Tortilla dishes up profit warning despite record UK performance

Burrito chain Tortilla Mexican Grill has warned over full-year earnings as delays to the roll out of stores in France offset a record performance in its UK business.

The group, which has 116 sites globally, including 80 company-owned and franchise sites in the UK, saw shares plunge as much as 12.5% at one stage after it said it now expects to deliver annual underlying earnings around 10% lower than expected.

Losses of £2 million across its French business pushed it deeper into the red at the half-year stage, with Tortilla slumping to a group pre-tax loss of £2.3 million for the six months to June 29, against losses of £200,000 a year earlier.

Boss Andy Naylor said the firm’s performance was held back as it took longer than previously forecast to convert acquired French sites under its branding and design, while the planning process in France had also held back progress.

This will also impact full-year earnings, although Mr Naylor said the group will have six sites in France up and running under the Tortilla brand by the end of the year.

It comes despite an impressive first half for the UK division, which is on track for its “most profitable year ever”, according to Mr Naylor.

Strong demand for seasonal menu dishes such as protein pots and salads helped like-for-like UK sales jump 5% in the first half, with growth accelerating to 7% in the third quarter so far.

Mr Naylor told the PA news agency the group has focused on improving its UK menu to help boost sales.

He said strong sales growth has helped offset many cost pressures that have taken their toll on the wider sector, such as rising wage bills after the national insurance contributions and minimum wage increases.

“If your top line is growing, then there isn’t such a need to cut costs,” he said.

He said the group hiked prices by 4% in April to offset rising costs, but stressed this was below the 5% to 6% increase in its wage bill.

The group, which employs more than 1,200 staff, will review prices again next year, but is not set to push through any further increases in 2025, according to Mr Naylor.

He said: “Our ongoing investment in food quality and innovation as well as brand marketing continues to resonate with customers.

“New launches such as protein pots and seasonal salads have been well received, supported by the growth of our Burrito Society loyalty app, which has now surpassed 200,000 members.

“In the UK, full-year 2025 is forecast to be our most profitable year ever which is an achievement the team should be proud of considering the wider challenges reported by the sector,” he said.

He said that following the French design roll out, the group is also taking a fresh design to its UK stores, with the first to be revamped under the new look due in the first quarter of 2026.

It is soon to add a Buffalo chicken dish to its menu as part of plans for innovation, while the group is likewise looking at a new desert range.