Tortilla reports lfls returning to growth with new strategic approach ‘progressing well’: Tortilla, Europe’s largest fast-casual Mexican restaurant brand, has said trading is steadily improving on the back of its investment in the business with like-for-like sales returning to growth and its new strategic approach launched earlier this year “progressing well”. The company stated: “Current trading is in line with management expectations for the full year 2024, with in-store sales continuing to improve on the back of our investment in food, brand awareness and technology (up 4% like-for-like in September month to date, up from minus 6% in March). We also continue to see our revised delivery strategy and cost savings initiatives improving profit conversion.” Tortilla said the integration of Fresh Burritos, the largest fast-casual Mexican restaurant group in France that it acquired in the summer, was “progressing well and in-line with plans” and “provides a springboard for franchise growth across Europe”. Tortillla added: “A site has been secured for a fully-fitted-out 1,400 square-metre central production kitchen in Lille in France, enabling Tortilla to produce consistent food at scale for the European market, on track to open in the fourth quarter. Store conversion started with the first site, Strasbourg, converted to Tortilla in the third quarter with the next two sites scheduled for conversion in the fourth quarter.” Tortilla also announced a five-year extension of its development agreement with SSP, which will see it more than double its number of sites with the operator of food and beverage outlets in travel locations worldwide. Updating on the progress of its strategic approach launched in the first quarter, the company said UK profitability is improving with the strategic decision to revise delivery partner strategy in the first half driving Ebitda enhancements (up £0.5m) despite like-for-like decline in delivery of 10.3%. Tortilla said the leverage of previous year’s supplier contract negotiations is also driving improved profit conversions year-on-year. With new food director James Garland, joining in the first half, the group said it has revitalised its core menu with new recipes for its proteins and salsas, invested in new equipment to launch an entry-offer product, and introduced limited time offers. Additionally, it has focused on driving brand awareness through collaborations, and monthly influencer burrito specials, resulting in brand awareness rising to 23% (up four percentage points since a year ago). August also saw the launch of the new Tortilla app and has seen a rapid growing data base with 30,000 new members since launch, now totalling 164,000 active members. The group said seven new kiosk store conversions completed year to date, which are driving efficiency and spend (up 12% average order value), as well as improving the overall customer experience. The group said it was planning to install more kiosks during the fourth quarter. The company has launched a new training and development framework and held our first leadership away days “to promote a culture of internal growth and career development”. Tortilla said it had seen strong performance across UK franchise stores driving sales growth of more than 10% with two further openings during the first half of the year – one in Leeds train station with SSP and one in Leicester with Compass. Tortilla expect its franchise partners to open at least three more stores in the second half and so are on track to achieve the expected five for the full year. It comes as the business reported revenue fell to £31.5m for the 26 weeks ending 30 June 2024 (2023: £32.7m). Like-for-like revenue was down 5.5% “driven mainly by the planned strategic decision in the first quarter to condense to a dual delivery partnership. Adjusted Ebitda (pre-IFRS 16) of £1.8m was in line with prior year despite the revenue drop, “highlighting our improved profit conversion”. Pre-tax losses reduced to £0.2m from £0.6m. Adjusted net debt of £3.3m at period end (2023: £1.6m adjusted net debt) was in line with expectations and at that point £2.8m of the group’s existing debt facilities was undrawn. The Tortilla portfolio in the UK and Middle East at the end of the period consisted of 89 stores including franchise sites. Chief executive Andy Naylor said: “We are very proud of the positive momentum we have driven throughout the business over the last six months. The UK business had lost momentum at the start of the year, and we had to make some big decisions to overhaul the trend. We have driven the UK business forward by revitalising our food offering and investing in people, brand awareness and technology. It is encouraging to see the benefits of these investments, with our in-store like-for-like sales steadily improving. We took our first steps into Europe, announcing a strategic acquisition of Fresh Burritos, which provides us with an important foothold in France and a platform from which we can expand our franchise portfolio across Europe. Our franchise network in the UK is stronger than ever with FY24 being a record year for growth and we’ve just extended our SSP partnership for a further five years, which will see the estate more than double in size. As we approach the fourth quarter, we continue to see positive signs of the hard work conducted by the team in the first half of the year, with current trading in line with management expectations. The board remains confident and excited about Tortilla’s long-term and sizeable growth opportunities both in the UK and internationally.”

