Tortilla Mexican Grill (LSE:MEX) — Final Results for the year ending 29 December 2024

0:00 Good morning and welcome to the TORTILLA MEXICAN GRILL PLC full year results investor presentation. Throughout the quarter presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all the questions submitted today, and we'll publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Andy Naylor. Good morning to you, sir.

0:32 Good morning. Yeah. Thank you for the thank you for the introduction, and welcome, everyone, to our latest update with our twenty twenty four full year presentation. We'll start with some intros. So I'm Andy. I'm the CEO of TORTILLA. Been with the business for about eight years now. And, yeah, I love the restaurant industry. Not a didn't start life as a a restaurant, so I was an accountant by background. But, yeah, food industry is where what gets me excited now. And, yeah, delighted to have Maria on board as well since the beginning of last year. So welcome, everyone. And, yes, Andy said I'm Maria, the CFO since February last year when Andy stepped into the CEO role. Right. So we'll do a quick summary, and then we'll walk through a strategic review and an operational update. And then Maria will take us through some of the financials, and then we'll leave plenty of time for some q and a at the end as well.

1:30 So in terms of the key headlines, there's sort of six areas here we wanted to highlight. The first is that The UK business well well, first and foremost, it's been twelve months of significant progress across a number of the key pillars that we identified before. It's fair to say that we've had a busy twelve months transforming a lot of elements of the business, which has been fantastic, and it's good to see some of the fruits of that labor coming through. So The UK business starting with that started the well, q one last year was was quite tough for us. And so a lot of the initiatives we implemented kicked in from sort of April onwards when I took over. Over the last twelve months, it's moved on significantly. If compare q four of last year with q one, our like for like sales growth was 8% improvement compared to the way that the CGA Peach restaurant benchmark moved. So we're really delighted by that, and we'll talk a lot more about our like for likes and the progress we've made on that in the presentation.

2:32 We commenced an exciting strategic rollout in Europe with our acquisition of business in France. So we've got 13 quality locations there and some franchisees. So we'll tell you a bit about that. We grew our franchise estate last year with mostly with SSP, And we signed a new agreement with SSP to get us to 18 sites over five years. So really excited to see all of those relationships going from strength to strength becoming quite a significant part of our business now. We've worked very hard on on team and culture. We'd love to tell you a bit more about that in the presentation. And, you know, the key headline is we've got our staff turnover down by 35 percentage points, which is quite incredible, actually. And you can see there's a little picture of the first, the inaugural burrito masters rolling competition that we did last year.

3:24 We had a significant change in our recipes and our foods, our our products over the period in terms of limited time offers and creating some buzz around the brand. So we'll tell you about that. And then lastly, we did a lot on the tech kiosks loyalty. I'm seeing some good numbers with those. We'll talk to you about that in a bit more detail too. So moving on, just as a reminder, when in April last year when I took over as CEO, we identified five strategic pillars that we wanted to really focus on as a business. One was to improve our UK profitability. Second one was investing in our brand, both brand and food and to drive our top line growth. We thought there was big potential there. We wanted to invest in our teams and our technology.

4:12 We had a mission to double down on franchising, and then we also wanted to develop our brand internationally in Europe. So these are the things that we're going to focus on in the coming slides. So starting with The UK profitability, we are really delighted with the progress on this. I wanted to create a culture of obsession about volumes in the business, getting more people through the door, eating burritos and our and tacos and quesadillas. So you can see the red line here is the TORTIA in store sorry, total like for like. Then the gray line is the industry like for like. And you can see when we started the vital five strategy, we're in about minus 6%.

4:59 And then it grew quickly during the period of all of the things that we've launched. And you can see from September onwards, we've consistently outperformed the industry tracker during that time. And and actually that gap is just widening by April, which Maria will talk to it in a little bit more detail later because there's a nuance around pricing there. So, yeah, we're really, really pleased with this. And I think to have such a big gap against the restaurant tracker is a really good indicator that we're on the right journey here as a brand in The UK. So linked to profitability, we've got some historicals here in terms of our profitability percentages. We've moved it forward year on year from 23 to 24, which is great.

5:45 But actually, as Maria will tell you a bit more about later on, a lot of these improvements since the top line and some of our cost savings, they really impacts the second half of the year. And so what we will find, you know, obviously, is the year when time got better as you saw from the last graph. So a lot of these will come to a full year fruition in 2025. And so we should see our profitability grow healthily this year. In terms of the things that have driven our profitability, the main fact is that we have obviously transformed the top line through that sales growth. And as everyone knows in the restaurant industry, that top line sort of sales growth flows through very quickly down to the bottom line. So that was the main mission really of ours. But also we've looked given that the general climate within the restaurant industry is profitability is decreasing because of all the labor inflation and other types of inflation.

