Tortilla Mexican Grill Ltd. · LSE:MEX
Tortilla Mexican Grill — FY2023 Earnings Presentation
45 slides from Tortilla Mexican Grill's earnings presentation, April 2024
Slide 1: Tortilla Mexican Grill plc 2023 Full Year Presentation
Tortilla Mexican Grill plc 2023 Full Year Presentation April 2024
Slide 2: Presenting team
Presenting team Andy Naylor Maria Denny Chief Executive Officer Chief Financial Officer 2 Tortilla Mexican Grill plc 2023 Full Year Presentation April 2024
Slide 3: Agenda
Agenda 1 Reflections Andy Naylor 2 Financial review Maria Denny 3 The next chapter! Strategic and operational review Andy Naylor and Maria Denny 4 Q&A 3 Tortilla Mexican Grill plc 2023 Full Year Presentation April 2024
Slide 4: Reflections
REFLECTIONS Andy Naylor, CEO
Slide 5: My first month as CEO
My first month as CEO The Big Tortilla Tour highlighted our amazing business Fantastic people High-quality franchise partners Strong national footprint A brilliant product that our customers love I was so inspired by the energy of our staff that I decided to match that with a 28-mile run around our
Slide 6: I'm the CEO of Tortilla
‘ ' I'm the CEO efiTortilla
Slide 7: What do I stand for?
What do I stand for? High-energy style of Passionate about Building culture – working – I like the brand and the focusing on getting things done! burrito opportunity developing our across UK and people, attracting Commercial Customer-centric – internationally and retaining talent mindset providing t
Slide 8: Where we are today / Where we could be
Where we are today Where we could be TRACK RECORD Nearly 20 years strong, TARGETED GRADE A LOCATIONS Review of the Europe’s largest burrito provider strategic mix of own store/ franchise roll out SCALE ADVANTAGE Years ahead of the FRANCHISE GROWTH Accelerate growth rest thanks to significant size th
Slide 9: FY23 – a year of recovery
FY23 – a year of recovery Profitability +16% Franchising partnerships +26% Progressed with UK +6 own recovered Adjusted EBITDA performed strongly Sales new store openings +1 franchisee Fully integrated +£3.4m Successfully launched Strengthened the Board Chilango YoY revenue major tech projects and E
Slide 10: Demand for Mexican cuisine is steadily increasing
Demand for Mexican cuisine is steadily increasing • The popularity for Mexican cuisine has been steadily increasing for years, and is one of the key food trends for 20241 • Consumers want to enjoy novel flavours based on unique ingredients at reasonable prices • Fits consumer trends of wanting food
Slide 11: Financial review
FINANCIAL REVIEW Maria Denny, CFO
Slide 12: Macroeconomic outlook
Macroeconomic outlook FY23 battled with high inflation and low consumer confidence, expected to turn in FY24 Weekly Footfall 2023/242 The hospitality Growing costs and Supply-side disruption industry endured an reduced consumer starting to ease but ongoing battle with spend have seen challenges rema
Slide 13: Financial highlights
Financial highlights Profitable growth with low leverage and strong liquidity +3.6% £65.7m £4.6m +14% YoY +16% YoY LFL sales growth Revenue Adjusted EBITDA1 +7 sites 0.3x £3.8m 87 total New stores2 Net leverage ratio3 Cash from Operations 1 Adjusted EBITDA represents the Group’s main Adjusted Perfor
Slide 14: Income statement
Income statement Revenue growth and profitability initiatives generated 16% increase in Adjusted EBITDA FY23 FY22 • Revenue up growth of £8m YoY +14% £m £m • LFL sales growth of existing estate of +3.6% Revenue 65.7 57.7 • Seven new site openings • Strong franchise sales Gross profit 50.8 44.1 % of
Slide 15: Revenue growth – FY23 v FY22
Revenue growth – FY23 v FY22 Strong growth from new store openings New store openings Stores Revenue £m 66 Revenue £m 65 1.5 65.7 FY22 openings FY impact 8 3.7 0.2 64 Chilango acquisition FY impact 8 3.4 7.1 63 FY23 openings 6 2.2 62 Cloud kitchen closures (10) (2.2) 61 +14% 60 +£8m Total 7.1 59 58
Slide 16: Revenue: LFL growth and channel mix
Revenue: LFL growth and channel mix Channel mix remains consistent YoY LFL growth Channel mix • LFL sales growth of 3.6% LFL (4.9% VAT adjusted1) • 30% of our sales comes from our delivery channel • Increased cost of living crisis made FY23 challenging • Traded across multiple delivery platforms thr
Slide 17: Inflationary impacts: food and utility
Inflationary impacts: food and utility Costs are easing with medium term certainty on food and utilities prices Gross margin – protein inflation1 Utility costs2 Product Basket % Price secured date Proteins 30% FY24 Chicken/ quarterly pork, beef Fresh produce and dairy 34% JUL 24 Dry goods 12% JUL 24
Slide 18: Adjusted EBITDA – FY23 v FY22
Adjusted EBITDA1 – FY23 v FY22 Growth of +16% to £4.6m 5.0 EBITDA £m 4.5 0.3 4.6 0.8 4.0 4.0 3.5 (0.8) 0.8 3.0 (0.5) +70% 2.5 2.7 2.0 underlying EBITDA 1.5 improvement 1.0 0.5 Franchising Franchising Franchising 0.0 FY22 VAT benefit Rate benefit Adjusted EBITDA Margin FY22 and FY23 Underlying FY23 d
Slide 19: Cash flow
Cash flow FCF covered 60 % of new site capex and will return to fund capital expansion from operationally generated cash in FY24 • Cash-generative business with £3.8m generated from FY23 £m operations (pre-IFRS 16) Adjusted EBITDA (pre-IFRS 16) 4.6 • Free cash flow of £1.6m Pre-opening costs (0.3) •
Slide 20: Leverage and liquidity
Leverage and liquidity Healthy balance sheet with low net leverage and high liquidity • Low leverage of 0.3x (Net debt/EBITDA) 10.0 • Net debt of £1.3m at YE • Debt of £2.9m drawn from a total available 8.0 credit facility of £10m • Significant EBITDA headroom in covenants 6.0 • Strong liquidity 4.0
Slide 21: The next chapter!
