Shares in Tortilla Mexican Grill slumped on Wednesday after the restaurant group declared a profit warning.
Britain’s largest Mexican fast-casual dining chain predicts making adjusted earnings before nasties of £4.5million to £4.6million this year, against £5million as previously anticipated.
Tortilla also expects turnover to increase by 13.8 per cent to £65.7million in 2023, ‘slightly behind’ analyst forecasts of £69.8million, driven by new site openings and positive like-for-like growth in the UK.
Price drop: Tortilla Mexican Grill shares slumped on Wednesday following a profit warning
Bosses blamed the tempered revenue guidance on weaker consumer confidence for hitting sales across the eating-out sector, especially in recent months.
Sales have been further impacted by lower footfall at outlets on high streets and in ‘smaller tertiary cities and towns’ where the company has less brand awareness.
It expects cost-of-living problems affecting the hospitality industry to continue into 2024, particularly outside London.
Following the trading update, Tortilla Mexican Grill shares plummeted 9.8 per cent, or 5.4p, to 49.6p by the mid-afternoon, meaning their value has declined by 42 per cent since the year started.
Yet despite the subdued outlook, the firm revealed that its United Arab Emirates-based business achieved a record year.
Tortilla also said its franchised tie-ups with catering giant Compass Group and Upper Crust owner SSP Group had performed ‘outstandingly well.’
The company plans to open another four establishments with SSP next year and has a significant pipeline of restaurants in ‘high-footfall city centre and shopping centre locations.’
Richard Morris, chief executive of Tortilla, said: ‘As a management team, we are taking proactive actions to adapt to the changing market environment.
‘We know that in buoyant eating-out markets where the Tortilla brand is well known, we outperform. We have a strong portfolio of new sites in high-quality locations as well as additional franchise growth opportunities.’
Tortilla was founded in 2007 by California-born Brandon Stephens after he became frustrated at the absence of Mexican restaurants in the UK capital.
The AIM-listed firm now has 87 establishments across the British Isles and Middle East, including 18 franchised outlets, and served over 6.5 million meals last year.
When announcing plans to have an initial public offering two years ago, the group declared it wanted to launch 45 new sites over the following five years.
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