6:39 We also put in various self help measures like automation. So we are now doing more automation of our cooking processes at the central kitchen, which actually also we've coincided that with improving the quality of what we do as well, which I'll come on to in a minute. But it's also saved us manual labor hours. We've got better buying power than we've ever got before because we're growing, particularly as well with our franchise partnerships growing and and that supply chain coming through through our business. Energy saving initiatives, we've the solar panels in at our central kitchen, which is fantastic, particularly with the weather we've had over the last couple of months and the AI spark smart sockets in the store as well as in saving us energy too. And then finally, the hedging strategy we've been utilizing to buy ahead and lock in our our own purchasing and protect ourselves from volatility.

7:29 So, yeah, good progress on UK profitability. So moving on to the second pillar, the investment in the brands to drive growth. This slide covers really the food side of that, which has probably been the most substantial element that we've done on brands. So starting with capability, we brought in a new food director in June last year, a guy called James, who's had a fantastic impact on business. And we've upskilled his team as well with the new executive chef and some wider changes within the team. So we've got a really strong team driving the food now. And we've invested in new server equipment as well as part of that. So skipping on to the all day quesadilla, one of the things that we really want to do, we felt our quesadilla was one of our best products, but before we only served it after 02:00 because it was too slow to serve at lunch and slow the line down.

8:22 We're putting in some new equipment in the stores. We can cook these very quickly now and with a much better quality to them as well. So we launched the ditch the sandwich campaign with a lower price point $6.95, get a case of beer, and the improvement in the sales mix of that has doubled. It's been a really popular product. You might have a concern that that's diluting our ATV, but it isn't because what we're doing with that is we're really promoting as a meal deal. And so actually people are adding on drinks and chips as a result of the lower price point to still protect our ATV. It's a fantastic volume driver for us. We've overhauled our food offer. I mean, we have reviewed forensically every single container of food on our line, and we've made improvements to it, whether it's the recipe, the way that we cook it, or actually or even the produce that we're purchasing to put into it. We've changed a lot of stuff, and those that eat our food regularly are always telling me that they're seeing a big change. And, you know, I think it says a lot if the founder says it's the best that our food has ever been, which I think we're all feeling within the organization. We're in a really strong position from a product's point of view. And given the competitive landscape in The UK, having the top products at the best price you can afford to do it is absolutely vital to drive in the top line. We invested in our central kitchen as well, as I mentioned earlier, with various bits of equipment to not just improve the speed at which we can produce things, but also the quality to enhance that as well. And that's been

9:54 critical to underpinning the changes. We've also started on our journey of launching limited time offers, have been fantastic for the brand. So it's a bit of a mixture for us of working with big brands like Beyond Meat, you know, global brands. So also work with more artists and producers. So we've done various collaborations, for example, with Tommy Tom's Portbelly, which was in this year. Really great product. And, you know, partnering with people who've got quite big Instagram followers and just whipping up a bit of food news and excitement in the brand, not only for the customers, but also for our employees. You know, you can see the energy it creates and the excitement, and people are upset when they see some of them come off the menu. But that's the whole idea clearly behind creating a buzz around your brand and being able to rotate things like that.

10:45 So moving then on to brand. We we have pulled the brand lever a bit, but if I'm honest, this is a lever. There's a lot more to pull on. And I'm delighted that we recruited a new marketing director at the beginning of the year. He joined us in January, and we've got some really exciting bold plans coming on this run. Starting first mesh mission that we've been working on over the last twelve months that was evolving our brand. Our brand that is twenty years old, and I think when we were looking at the fresh burrito sites and how we convert them to TORTILLA, It was a moment of realization for us that there was an opportunity to make our own brand bolder, fresher, and also having a more youthful energy around it and a more simple design structure. So there's a consistent identity now as well.

11:31 We've implemented across our digital and physical touch points, and we've been working hard on our social presence as well. And we've seen some really good growth from our channels over the last six months. We've been driving awareness. There's a lot more to do on this, but we have done quite a few big activities within the National Greeting Day. As you can see from a screenshot there, we've got our app, our loyalty apps, number two behind ChatGPT for a day, which is fantastic. So we require people to sign up to our loyalty scheme in order to redeem their free burrito. 18,000 given away. We signed up 62,000 new loyalty members, and then that gives us obviously a lot of audience to kind of contact and and bring back into our stores now. We did a case of this stunt in December last year, which is good fun. Ditch the sandwich ditch the boring sandwich and replace it with a nice case of beer.

