Tortilla Mexican Grill Ltd. · LSE:MEX
Tortilla Mexican Grill — H1 2024 Earnings Presentation
39 slides from Tortilla Mexican Grill's earnings presentation, September 2024
Slide 1: 2024 Half Year ("Interim") Presentation
Tortilla Mexican Grill plc 2024 Half Year (“Interim”) Presentation September 2024
Slide 2: Presenting team
Presenting team Andy Naylor Maria Denny Chief Executive Officer Chief Financial Officer 2 Tortilla Mexican Grill plc 2024 Half Year Presentation September 2024
Slide 3: Agenda
Agenda 1 Key highlights Andy Naylor 2 Strategic and operational review: Momentum is building! Andy Naylor and Maria Denny 3 Financial review Maria Denny 4 Q&A 3 Tortilla Mexican Grill plc 2024 Half Year Presentation September 2024
Slide 4: Key Highlights
KEY HIGHLIGHTS Andy Naylor, CEO
Slide 5: Transforming UK business and completing strategic European acquisition
Transforming UK business and completing strategic European acquisition Focus on product quality and sales driving initiatives –6% in Mar Strategic acquisition +13 own stores Revitalised food New recipes, UK in-store LFL new products turnaround +4% in Sep PTD of Fresh Burritos + 19 franchise stores E
Slide 6: Strategic & Operational Review: Momentum is building!
STRATEGIC & OPERATIONAL REVIEW: Momentum is building! Andy Naylor and Maria Denny
Slide 7: Vital 5 strategic pillars
Vital 5 strategic pillars Driving profitable growth in 2024 and beyond Improve UK Invest in brand to Invest in team Double down Develop brand profitability drive growth and tech on franchise internationally Leverage positive Invest in food, menu Utilise digital kiosks Leverage successful Explore the
Slide 8: Improve UK profitability
Improve UK profitability Improved purchasing Hedging strategy on Decision to revise power and supplier food and utilities delivery partner relationships. keeps proving strategy in H1 driving Intending to gain successful EBITDA enhancements further leverage despite delivery following the Fresh volume
Slide 9: Invest in brand to drive growth
Invest in brand to drive growth In-store LFL sales improved from -6% in March to +4% in less than half a year • Turnaround of Q1 volume decline with optimistic outlook for the rest of H2 • Since the low point in March, Tortilla has closed the LFL sales gap to the industry tracker In-store LFL sales
Slide 10: Invest in brand to drive growth
Invest in brand to drive growth Defined multi-channel marketing strategy to drive awareness, conversion and loyalty Drive loyalty with launch of new Tortilla app UBER EATS X TORTILLA • Ranked No.2 in most popular UK food apps in launch weekend • 1.4 million impressions across social media with launc
Slide 11: Invest in brand to drive growth
Invest in brand to drive growth Revitalising the quality of our menu to drive frequency and attract new customers Revitalised our core menu • New chicken asado recipe saw an improvement in product taste and quality, gaining positive customer sentiment online • Recipe adjustments to beans and slow-co
Slide 12: Invest in team and tech
Invest in team and tech Drive growth through investment in our people and technology Continued investment in team and culture • Appointed an experienced Managing Director for the French business, Eric Wauthier-Wurmser • Created a sub-Board in France chaired by UK NED Francesca Tiritiello, with Gille
Slide 13: Invest in team and tech
Invest in team and tech Drive growth through investment in our people and technology Seven new kiosks opened YTD • Driving efficiency and spend (+12% AOV) • Improved customer experience • <6 months payback period New and improved platforms launched • Launched first loyalty app with international par
Slide 14: Invest in team and tech
Invest in team and tech Invests in energy efficiency projects to drive down carbon usage Largest energy efficiency project ever undertaken by the Group • Installation for a state-of-the-art 60.68kWp Solar PV in System was completed with the array going live in July • The array will provide 10% of th
Slide 15: Growth through new store openings and acquisitions
Growth through new store openings and acquisitions Growth with three new stores in H1 FY24, with significant opportunities to gain further footfall Finished H1 FY24 with 89 stores, of which 20 are franchised Development of number of Tortilla stores Expansion plans in FY24 and beyond • New high-traff
Slide 16: Double down on franchise
Double down on franchise Well-established, adaptable business model ideal for franchise growth • Tortilla has a perfect operating model for franchising • Site format and location flexibility with no requirement for kitchen-extraction • Central kitchen food model delivers consistent food quality and
Slide 17: Develop brand internationally
Develop brand internationally Tortilla rolled into France by acquiring the largest European competitor • The acquisition of Fresh Burritos in July, and the creation of a centralised production kitchen (CPK) in Lille, has created a springboard for growth across Europe • Tortilla European sub-board co
Slide 18: Develop brand internationally
Develop brand internationally Tortilla now perfectly placed to own the cuisine across Europe • Tortilla is now more than four times the size of our nearest competitor, so has a unique position to own the growing European Mexican food segment • CPK in Lille on track to be ready for production in Q4 •
Slide 19: Financial Review
FINANCIAL REVIEW Maria Denny, CFO
Slide 20: Financial highlights H1 FY24
Financial highlights H1 FY24 Positive momentum on financials -3.6% £31.5m £1.8m -3.7% YoY level YoY LFL in-store sales Revenue Adjusted EBITDA1 +3 sites 0.7x £1.1m 89 total New stores Net leverage ratio2 Cash from Operations 1 Adjusted EBITDA represents the Group’s main Adjusted Performance Measure
