Tortilla Mexican Grill Shares Slide Despite Record UK Profitability

Tortilla Mexican Grill (LON: MEX) has released a trading update for the year ended December 28, 2025, showcasing strong revenue growth and UK market outperformance.

The company reported a record year for UK profitability, alongside encouraging early results from its French store conversions. However, MEX shares declined around 1.9% shortly after the London open.

Group revenue reached £73.8 million, marking an 8.5% increase compared to FY24. Total Group system sales climbed to £98.3 million, up 9.2% year-over-year. UK like-for-like (LFL) sales demonstrated significant strength, growing by 6.2% for the year, substantially exceeding the CGA benchmark, which saw a 1.3% decline.

The UK LFL momentum accelerated throughout the year, with growth rates of 5.9% in Q1, 4.2% in Q2, 6.9% in Q3, and an impressive 7.8% in Q4. Notably, in-store LFL sales in Q4 remained resilient at 3.0%, despite facing tough comparatives of 4.8% in Q4 of the previous year.

Tortilla's franchise network also delivered robust performance, with LFL revenue growth of 4.5% in the UK, 14.7% in the UAE, and 2.6% in France. Thirteen franchise locations achieved weekly sales records during the year, and seven new franchise stores were opened: three in the UK and four in the UAE.

The company continued to invest in technology, with self-ordering kiosks now operational in 38 UK restaurants. Tortilla plans to equip all suitable sites with kiosks by the end of Q1 FY26, demonstrating its commitment to enhancing customer experience and operational efficiency.

Progress in France is notable, with seven Fresh Burritos sites successfully converted to Tortilla, including the flagship location at Gare du Nord in Paris. Early trading performance from the first six converted stores has been encouraging, with a strategic pricing reset driving a 39% average increase in transactions and a 30% increase in sales post-conversion.

Adjusted EBITDA (pre-IFRS 16) for FY25 is expected to align with management expectations, driven by a strong Q4 performance. Group Adjusted net debt (pre-IFRS 16) stood at £10.7 million at the end of the period, consistent with forecasts. The Group successfully refinanced its debt facilities with Santander during the year, providing support for future growth initiatives.

Looking ahead, Tortilla anticipates continued pressure on the UK consumer economy due to employment concerns. Cost headwinds experienced in FY25 are expected to persist into FY26, prompting a review of pricing strategies.

Despite these challenges, the company has had a positive start to 2026, outperforming the UK market in the first three weeks. Supported by the success of its Winter menu, investments in food, brand, and technology, and positive results from French conversions, Tortilla is well-positioned for the year ahead.

CEO Andy Naylor stated, “I'm happy to report that we finished 2025 positively, with a strong fourth quarter capping off a record year for UK profitability… Our food is better than ever and our work on brand and use of technology continue to yield a good impact.”

The Board expresses confidence that the outlook for FY26 will demonstrate continued improvement over FY25. While economic headwinds remain a concern, Tortilla's strategic initiatives and strong performance indicators suggest a positive trajectory for the company.