12:23 And as I said, we've been doing a lot of culture driven collaborations as well with some brands listed on this slide. But, yeah, it's been great to partner with and and and have some fun with. So, yeah, that was it on the brand side of things. As I say, there's there's a lot more to come on that front this year. Onto team, I'm a big believer that although we are a restaurant and a food business, we're also a people business. GRILL And so we've been working really hard to develop a an employer of choice and become a sort of place that

13:08 as versus 2023. We've been really working hard on this. We now meet with our store managers face to face quarterly. We launched what we call the Habanero Highway, which is an l and d framework. I was actually at some graduate presentations from the leadership course that we did yesterday. Various people have been in the business a long time have remarked. They felt it's the best thing we've ever done as a company, which is high praise indeed, and I think it really goes to show what kind of an impact you can have on your people when you when you start building this culture. We we did our first burrito masters, which I mentioned earlier. So celebrating the the challenge of rolling a burrito, who's the best of it. And now we're an international business. We can get the best from Middle East, the best from France, the best from The UK, the best from our franchisees, have a lot of fun with it and celebrate the success of that.

13:59 And, yeah, there's been a big improvement in our operational statistics as well. So, you know, hats off to the team. They've worked really hard on our inaccurate order rate, the mystery diners, and our Google ratings. So we've seen some really strong results operationally as well. It goes to show that that buying is building within the organization. There's still a lot more to do on that front. There's another twelve months at least of big transformation, but but we're gonna get there and we're keep growing it. So then on the tech oh, so this is another slide here on team. So there's some statistics here around feedback from our guests. The scores are pretty good, but they could be better. And so I'm gonna be working with our chief operating officer to see what we can do to drive these things forward. I think particularly in this space of value for money and portioning, making sure that the portioning is consistent. We want people to walk away with a consistently sized product, and we've just got a lot of ideas about how we can move forward on that.

14:58 We wanna make sure people are satisfied with their visit, and we know from our loyalty that they are. So it's just about driving that further now. We've implemented some more systems to track this stuff going forward as well. So if we move on to technology, other than food, this is probably the other lever that we pulled most heavily last year to drive that sales growth. So we've got a fantastic new loyalty app, which we launched in late summer last year. A lot more functional than what we were using before. We call it the Burrito Society, and it says 196,000 users. We're over 200,000 now, which is fantastic. And we've seen a huge improvement in our average weekly sales on that application. What we're really seeing with TORTILLA is a very sticky, loyal customer.

15:45 You know, with our type of food offer and the variety you can get from it, you will get people coming multiple times a week. And the scheme is very generous. We wanted to not fall down the track that many restaurant businesses have done and discount, but instead provide value to our customers through rewarding loyalty. So you get a sick burrito after you bought five, you get the sick one free. It's pretty generous, and I think we're really seeing sort of visitation frequency go up heavily because of that. We've also rolled out self ordering kiosks across a range of stores. We've seen some really strong results from that. It enhances the customer experience in a lot of locations where people feel that the journey that we have at the moment is perhaps a little bit intimidating. It's not for everyone though, so we've been working hard on how do we put them in without it feeling like QSR.

16:35 So we've been evolving as we go around where we position them in the store, so they're not in your face as soon as you walk through the front door. So we learned as we went on that, but by learning as we went, we went quick and we got lots of these in and we've seen some really strong payback and results from them so far. Not just in average transaction value, which is the commonly reported upside people talk about, but also volume, which goes to show that people enjoy the experience in some of these locations and it's driving footfall. The robotics partnership we've announced, fantastic business Kokaku. I believe that our proposition is inherently suited to further automation opportunities. There's less precision needed in producing our our food on the servery compared to burgers, sushi, and other more foods require more finesse in the preparation.

17:28 Our food is fun. I think we can automate further, and I think we can redeploy people from manual roles within the stores to exciting front of house roles providing much more than a functional guest experience than we're able to do at the moment, really enhancing that kind of customer journey, explaining the menu. I'd really love for us to become a much more heavy front of house focused organization. BI and data warehouse, probably a bit less exciting, but exciting to data nerds like us because, ultimately, it means you can make decisions more quickly, and you can make commercial impact more rapidly by being able to make quick decisions off of data. So that's been a big behind the scenes project of ours as well.