Six days to go until Propel’s Talent & Training Conference with focus on how companies can build a culture to attract, develop and retain talent: There are six days to go until Propel’s Talent & Training Conference. The all-day conference takes place on Tuesday, 1 October at One Moorgate Place in London and is open for bookings. The conference will showcase examples of outstanding people culture among companies within the sector and how the industry is attracting talent. Attendees will hear how businesses are developing their teams, dealing with talent shortages and keeping their staff energised. Also new for this year are “parallel sessions”, which offer the chance to deep dive into specialist subjects. For the full speaker schedule, click here. Tickets are £345 plus VAT for operators and £395 plus VAT for suppliers. Premium Club members get a 20% discount. Email: kai.kirkman@propelinfo.comto book places.

 

Punch adds 14 more pubs to portfolio: Punch Pubs & Co, which is backed by Fortress Investment Group, has added a further 14 pubs to its circa 1,300-strong estate with the acquisition of the Milton 1 & 2 portfolio from real estate investment company Aprirose. The newly acquired pubs, currently operated by Blackrose Pubs, are located across the UK. This is a separate and additional deal to the Milton 3 acquisition of 24 pubs, which completed earlier this year. Stephen Allen, group property director at Punch, said: “We are delighted to welcome these 14 fantastic pubs into the Punch family. This acquisition reflects our continued dedication to expanding and enhancing our portfolio. We look forward to investing in these pubs and supporting them with our industry-leading resources, ensuring their long-term success.” Aprirose, together with its investment partners acquired the pubs originally five years ago. Manish Gudka, chief executive of Aprirose, said: “This sale aligns with our strategic goal of exiting our operational pub platform and reallocating capital towards new opportunities we are actively pursuing across several sectors with a range of investor partnerships. We appreciate the hard work of Blackrose Pubs in managing these assets, and we are confident that the pubs will continue to thrive under Punch’s ownership.” Daren Knipe, chief executive of Blackrose Pubs, added: “We have been honoured to work with some incredible people over the years as we have developed these pubs into what they are today. We wish the managers and their teams the very best for the future, and we’re confident that Punch will continue to foster their growth.” The pubs are: The Anchor, Bexley, south east London; Shield & Dagger, Bristol; The Auction House, Coventry; The Lochside, Newcastle; Vesper Gate, Leeds; The Claro Beagle, Harrogate; The North Camp, Farnborough, Hampshire; The Village Inn, Swindon; The Vine, Uxbridge, west London; The Wheatsheaf, Camberley, Surrey; The Fox, Cambridge; The Woodlands, St Helens, Merseyside; Game Cock Inn, Blackburn; and The Royal Oak, Bolton. This deal takes Punch’s total acquisitions in the last 12 months to more than 50 pubs.

 

Everyman reports first half trading in line with expectations: Everyman, the independent, premium cinema group, has reported that trading in the first half of 2024 was in line with management expectations, with revenue of £46.9m (2023: £38.3m) and Ebitda of £6.2m (2023: £5.8m). Pre-tax loss for the period stood at £4.94m (2023: loss of £4.31m). The company said that in the 26 weeks to 27 June 2024, admissions were 1.9 million, compared with 1.6 million in the same period last year, food and beverage spend per head stood at £10.47 (2023: £10.25), while paid-for average ticket price was £11.76 (2023: £11.49). The company said: “The increase in admissions, revenue and Ebitda would have been greater if it hadn’t been for the adverse impact of a reduced second quarter film slate, driven by last year’s WGA and SAG-AFTRA strikes. As was the case in 2023, the group expects a significant second half weighting to admissions in 2024. The spend per head increase was driven mainly by investment in new functionality to enable our guests to order food and beverage to their seats from mobile devices which has driven a higher proportion of second orders. The group has continued to gain significant market share during the first half of the year, increasing to 5.6% (2023: 4.2%), demonstrating the enduring strength of the Everyman proposition. During the period we have remained committed to investing in and elevating the Everyman experience. Recognising that our most loyal customers are our strongest advocates, we identified an opportunity to increase our membership base and increase customer engagement. This has seen remarkable success, with 45,684 active members at the end of the first half of 2024, up from 26,024 at the end of the first half of 2023, a 76% increase.” Everyman currently has 45 cinemas and 155 screens. During the period, a three-screen venue in Bury St Edmunds opened and is trading in line with management expectations. Additionally, a new five-screen venue will open in Cambridge in November followed by a three-screen venue in Stratford International (London) in December 2024. During 2025, new venues are planned to open at The Whiteley in Bayswater, Brentford Lock and Lichfield. The company said: “We continually evaluate our rate of expansion whilst maintaining a prudent approach to funding requirements. The reduced number of FY25 openings will ensure availability of capital for a number of key projects scheduled for 2026, whilst maintaining a strong balance sheet.” Alex Scrimgeour, chief executive of Everyman, said: “Despite weathering the full impact of last year’s actor and writer strikes, we are pleased to report another period of financial and operational progress. We achieved strong growth in revenue, increased Ebitda and record market share, driven by rising demand for Everyman’s unique brand of hospitality. The expansion of our footprint continues, with one new venue opened in the period and two more openings to look forward to in the year, further consolidating our position as the market leader in premium cinema. We move into the second half with confidence, and look forward to an exciting slate of high-profile releases to come through the remainder of the year.”

