Tortilla holds off on expansion to target driving footfall

The business had previously announced in October 2022 that it will increase its number of new openings to between 12 and 15 every year from 2023.

Richard Morris, chief executive of Tortilla, told The Caterer: "We didn't open as many sites as we originally thought at the end of last year. Last year was really the height of the cost challenges, so from a responsible point of view, we thought we would wait to see how the first quarter was in terms of customer sentiment and it was pretty awful."

The group could have pushed a couple of openings into 2023 but decided to be "a bit more conservative" and "do them in Q1 and Q2 of next year".

It is still considering additional sites in the UK and Europe "where there is a presence of Mexican food".

Morris added the group is also prepared to acquire a business and "put our food in it", as it did with the acquisition and conversion of the Chilango brand in May 2022, which has led to a 30% uptick in sales at those locations.

However, Tortilla reported a loss before tax of £0.6m in the 26 weeks ended 2 July 2023, with adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) dropping slightly to £1.8m from £2.5m over the same period in 2022.

Morris stressed the results are "not a concern" for the business, commenting: "We're confident through our focus on profitability and all the work we are doing that we will be back into profit as soon as possible."

Meanwhile, revenue over the period grew by 22% from £26.9m to £32.7m.

He added Tortilla has gained new customers who are "trading down" from casual dining and is well-placed to compete with the fast food sector due to the brand's focus on fresh produce and its new "dinner for a tenner" initiative, Tortilla Sunsets.

The deal offers diners a full evening meal between 5pm and 8pm, including burritos, tacos, naked burritos or salads and a side, for £10. For an additional £2.50, guests who are Tortilla Club loyalty members will also receive an alcoholic drink of choice.

Morris said: "Most of our in-house sales are during the day and in the evenings we are predominantly a delivery business. We have the bandwidth to operate an in-store offer in the evening. We have staff there anyway because they are preparing food for delivery and we don't sell a lot of alcohol, so the very fact that we're giving our alcohol away at cost price is not a huge impact for us."

He said Tortilla Sunsets will run for "as long as it continues to be popular".

In October 2020, Tortilla ran its £1 Taco Thursday offering, which was also successful in attracting a wider demographic of customers into the restaurant, not just students.

"We try and offer lots of promotions. We're very keen on not discounting. I know giving away beer for £2.50 is heavily discounted, but it's more around driving footfall to eat our food and the fact that we're giving beer away at a cost price is a really good hook," Morris added.