18:15 So then we talked about doubling down on our franchise and we definitely have. So we've we've delivered on this pillar. Just as a reminder for those that are new to the business, we've got a great operating model for franchise. I mean, it's it is a very strong model, simple kitchen format. We provide a lot of the harder to produce recipes and food from our central kitchen, meaning the on-site preparation is very simple for our franchisees. Great for the franchisee. Great for us because it means that we can protect the consistency of our offer much better than some of our competitors are able to do, which is great. And in terms of protecting your brand, It means that our franchisees can build sites without extraction, and they can take smaller units as well.

19:02 And as you can see from the graph in the bottom left corner, our franchising sales across The UK and The Middle East are over 16,000,000 now. You can see how that evolved over the last five years. It's quite incredible. And it goes to show with the commitment that SSP have made to the business and the sites we're opening elsewhere. There's excitement about our brand on that front. SSP have opened a range of stores recently as a few of them listed here. I mean, Stansted Airport recently in December last year, fantastic site. This year with SSP, opened Victoria's as listed on the slide, but also Liverpool Street Station. So we're across most of the major train stations in London now, fantastic from a brand perspective. We also opened a couple of sites in The Middle East so far this year. We'll be opening another site in the summer in Abu Dhabi, Fantastic region. That business is incredibly well run by the franchisee we've got there.

19:54 And you can see 24% like for like sales growth. I love that number as well. Our sales growth is strong, but hats off to those guys. They're absolutely killing it over there and doing a great job. And Compass as well, they're strong. We're in The U the higher education spaces, and we're looking at other sectors as well with them and looking to expand that relationship.

20:13 And then, yeah, lastly, we guess with the European growth, we'll come on to that. We've got a range of franchisees now in France. And so we've we've got some stepping stones to build on on the franchising in Europe now as well. So, yeah, developing the brand internationally. We obviously made some progress on this by buying our largest European competitor last year in the summer. We bought 13 owned stores and 14 franchise sites. Fantastic locations. This was a property play for us. Let's have no doubt. This is not a a brand that we were looking to retain in our own corporate stores. We want to turn them to TORTIA. We've got our food in the restaurants at the moment. We've got our central kitchen built in Lille.

21:00 And the central kitchen is enormous. It's three times the size of our UK facility. And our UK facility is supplying around 100 sites. So as you can imagine, there's huge rollout potential now that we've got as a springboard in Lille. And it's important that we're able to provide food to the franchisees for the reasons I talked about previously. We've got a great team in place led by a French MD called Gilles. He's got great experience from KFC. And, yeah, we we're on the journey to getting the stores converted. We'll be converting the first sites in the summer. We're hugely excited about that, and we'll be working hard on that for the rest of the year. So really exciting and gives us a solid platform for our European growth, which is going to be a largely franchising experience for us as we talked about previously.

21:50 So, yeah, great progress on this pillar.

21:54 There's a quick quick reconciliation here of our number of our sites. You can see that we're up to a 120 internationally by the end of May of this year. Diverse portfolio, as we talked about previously, can see a bar graph at the bottom with the different types of sites we've got. And, yeah, great to see us expanding across both franchising, but also through the acquisition we did last year and, you know, that property play that we we we commenced on that front as well. So lastly, before I hand over to Maria, I just wanted to give you a a quick

22:29 view of our rebrand. So as I mentioned on another side, when we were looking to convert the FreshBreaths to source of sorts here, we wanted the that conversion to really feel like, wow, noticeably different to existing design. And it made us go through a journey of looking at our own design in The UK and seeing if there was an opportunity to modernize it, create a more contemporary design, and I think that's what we've delivered here. These are some renders from some sites that we're gonna be reopening. This is a site in Leeds that would be opening next year. Looks fantastic. Bright signage on the outside. Looks fantastic with the kiosks well positioned, you know, and the interior nice and clean looking. I think it's a much more contemporary design than our current look. And so this is something that we're really excited to be deploying in The UK where we can and also rolling out our sites in France.

23:21 We simplified the main logo from TORTILLA MEXICAN REAL CALIFORNIAM burritos and tacos, just burritos and tacos,

23:27 simplify it, and we want to start this feels like a global brand to us now, not just The UK brand. And I think having an iconic logo is is a key part of that. Thank you. Thank you, Andy. I'm going to talk you through some of the financials now starting with the highlights of next year from last year. And I think the key thing of this is they really prove what Andy's been talking about, the significant progress we have made in The UK as well as obviously the investments we're doing to grow in Europe. So first of all, we saw the slide earlier on with our improvement in our like for like sales in The UK compared with the market. But just to highlight again, compared where we were in quarter one last year, we were about sort of minus five percentage points decline and then finishing quarter four last year in about in over 4% increase means we moved nine percentage points between where we started to where we ended the year, which is quite a significant move.

