Tortilla buys rival Mexican chain Chilango for £2.75m

Tortilla has bought rival Mexican restaurant business Chilango for £2.75m from investment firm RDCP Group.

Chilango currently runs eight UK restaurants in Brighton, Manchester and London and four delivery-only kitchens. Six of its sites are in London's Zone 1.

Tortilla said the deal strengthened its position as "the UK's leading fast-casual Mexican chain" and boosted its presence in central London to capitalise on workers returning to offices.

It intends to retain the Chilango brand at "certain locations" and through delivery channels in a number of sites.

Tortila said it had identified "several synergy opportunities" between the two companies which included leveraging Chilango's "buying power" and 5,500 sq ft central production kitchen in Tottenham Hale, London.

Chilango and Tortilla were both founded in 2007 but their growth has been markedly different. Tortilla now runs 68 sites worldwide, including 52 company-run UK restaurants, while Chilango was bought out of administration by RDCP in 2020 when it had reached 11 sites.

Sameer Rizvi, founder of RDCP, said that Chilango had been "successfully turned around" after taking advantage of the growing delivery market during the pandemic and was ready for its "next stage of growth".

Chilango delivered revenue of £7.3m and posted a loss before tax of £200,000 for the year to 26 December 2021.

Tortilla said the acquisition was expected to contribute earnings before interest, tax, depreciation and amortisation (EBITDA) of around £100,000 to the company for the remainder of 2022 and that it expected EBITDA from 2023 onwards of some £1m a year.

Richard Morris, chief executive of Tortilla, said: "Chilango is a highly complementary brand that, similarly to Tortilla, provides a fantastic value-for-money proposition and embraces popular and growing sector trends for healthy, customisable food from an estate of restaurants situated in premium locations in London and Manchester."