Slide 21: Income statement
Income statement Profitability in line with last year despite lower revenue H1 FY24 H1 FY23 • Revenue down £1.2m YoY -3.7% £m £m • Delivery LFL -10.3% as expected following change in delivery Revenue 31.5 32.7 strategy in Q1 • Challenging start of the year with in-store H1 LFL of Gross profit 24.5 2
Slide 22: Like-for-like (LFL) Sales
Like-for-like (LFL) Sales Change in delivery strategy driving profitability despite LFL revenue decline • Delivery LFL 1 -10.3% following the strategic decision to revise our delivery partner strategy in February from all three delivery aggregators to just a dual partnership. The decision has underp
Slide 23: Revenue H1 FY24 v H1 FY23
Revenue H1 FY24 v H1 FY23 Expected decline driven by revised delivery strategy, and challenging trading environment Revenue £m New store openings Stores Revenue £m FY23 openings 6 1.2 FY24 openings 1 0.0 Cloud kitchen closures (3) (0.8) Total +4 0.4 -3.7% -£1.2m 23 Tortilla Mexican Grill plc 2024 Ha
Slide 24: Inflationary impacts: food and utility
Inflationary impacts: food and utility Costs considerably lower YoY, and secured for the remainder of the year Gross margin – protein inflation1 Utility costs2 • Moved energy provider during FY23, FY benefit being realised in FY24 • Chicken prices secured to the end of the year, with other proteins
Slide 25: Adjusted EBITDA – H1 FY24 v H1 FY23
Adjusted EBITDA1 – H1 FY24 v H1 FY23 EBITDA held steady despite drop in revenue from restructuring the Group’s delivery channel EBITDA £m level EBITDA % of sales +20bpt 1 Adjusted EBITDA is a non-GAAP measure and is defined as statutory operating profit before interest, tax, depreciation and 25 Tort
Slide 26: Cash flow and leverage
Cash flow and leverage Cash from operations re-invested to drive future growth • Cash-generative business with £1.1m generated from H1 FY24 £m operations (pre-IFRS 16) Adjusted EBITDA (pre-IFRS 16) 1.8 • Free cash flow of £(1.0)m Pre-opening costs (0.1) • Invested into a new site, product, technolog
Slide 27: Current trading and outlook
Current trading and outlook UK current trading in line France trading in line with Expect favourable upside with management’s expectation, with CPK and in margin to continue expectations store conversion throughout H2 FY24 as we In-store volume recovery progressing as planned leverage on initiatives
Slide 28: Summary
Summary On track to drive sustainable, profitable sales growth in FY24 and beyond as we focusing on our strategic pillars Improve UK Invest in Invest in Develop Develop brand profitability the brand technology franchising internationally Change in delivery LFL sales improving Drive sales growth Acce
Slide 29: Q&A
Q&A
Slide 30: Appendix
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Slide 31: About us: a reminder
About us: a reminder The Europe’s largest and most successful fast-casual Mexican restaurant business Founded in 2007 Leading fast-casual Mexican Value-for-money proposition Brandon Stephens’ mission was restaurant group in Europe Freshly-prepared, to bring authentic burritos to 113 site across Euro
Slide 32: Tortilla Plc board of directors
Tortilla Plc board of directors Emma Woods Andy Naylor Maria Denny Brandon Stephens Non-Executive Chair Chief Executive Officer Chief Financial Officer Founder Non-executive Director Loeïz Lagadec Francesca Tiritiello Keith Down Non-executive Director Non-executive Director Non-executive Director 32
Slide 33: Tortilla European sub-board committee
Tortilla European sub-board committee Francesca Tiritiello Eric Wauthier-Wurmser Gilles Boehringer Andy Naylor Non-Executive Chair Managing Director France Non-executive Director Chief Executive Officer 33 Tortilla Mexican Grill plc 2024 Half Year Presentation September 2024
Slide 34: Scalable growth with centralised production and expert leadership
Scalable growth with centralised production and expert leadership Centralised Production Kitchen (CPK) Head office structure - UK • Tortilla’s 510 sqm CPK in Tottenham Hale provides Chief Executive the production infrastructure to double the size of Officer the estate. A further CPK with 1,400 sqm i
Slide 35: Fresh, customisable product proposition
Fresh, customisable product proposition Freshness Our toppings and guacamole Numerous awards for food, are freshly made in-house every day value and profitability Innovation Menu regularly reviewed and Third most-loved fast-casual chain refreshed to add trending fillings (eg, chili no carne), popula
Slide 36: Well-defined, proven and flexible property strategy
Well-defined, proven and flexible property strategy Uncompromising site selection criteria • Size 60–200 sqm • CAPEX circa £375–450k depending on size, site condition and store front requirements • ROCE 30% minimum investment hurdle High Street Shopping Centre Transport Hub Guildford 181 sqm Westfie
Slide 37: ESG highlights
ESG highlights Our people Our customers People are the heart of our business and we’re We encourage our customers to make good proud to champion diversity, inclusion and food choices that are also great value for mental wellbeing. Our entire crew has access to money. More than 70% of our menu is pla
Slide 38: Balance sheet H1 FY24
Balance sheet H1 FY24 Healthy balance sheet with low net leverage At 30 Jun At 2 Jul FY24 FY23 • High quality asset base £m £m Non-current assets Intangible assets 2.6 2.6 • Low leverage of 0.7x (Net debt/EBITDA) Right of use assets 29.9 30.8 • Net debt of £3.3m Property, plant and equipment 14.2 14
Slide 39: Tortilla Mexican Grill PLC Registered Office
Tortilla Mexican Grill PLC Registered Office 1st Floor, Evelyn House, 142 New Cavendish Street, London W1W 6YF Registered in England and Wales 13511888
Tortilla Mexican Grill — H1 2024 Earnings Presentation on 6ix