24:30 On our top line turnover, we have grown to GBP 68,000,000, up GBP 3,500,000 year on year. I'll talk to you a bit more in the detail of the breakdown of that, but the majority of that's coming from of L Fresh Burritos.

24:44 On an adjusted group EBITDA line, we were GBP 4,500,000, which is slightly less than last year at GBP 4,600,000, so down two percentage points. But what's important though is really to look at the split between The UK France. So if you look at The UK operations, we were up from 4.6 to 5.2, so 13 percentage points growth. And as Andy hinted on earlier, majority of that was driven through the second part of the year, hence, where we will see full year impact of that really coming through in 2025. As expected,

25:15 when we bought a sort of distressed business, which was more of a property player, as Andy said, we expected early day losses, and that's what we're seeing in the minus 0.7 EBITDA contribution from France. On a a cash perspective, we generated 4,200,000 of cash from operations, up 10% year on year, and that's been really reinvested within the business, which I will talk to a bit more about later on. Already gone through the slides, but, yes, to highlight that again, at the end of the year, we had 117 stores, up 28 year on year, and we're now at 120 as as where we stand today. Our net leverage ratio for last year was 1.3, up from naught point seven the previous year, which is really driven by that we increased our debt as be able to grow and expand into Europe.

26:06 So we'll then go a bit more into the details starting off with the income statement. So you can see that the revenue growth being 2,300,000 up, three and a half percent. And I said the majority of that comes from the acquisition of Fresh Breeders, but we also opened new site one new site in Arndale in Manchester in The UK in the year, we have the full year impact of twenty twenty three openings and also seen strong, as Sandy said, franchise growth growth in The UK and The Middle East. This is then offset by our delivery sales year on year because back in February, for those of you listened before might have heard this, that we we changed our delivery strategy to go on dual platforms rather than trading on three three platforms, and that meant a drop in sales of 10.5 percentage like for like, but that's increased our profitability, which you'll see on a later slide.

26:59 From a gross profit margin, we as we're temporarily down 70 basis points. And I say temporarily for the reason that this is really driven by the fact that we took over the French business. They had a frozen supply chain and didn't purchase very well from the suppliers. So we had a short term sort of impact on our gross margin dip since we implemented the new central kitchen in Lillian, France in q one this year. We have now seen margins going up again, and we're currently trading around 78.5%.

27:30 The adjusted EBITDA, I've already mentioned to you that we were slightly down as a total, but a strong progression on The UK side whilst we France was down driven by the early sort of losses that we expected there. Looking at the bottom line, the loss before tax, it looks quite alarming maybe at going up three times to 3,300,000, but it's really driven by two items. The first one is an impairment of 1,400,000 in a small number of stores in The UK. And just as a reminder, that has no cash impact at all. It's just sort of an accountancy sort of booking. And the second one is a one off exceptional items of 1,600,000, of which the majority, 1.3, is driven by the acquisition costs. This drives down a little bit more into our like for likes in The UK following on from the slide that Andy showed at the very start on that graph.

28:23 So just want to talk to you a bit and show, like, really the splits here between in store and delivery as well. You can see that on the in store, they were really transformed from minus 4.6 in q one to 4.8 in q four, so up up with nine percentage points as I said earlier on. And the nice thing with that is that we can then see that tracking through into this year. We dipped down a bit in q one, and it was really driven by in April, we sorry. I'm saying it wrong now. We we didn't do it. We started off a little bit slowly, but we then have been really strong in the q two despite the fact that we dipped down a little bit in April because we chose to price slightly later rather than going April

29:04 1 with a price increase. We actually priced end of April to be able to watch the market a bit. Hence, we saw that bit of dip in like for likes in April on Andy's slide. But since then, it come up stronger, and we're now around sort of plus nine percentage points for after we had implemented that sort of price. And when you're looking at our total there, I think it's really interesting to look compare that with the market. So where we were in a decline quarter one last year of over two percentage point and now in an increase of six, so we've gone up nearly nine

29:36 basis points. Our the market was in a 2% increase last year in q one and quarter two, quarter to date, they are now in a decline of 2%. So that's gone backwards 4%. So compared with the market, we really outperformed that with 13 basis points over that period of time. And just to highlight, as I said on the delivery, because we changed the delivery strategy, you can see full year at 2024 that we're down 10 and a half percentage points in like for like. But when we came into quarter two this year, which is the first time we're now starting to overlap this relevant timing last year where we also traded on two platforms rather than three. The actual delivery channel is in quite a strong growth of nearly 10 percentage points.

