said: “I am pleased to present my first set of results as chief executive. Recent years have seen Tortilla expand strategically through a multi-channel approach, strengthening our operational model as a springboard for sustained, profitable growth. Throughout 2023, we dedicated ourselves to building resilience, especially enhancing profitability, as we recovered from macro events in 2022. Our efforts included streamlining costs, bolstering franchise partnerships, augmenting efficiency via technology investments, and enriching our team with fresh talent, all while continuing site deployments. These initiatives have solidified the foundation for our continued success. The appetite for Mexican cuisine is surging, and Tortilla, as the dominant market leader in the UK, has an unparalleled set of advantages to capitalise on this burgeoning opportunity across the UK and Europe. Today, I’m pleased to unveil our reinvigorated strategic vision: ‘Tortilla’s Vital Five.’ Building upon our proven track record, this strategy will create sustainable profitable growth in the years ahead, unlocking substantial value for our shareholders. Tortilla continues to have immense potential and I am excited to lead the business through the next chapter of the journey.”

Propel’s latest Multi-Site Database to be released on Friday with seven category segmentation including 510 operators from the cafe and bakery sector: The next Propel Multi-Site Database, produced in association with Virgate, providing details of more than 3,000 multi-site operators, will be released on Friday (26 April) at midday to Premium Club members – and companies are now searchable in seven main segments. The database features 910 (29%) operators from the casual dining sector, 765 (25%) pub and bar operators, 510 (16%) cafe bakery operators, 420 (14%) quick service restaurant operators, 250 (8%) hotel operators, 190 (6%) experiential leisure operators and 53 (2%) fine dining operators. The database is updated each month – this edition includes 23 new companies and brings the total to 3,098. New additions in the cafe and bakery sector include Utter Waffle, a four-times winner in the British Street Food Awards that has sites in London and Reggie – its flagship food truck. There is also Cook’s Café, which was set up by ex-teacher Paul Charlton in 2017 and has five sites in the Teesside area. Premium Club members also receive access to five other databases: the Turnover & Profits Blue Book, the New Openings Database, the UK Food and Beverage Franchisor Database, the UK Food and Beverage Franchisee Database and the Who's Who of UK Hospitality. Plus, all members will be offered a 20% discount on tickets to five Propel paid-for events – The Excellence in Pub Retailing Conference (14 May), Social Media for Profit (18 July), the Talent and Training Conference (1 October) and Restaurant Marketer and Innovator (two days in January 2025). Operators are also able to send up to four members of staff to each of our four Multi-Club Conferences for free. Premium Club members receive their daily Propel Info newsletter 11 hours earlier than standard subscribers, at 7pm the evening before. They also receive videos of presentations at eight Propel conference events two weeks after they are held. This represents around 100 videos of industry insight over the course of the year. Premium Club members will be sent a dedicated monthly newsletter that will highlight key updates in the sector and direct subscribers to all the vital content their membership offers. Premium Club members also receive exclusive opinion columns every Friday at 5pm, which include the thoughts of Propel group editor Mark Wingett and a host of industry leaders from across the sector. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or a supplier. Email kai.kirkman@propelinfo.com today to sign up.

