Tortilla reports resilient H1 trading: Tortilla, the UK’s largest fast-casual Mexican restaurant brand, has reported “resilient trading” for its half year ended 2 July 2023, with group like-for-like revenue increasing by 8.4% during the period. The 85-strong business said group revenue increased by 22% to £32.7m (H1 2022: £26.9m) in the period, which it said illustrated “growing demand for the group’s high-quality, value-for-money customer proposition”. It said it saw “continued industry outperformance” with group like-for-like revenue increasing by 8.4% (adjusting for FY 2022 VAT benefit), ahead of the industry Peach Coffer Tracker benchmark. It said that its franchise sites performed “very well” with record sales being achieved in all of its SSP locations. The company said that further franchise sites were in the pipeline to expand on this success. During the period, it opened new sites in Derby and Greenwich alongside an additional SSP franchise site at Manchester Piccadilly, “all performing well since opening”. In total, there were 85 sites at end of the period operating under the Tortilla and Chilango brands (82 at end of FY22). As previously revealed by Propel, Tortilla will make its debut in Northern Ireland this week, in Belfast, with another site opening in Bracknell in the coming weeks. The business reported net debt (pre-IFRS 16) of £1.6m as at 2 July 2023, which it said was in line with expectations. The company said: “The group continues to deliver strong strategic progress and achieve good levels of revenue growth. While the widely publicised economic pressures impacting the sector remain, management has successfully implemented several efficiency and cost-saving initiatives including utilities hedging that are supporting group profitability and these will continue in the second half. The board is also pleased to report some easing of cost inflation in relation to certain key food ingredients.” In addition, the business said it has delivered a number of new strategic initiatives to continue to grow demand including driving evening trade through the new ‘Tortilla Sunsets’ menu and ‘Happy Hour’ offers. The company said it “remains confident” in its ability to deliver FY 2023 results in line with market expectations. Richard Morris, chief executive of Tortilla, said: “We are pleased to have delivered good revenue growth and further strategic progress in the first half. Our strong like-for-like sales growth has been ahead of industry comparatives reflecting the appeal of our high quality, healthy and customisable great value propositions. We continue to deliver on our disciplined but ambitious approach to new site openings and strategic expansion, with all of our new openings performing well and meeting our expectations. Our franchise sites also continue to perform well with our SSP sites achieving record results and we remain hugely excited by the significant franchise growth opportunities in the UK and overseas.”
Latest Who’s Who of UK Food and Beverage featuring 715 companies to be released on Friday:
The latest Who’s Who of UK Food and Beverage will be published for Premium subscribers on Friday (21 July). A total of 22 companies have been added to the database, which now features 715 companies. This month’s edition also includes 75 updated entries. The companies, listed in alphabetical order, will have their most recent results reported as well as broader information around Ebitda, plans and trading style available. The database merges Companies House information, interviews and other public information to provide an easy to reference and exhaustive guide to the sector. Premium subscribers also receive access to four other databases: the Propel Multi-Site Database,
produced in association with Virgate; the New Openings Database;
the Propel Turnover & Profits Blue Book;
and the UK Food and Beverage Franchisor Database.
Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email email@example.com to upgrade your subscription
. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before; regular video content and regular exclusive columns from Propel group editor Mark Wingett.
Rising interest rates push more households into debt: Homeowners across the country are living on “negative budgets”, where their income is no longer meeting their basic costs because of rapidly increasing interest rates, the UK’s largest debt support charity has said. The Times reports that the Citizens Advice said the number of people it was seeing who could no longer afford the property they were living in had almost doubled in a year. It added it was now unable to help almost half those who went to the charity for financial advice because they had already cut back their spending to the bare essentials. The figures were revealed as the Office for National Statistics prepares to publish its latest inflation data on Wednesday. This is likely to show a further fall in the headline consumer prices index rate but there are fears that core inflation could rise again, putting pressure on the Bank of England to keep interest rates higher for longer. A new report by the Resolution Foundation economic think tank said rising interest rates had caused household wealth across Britain to fall by £2.1trn over the past year. It said that a combination of rising mortgage rates, falling house prices and a collapse in the price of government and corporate bonds – which help to determine pension values – had led to total household wealth falling to 650% of national income from record highs. It suggested, though, that the fall could be good news for younger people, as falling prices would make property more affordable and they would have to sacrifice less of their salary in pension contributions. The foundation said that under low interest rates a typical worker would need to save about £5,000 a year to achieve an income in retirement worth two thirds of their income. Under the present higher interest rates, the same worker would need to save about £3,000 to achieve that same standard of living in retirement. Citizens Advice said it was seeing up to 40,000 people with debt problems every month, including an increasingly large number of homeowners who were unable to afford their mortgage.
CFOs see high interest rates as biggest threat: Britain’s largest companies are prepared for interest rates to remain higher than expected over the next 12 months as inflation proves more stubborn, knocking corporate confidence. The Times reports that the Office for National Statistics is due to release its official inflation figures for June this week, amid speculation that the Bank of England will be forced to raise the base rate for the 14th consecutive time to tame rising prices. Tighter monetary policy is now seen as the chief threat facing British businesses, according to the latest quarterly survey from Deloitte of chief financial officers, outweighing the concerns about geopolitics and energy prices that have dominated for two years. Finance chiefs raised expectations for interest rates to be at 4.5% in 12 months, up from the 3.75% anticipated in the first quarter of this year. In 2025 inflation is expected to remain above the Bank’s 2% target, at 3.6%, up from 2.9%. The rate of inflation has started to come down from its peak of 11.1% but it is still running at 8.7% and there are concerns about a wage-price spiral. Finance chiefs expected wage growth to fall in their own businesses, however, as the jobs market slowed. Deloitte’s optimism/pessimism index was a net minus 10%, indicating that more finance chiefs are negative about their firm’s financial prospects than are not. That compares with a net plus 25% three months ago.
Big rise in companies collapsing as costs soar: Company administrations jumped in the first half of the year as the rising tide of inflation and interest rates claimed more corporate casualties. The Times reports they increased by 44% from 429 to 618 as inflation put pressure on balance sheets, according to data from the restructuring firm Kroll. The food and drink sector was knocked by more administrations in the six-month period than it faced during the whole of previous year. Fifty-six businesses filed for protection from creditors, compared with 53 during 2022. Construction and manufacturing industries suffered the most acute distress overall as they were hit with 79 and 71 company administrations respectively. Businesses have been struggling with a sharp rise in costs for labour, materials, energy and credit. The Bank of England started to increase base rates two years ago and the cost of debt is starting to feed through. Sarah Rayment, co-head of global restructuring at Kroll, said: “This probably is going to be a continuing trend. The challenged sectors continue to be construction, manufacturing, leisure and hospitality. People are finding the market very difficult to predict. UK business does seem to have real resilience and stakeholders do seem to want to work together more than previously. The banks want to work with their customers and suppliers want to work with businesses. But there are always going to be situations where businesses fail because they have just run out of all of the resources available to them.”