30:23 This is an interesting slide because as you might remember, we opened quite a lot of stores, 18, in fact, back in 2022, '23. And a majority of those stores were opened in smaller tertiary towns, not in a major of city. And because of that, we have expected them to take a bit longer to mature. And what's interesting with this is that, obviously, these sites have benefited from everything else other sites in in our portfolio have done, like the investment in food and tech and marketing

30:55 and so on. But what we can see here on the gray line, which is the new store openings from 22, 23 versus a total to tier state, which is the red line, is that the new store openings are really outperforming our total estate. Specific over the last sort of three months is 11 percentage points difference between the two lines, which really demonstrate that those stores are still maturing, which is interesting because, obviously, a year or so ago, there's really a drag on to our p and l, you know, loss making or maybe as marginal. They're all now starting to reach that sort of point, and they're starting to become profitable or at least breakeven. And as you can see here, they're still maturing, so that should, you know, benefit us as the year go through and into the future as well. I told you already quite a lot through the revenue slide, but this is really just to demonstrate how much the revenue went up there from we'd have that position. We increased with 3,000,000.

31:51 We opened new stores last year, which an an average of 1,100,000 net contribution

31:58 to revenue. You can see from that little new store opening graph that we have a closure of two stores in there. Those two closures are coming from one which in Peckham, was our last delivery kitchen after the ones we opened in COVID to close down. We're not really having sort of specific delivery kitchens anymore. We're using our normal stores for that. And the second one was our store in Nottingham where we had two stores fairly close to each other. We realized that we only really need one in that town. And since we closed that one store, the majority of the sales actually transferred over to the second one. Franchise income is growing 0.2 up. You can then see that the revised delivery strategy made our revenue fall by 2.8.

32:44 Small impact of our in store, which was in decline as a total for the full year driven by the first four months of the year that was really negative before we started to turn the business around. And then you have a accounting adjustment of naught point eight, which is just the way we book our the book the sale we do to our franchise partners of our food from our central production kitchen. There's no impact on our actual profitability as to how where in the p and l we book that, give giving us a total of 68,000,000. Looking at our EBITDA bridge, we were at 4.6 last year. You can see a lot of green ones here coming from The UK business. Cost savings of naught 0.7, which comes from the points that Andy highlighted earlier, the automation in stores of bringing our, let's say, chicken dicing to the central production kitchen, the fact that we the fact that we have saved on energy, and that we have now stronger purchasing power, all of that contributing to this naught 700,000.

33:48 Franchise income goes straight to the p and l at naught point two. The change in delivery strategy whilst bringing down our revenue actually increased our profitability with naught point three. And we can then see that we priced. So last year, we priced 6% in April, giving us an increase here of in our EBITDA of naught point eight. This year, we've gone a bit softer. One, we delayed it to the end of April to watch the market. We also choose to price only 4.5%, so it's probably slightly lower than when the market and our general sort of inflation in labor and that. We've also chosen to go slightly softer on the pricing in Central London, where we already have a premium pricing and also the fact that the competition is really intense in in Central London compared with in some of the towns outside of London. So we've done more of a split pricing strategy there.

34:38 But the the pricing and the cost savings combined there more than offsets the labor inflation we've seen of naught point eight, and that means we've been able to also invest in our head office and, in particular, marketing of naught point six to start driving our brand awareness and repeat purchasing powers in that. And then you could lastly, you can see the Fresh Barito acquisition and and the downside on the EBITDA down, 0.7, giving us 4.5 in total for the year. And as Andy highlighted earlier, again, I just want to point out in table at the top, you can see that that the split for our EBITDA in 2024 is more heavily weighted towards the second half of the year compared with the normal seasonality that we see, which always more heavily half two because that's just the seasonality of, you know, having a really strong quarter four, and that what we normally see. But because our cost savings and other initiatives driving the sales and so really started coming through from the second half of the year, that's what's driving that, and that's where we will see it's fully materializing in 2025.

35:42 Talking to you about about the cash flow. So what you can see here is that we we generated, as I said earlier, 4,200,000 from cash from operation. We've reinvested this in the business both in The UK business to invest in our product technology, our both the kiosks and the app as well as our central production kitchen to really drive our like for like sales. Then And on top of that, we have maintenance investments that will to improve the sort of quality of the estate as we would always have. And some new site CapEx, the majority of that is gone to Arndale, which I said we opened in Manchester last year. But we also have investments in in France, both for the central production kitchen and starting to invest in in equipment into the stores of 1,600,000 as well as the actual acquisition costs has come through here, 1.4 impacting the the cash flow, meaning that at a free cash flow level, we were actually adverse 2.7.

