Tortilla Mexican Grill shares tumble on sales hit from move to quit Deliveroo

Shares in restaurant chain Tortilla Mexican Grill tumbled following a profit warning after seeing sales hit since removing itself from Deliveroo.

The group said sales dropped £1.2 million to £31.5 million and were 5.9% lower on a like-for-like basis in the first half of the year after announcing in February that it would focus solely on the Just Eat and Uber Eats platforms to cut down on delivery commission charges.

It made the move to “improve profit conversion and increase focus on in-store revenue” but admitted the benefits of its strategy overhaul “will be slower than originally anticipated”.

The burrito and tacos chain cautioned that the sales impact of this and an “ongoing challenging trading environment” would leave full-year underlying earnings lower than first thought, sending shares down by nearly a quarter at one stage in morning trading on Wednesday.

Tortilla – which has over 80 stores in the UK, about 30 outlets in France and eight sites in the Middle East – now expects underlying earnings of £5 million for 2024, or £4.5 million including the Fresh Burritos business.

Andy Naylor, chief executive at Tortilla, said: “In the first half of 2024, we have significantly improved the quality of our food and are driving exciting innovation with our new food director James Garland now onboard.

“We have accelerated the deployment of kiosk-ordering technology and will be launching our new loyalty platform at the beginning of August.

“Whilst the timing of these initiatives has been slower than planned, the early signs are positive, and we look forward to updating shareholders on progress in September.”

The London-headquartered group, which employs over 1,300 people, delivered more than 1.5 million meals across Uber Eats, Just Eat and Deliveroo in 2023.

But it said on announcing the move to end the Deliveroo partnership earlier this year that “delivery commission charges have challenged margin performance”.

“To mitigate this, the group sought for a new delivery structure and to strengthen the relationship between fewer partners,” it added at the time.