Private sector economy grows at fastest pace in nearly a year: The private sector economy grew at the fastest pace in nearly a year last month, underscoring that the recovery from a short-lived recession is picking up pace, a closely watched survey showed. The Times reports that the composite flash purchasing managers’ index (PMI), which measures output across the UK’s main services and manufacturing sectors, climbed to 54 in April from 52.8, the highest reading since May 2023. The index, published by S&P Global, was well above City analysts’ expectations of 52.6 and the 50-point threshold that separates growth from contraction. The results underscore that growth is on an upward trajectory thanks to an improvement in macroeconomic conditions. Inflation has dropped to 3.2%, its lowest point since September 2021, raising hopes that the Bank of England will cut interest rates from a 16-year high of 5.25%. Real wages have grown for several months in a row, assisting consumer spending. Households and businesses raised spending in response to improved sentiment towards the economy, the PMI showed, with new order volumes up and employment across the private sector rising. The PMI showed “that the UK economy’s recovery from recession last year continued to gain momentum”, Chris Williamson, chief business economist at S&P Global Market Intelligence, said. He said: “Improved growth in the service sector offset a renewed downturn in manufacturing to propel overall business growth to the fastest for nearly a year, indicating that GDP is rising at a quarterly rate of 0.4% after a 0.3% gain in the first quarter.” A recovery in output among services businesses has powered the wider economy’s momentum, with the sector’s PMI reading jumping to 54.9 from 53.1, an 11-month high. Manufacturing activity returned to contraction, with the sector’s index down to 48.7 from 50.3. Williamson said: “While the improving economic recovery picture is welcome news, the upward pressure on inflation will add to concerns that a sustainable path to below target inflation has not yet been achieved.” However, Ashley Webb, UK economist at Capital Economics, said the services component of the inflation index dropped to 56.4 from 57.1, which might encourage the Bank “to cut rates in the coming months”.

Rate cuts are still a ‘way off’, warns Bank’s chief economist: The Bank of England’s chief economist has insisted that interest rate cuts still remain a “way off” in a sign of a split emerging among the central bank’s policymakers over when borrowing costs could come down. The Times reports that Huw Pill said that a lack of data since March demonstrating that inflation had fallen substantially meant he saw “no reason to depart from the baseline” of keeping borrowing costs restrictive for some time. Pill said that the “passage of time” had brought cuts to the UK base rate “somewhat closer”, but added that policy needs to remain restrictive to eradicate underlying inflationary pressures from the economy. A sharp fall in global energy prices had driven inflation lower over the past year. However, the “tentative decline in the persistent component of inflation that we have seen thus far owes to the restrictive stance of monetary policy the [monetary policy committee] has established”, Pill said. “Any decline in inflation persistence we are seeing is therefore not a reason to think restrictiveness is no longer required. Rather it is an illustration that the restrictiveness of monetary policy is starting to have its desired effect.” Inflation has dropped from a four-decade high of 11.1% in October 2022 to 3.2% last month, its lowest level since September 2021. The Bank of England has raised the base rate to 5.25%, its highest level in 16 years. However, services inflation, which the Bank monitors closely, remains high at 6% above the central bank’s forecasts. Wage growth too is elevated, unemployment low at 4.2% and economic growth is gathering momentum. Pill said he did think that the “persistent component of inflation is being squeezed out of the system by restrictive monetary policy”, adding that he does not see “reason to believe that is happening more rapidly or profoundly than I expected six months ago”. “The hurdle to changing my assessment of inflation persistence over the coming few months is relatively high.”

New AG Barr chief hits sweet spot with pay deal: The new chief executive of AG Barr is to receive a £130,000 relocation package to help him buy a property in Scotland. The Times reports that the soft drinks firm said that Euan Sutherland, who is Scottish, would get the lump sum as part of his joining package when he officially takes over on 1 May. He and his family live in Surrey but the new role will see him splitting time between London and Scotland. Sutherland, who has previously led the insurer Saga, the clothing brand Superdry and the Co-op, is also to get a base salary of £650,000. That is 26% higher than the £515,000 received by the outgoing boss, Roger White. AG Barr said that Sutherland was still being paid “materially” less than he had been at Saga and the improved chief executive salary reflected his extensive experience as a public company director. AG Barr counts Irn-Bru and Rubicon among its soft drinks brands while it also owns Moma, an oat milk firm, and Funkin, a cocktail provider. Property website Rightmove shows a plot of land in Cumbernauld, North Lanarkshire, where the AG Barr HQ is, would cost £130,000 and this is with planning permission for a five-bedroom luxury home. The annual report said AG Barr will meet Sutherland’s travel expenses to the south of England for up to two years. David Ritchie, chairman of the AG Barr remuneration committee, said: “While the salary is above that of the current chief executive, it is materially lower than the salary received by the incoming chief executive in their most recent appointment at Saga plc and reflects the significant experience of the individual as a PLC director.”