36:40 Therefore, we have drawn down 4,200,000 more from our credit facility with Santander. All of that's not fully utilized at at the end of the year, meaning as we close the cash position at 2.8 and obviously further CapEx investments will go on as we start converting the stores in 2025. So this means that a total net debt level, we were 5,700,000 at year end, one point one point three times. And just to remind this everyone, we have a total facility with Santander 10,000,000. We've now drawn down 7.2 of that, and that facility is agreed until September 2026. Actually, being less than eighteen months, you would have we would have actually started our discussions with banks, and we are pleased to say we're in a really advanced discussion with banks to renew our facility, and we'll release some news to the market as soon as we have agreed that.

37:37 Just looking at our trading outlook for the rest of the year. As I said, UK is trading well going into quarter one, quarter two this year, and a 6% like for like. We can see the cost savings coming through that we sort of for the initiatives we drove last year, and we we keep driving, obviously, food news and marketing and in technology investments as Andy's already talked about. So The UK outlook is very much in line with the management expectations. For France, we're now ready to start conversion converting the stores with the first conversions to take place towards the summer. Our franchise partners have already opened two two new stores, sorry, through SSP and two through ETHUS so far this year, and we're expecting another two to four to open in 2025, a bit relating to the timing of the last two, whether they will fall into this year or into 2026.

38:35 I'm also pleased to say that the hedging strategies we have and the relationships with our suppliers means that we have already agreed very early on back in January, the prices for all our proteins and for, you know, energy prices are fixed. So we have no really volatilities throughout this year or risk to other input costs, so they would be stable for the year, which is quite nice with everything going on in the world economy at the moment. And so I think as generally, I'd say that both Andy and myself and the board, we are really so excited about both this year and the future and the growth opportunities we have both in The UK and abroad. And I over to Andy to just summarize. Yeah. So just to wrap things up, I guess, before we move on to the q and a. Yeah. We we made really good progress. You know, there's still a lot more to do, undoubtedly.

39:24 But if you look at what's happened over the last twelve months, there's some big moves forward on some of these key pillars. So The UK profitability, as we've talked about quite a lot today, has moved forward last year and will move forward again this year. So we're feeling in a really good place about how we are recovering here and getting more people through the door, our food through all the different things we've done around our food and our tech. Feeling very strong on that front. We're investing in our brands, so there's more to do on food. There's still tweaking that we're doing on our recipes. In fact, there always will be. I think it's something that you have to be continuously optimizing. But we will also now, with our marketing team, be working very hard on our brands and the new look and feel, how we get that into stores, how we bring that to market.

40:15 If you look at some of the real success stories in The UK in recent years, it's very often been heavily impacted by marketing. So really excited by a huge lever that we can pull on this that we've only just begun to to do so far. Continuing on the team and tech, there's lots more work to do on both of those fronts. We made good progress, but we'll be making more progress this year. And we're doubling down on our franchising again. As that's what Maria just mentioned, we've got a healthy pipeline of sites. And with the franchising and the brand, the last pillar that developing the brand internationally, this is how we envisage TORTILLA expanding across Europe. There's a huge opportunity to consolidate and really own this cuisine in Europe. We believe that if you look at other markets, not just The US next to Mexico, but you look at Australia and the success there with burritos, Europe is clearly underserved with this type of food. I think we we all feel that it's very much on trend with the way that people are going around eating clean food without sort of deep frying, you know, clean protein, being able to create variety and health through that food as well. So yeah, it should be a great opportunity for us to expand across Europe over the coming years.

41:34 So that brings us on to the Q and A before we do a final wrap up. So we'll just flip to some of the questions that have come in over the course of the presentation. I think I'll let you take the first question, Anders. The first question is around the Chipotle team has obviously started to expand internationally and particularly started to take some presence sort of through Europe and what sort of is our view on that and what's on our radar? Yeah. I mean, it's an interesting business, Chipotle. They have got a great product and we we know their team relatively well. They've been in some good locations. They have been expanding a bit in recent months, but they've, you know, they've also closed the store. So I think they're working out what their right type of site is for them.