THE NEXT CHAPTER! Andy Naylor and Maria Denny
Slide 22: Vital 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 23: Improve UK profitability
Improve UK profitability Improved purchasing Hedging strategy on Revised delivery power and supplier food and utilities partner strategy relationships Drive operational Benefit of sales growth efficiencies impact on fixed costs 23 Tortilla Mexican Grill plc 2023 Full Year Presentation April 2024
Slide 24: Invest in brand to drive growth
Invest in brand to drive growth Defined multichannel marketing strategy to drive awareness, conversion and loyalty • Low brand awareness coupled with reasonable conversion rate indicates significant opportunities to drive growth through marketing investment1 • Brand awareness outside of London is pa
Slide 25: Slide 25
Slide 26: Invest in brand to drive growth
Invest in brand to drive growth Defined multi-channel marketing strategy to drive awareness, conversion and loyalty Drive awareness • Activations and collaborations to boost visibility • National Burrito Day reached 14m+ audience, ranked second on Google, and drove 27k people into store • Uber Eats
Slide 27: Invest in team and tech
Invest in team and tech Drive growth through investment in our people and technology Strong board of Strengthening the Culture, People and directors management team DE&I at our heart Bolstered the exec team We will be investing in with director-level culture, DE&I and ways appointments for all of wo
Slide 28: Growth through new store openings
Growth through new store openings Growth with seven new stores in FY23, with significant opportunities to gain further footfall Finished FY23 with 87 stores, of which 18 are franchised Number of Tortilla stores 100 Inside M25 Outside M25 Intl Franchise UK Franchise 90 FY23 openings and closures 80 6
Slide 29: 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 30: Develop brand internationally
Develop brand internationally Explore the unique opportunity to consolidate and own the cuisine across Europe We are more than twice the size of the nearest competitor Number of stores4 so have a unique position to own the growing European Mexican food segment • The Mexican food market is expected t
Slide 31: Current trading and outlook
Current trading and outlook Current trading in line Changed to a dual delivery Expect favourable upside with management model in February 2024 in margin to continue expectations Early indications are encouraging throughout FY24 as we Q1/24 LFL 4.7% adverse, in line leverage on initiatives with expec
Slide 32: Summary
Summary A new chapter with strategic focus to invest to drive sustainable, profitable sales growth in FY24 and beyond Improve Invest in Invest in Own-store Develop margins the brand technology rollout franchising Leverage on FY23 Drive LFL sales Drive sales growth UK own-store rollout Accelerate the
Slide 33: Q&A
Q&A
Slide 34: Appendix
Appendix
Slide 35: Strengthened board of directors
Strengthened 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 35
Slide 36: About us: a reminder
About us: a reminder The UK’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 87 sites worldwide1 cust
Slide 37: Investing in teams
Investing in teams Drive growth by investing in people to exceed their expectations A new chapter for Tortilla with a strong board of directors • Andy Naylor took over as CEO, with seven years at Tortilla • Maria Denny joined as CFO in February 2024, bringing food and retail experience • Keith Down
Slide 38: Scalable growth with centralised production and expert leadership
Scalable growth with centralised production and expert leadership Centralised Production Unit (CPU) Head office structure • Tortilla’s 5,500 sq ft CPU in Tottenham Hale provides • Tortilla has an established and experienced senior management team to the production infrastructure to double the size o
Slide 39: 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 40: Fresh, customisable product proposition
Fresh, customisable product proposition • Investing in food and menu increases customer engagement and purchase frequency, strengthening our value proposition • Despite raising prices by 7% in FY23 and 6% in Apr 2024 to cover food and wage inflation we remain competitively priced • Investment in foo
Slide 41: 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 42: 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 43: Central production unit solar project
Central production unit solar project Largest energy efficiency project ever undertaken by the Group • Preferred supplier is proposing to fit a 60.7 kWp array utilising 148 panels • This has been calculated to produced 57 MWh per annum considering the building orientation, shading and several other
Slide 44: Balance sheet YE23
Balance sheet YE23 Healthy balance sheet with low net leverage • Strong overall balance sheet and funding position At 31 Dec 2023 At 1 Jan 2023 £m £m Non-current assets • High quality asset base Intangible assets 2.6 2.6 Right of use assets 29.5 31.0 Property, plant and equipment 14.1 13.7 • Low lev
Slide 45: 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 — FY2023 Earnings Presentation on 6ix