Gaucho owner holds out for better offers: The owner of Argentinian-themed steak brand Gaucho is holding out for better offers after taking interest from private equity firms about selling the group. The Financial News reported that in a sign of the current stalemate over market valuations, Investec and SC Lowy have not found a buyer willing to meet their price for Rare Restaurants, which owns brands Gaucho and M. The casual dining group has been assessing its future strategic options for almost two years, with Propel revealing at the end of 2022 that the business had appointed Clearwater International to help assess its options. A person close to the situation told Financial News’ sister title Private Equity News that Rare Restaurants’ shareholders had received a number of approaches in recent months and will look to run a more proactive sale process sometime in the future.

 

Chick-fil-A lines up first five UK locations: US fast-food brand Chick-fil-A has lined up the first five locations for its debut in the UK next year. The Sun reported that the brand, which operates more than 3,000 sites across the US, Puerto Rico and Canada, will open two restaurants in Belfast and single sites in Leeds, Liverpool, and London. The sites will open over two years starting in 2025, and Chick-fil-A has now opened applications for those wishing to take on a franchise. The brand’s initial expansion into the UK will create approximately 400 jobs. Propel revealed in April that Chick-fil-A had secured a site in Kingston-upon-Thames, as it starts building its opening pipeline here. The brand has acquired the freehold of the HSBC site in Eden Street/Clarence Street in the south west London borough. The company is understood to have retained property firm Newmark Group to help it with its expansion in the UK. Anita Costello, chief international officer at Chick-fil-A, Inc, told The Sun: “Serving communities is at the heart of everything we do, and we look forward to bringing Chick-fil-A’s delicious food and signature hospitality to Belfast, Leeds, Liverpool and London, and continuing our long-term investment in the UK. From job creation to supporting local causes, we are excited about the positive impact our first restaurants will have in the communities they serve.” Chick-fil-A only lets its operators run up to three stores, and the majority of them only run a single location. Like in the US, each UK restaurant will be able to participate in Chick-fil-A’s Shared Table programme. This initiative redirects surplus food from Chick-fil-A restaurants to local soup kitchens, shelters, food banks, and non-profits in need. Joanna Symonds, head of UK operations, said: “We’ve always cared about the impact of our restaurants on the local communities that we serve, and we strive to positively impact areas throughout the UK.”

 

Bank of England governor Andrew Bailey – I would not expect a rapid reduction in interest rates: Interest rates will continue to be brought down slowly even as inflation comes under control, and are unlikely to return to the near-zero rates of the previous decade, the governor of the Bank of England has said. Andrew Bailey said he was “very encouraged” by falling inflation, which has dropped from a peak of 11.1% in October 2022 to 2.2%, just short of the bank’s 2% target. However, the governor, who voted to hold borrowing costs at 5% at the monetary policy committee’s meeting earlier this month, told the Kent Messenger he did not expect rates to return to the ultra-low levels of the post-financial crisis 2010s. He said: “I would not expect that because what caused interest rates to go that way was, among other things, two very big shocks to the economy. It all started with the financial crisis, then covid was another big shock. To go back down to those levels, you’d have to have very big shocks. Of course, you don’t want very big shocks to happen. That’s one way of saying my best guess will be it settles at a neutral rate – quite what that will be depends on a lot of things – but I expect rates to come down.” Traders in financial markets expect just one more rate reduction this year, in November, and that borrowing costs will drop to about 3.5% next year.