42:24 But, yeah, it's great that there's more businesses selling burritos in in The UK. I think, to be honest, I really like the awareness of the cuisine type to increase. We've been the ones driving that over the last ten, fifteen years. So we're very happy to see them expand. I think for us, scale is everything, and we've already got that. We've got significant scale in Europe, which obviously comes with huge advantages around buying power. And we have a slightly different proposition to to to Chipotle. So our our food is slightly different and, you know, we feel that that's why it's super important to be really obsessed about the best quality product and then being able to have a supply chain and process that enables you to beat people on price. I think if you've got products and price, generally, you're gonna be in a very good place in a competitive landscape.

43:15 Okay. The next question is the file shows Us UK sell fell in 2024. How confident are you that you can return UK back to revenue growth in 2025, specifically given the lack of own store expansion plans in the region? And where would you put the ballpark guide on your 2025 revenue estimates. So what I would say on that, one of the big reasons as you would have seen from the slides that we fell in 2024 was firstly, we had a really, like, really weak q one in April last year before we started turning business around. Secondly, we changed the delivery strategy. So we'll we lost nearly 3,000,000 worth of sale because of delivery of trading on two rather than three platforms. Going into 2025, we started strongly. So we've been in 6% like for like growth both through sort of q q one and into q two. So year to date, being around that sort ballpark of 6%.

44:10 And within that, it's only it is key to say that's only four and a half percent pricing pricing now. So we're actually growing in volume terms as well, which is really key. And a big driver of that is the investments we're doing in rolling out kiosks, and we had we rolled out 11, as we said before, last year. We already implemented 12 so far this year, and we're driving to get up to at least, like, at least 20 for this year. So and that's really driving not just the AOV, but also the volume, which is crucial to us. So the next question here then is about this year appears to be about continuing the focus on UK stores franchising and converting the French owned stores. Looking out beyond 2025, are there any other countries in Europe that you would take a similar path to expand in? Or is the focus in the medium term, The UK and France?

44:58 Any color there would be appreciated. Yeah. I think that's exactly right. If you like to just give tax, otherwise, I'll lose all the content. Just that. Yeah. The UK stores is there's there's lots more to do here to generate profitability. So just thinking about your the comment on The UK stores is absolutely a priority to keep going on that. I think there's there's loads more room to grow our sales in our own stores in The UK and grow our existing franchise partnerships. I don't wanna distract the team with too many missions because I think it's important just to knuckle down, you know, getting our UK cash generation back to a really solid place, and we made good progress on that. And the French stores, you know, it's a big mission buying a fairly big business in France.

45:44 So so the mindset is not necessarily chasing new opportunities now, but making what we've got work. And I think that's definitely the right strategy. But of course, we're starting conversations. We're showing franchisees our central kitchen in Lille. People are the the the to to it proves the use case for burritos and the appetite for it. So we will be keeping an eye on that, and our our focus will pivot towards that when the time is right. The next one, can you talk us more about the departure of Kielbas Capital Partner and what their motives were for selling down that stake into TORTILLA? I'm going to let you take that. Yeah. I mean, so I mean, Kielbas were came into TORTILLA, I think, in 2010.

46:44 So, obviously, private equity firm, they tend to hold investments for a long period of time, and they have no presence in the public market. So for them, there was always a a sort of view that they were although very supportive that they would ideally like to bring that funds to a close at some point and and move on to other things. So I think it's just a natural life cycle as businesses you know, as as as that funds move on to different things. We were really excited to bring in Okta as a as a key shareholder. They've got some fantastic ideas on the board as well, some really good conversations around tech. And I think actually a bit of change is good because you bring new ideas to the table. Kielbas are fantastic and, you know, we we had a great relationship with them. But it it is nice to get new ideas, new energy, and we've had a really good time with working with Usman and the team at Auckus so far.

47:40 I think, Andy, this one specifically assesses for you, one for Andy and anyone else who would wish to comment. So TORTILLA, share price has been dead for the better part of the year now. As executive team, you can control operation, which appears to be taking a turn for the better, so congratulations. The market dynamics, you have less control over. But if you could comment on your thoughts why TORTILLA fails to affect optimism for the market, what would you would be welcomed? Yeah. It's a great question. Yeah. I mean, guess I'm a big believer in spending time energizing yourself about things that you can control. And so I guess we're very much focused on looking at things we can control, which is how do we get our our brand to win. And that is how do we get obsessed about volume, more people eating greases.

48:28 That's kind of the management team's obsession here. I think the public markets are difficult, not just in the smaller market cap space like we are now, sadly, but also just why do we see a lot of volatility this year. I can't say I'm an expert on public markets and the market dynamics. But I think the priority for me just remains growing this business and making TORTILLA win this mission that we think that remains. I think there's opportunity for hundreds of stores across Europe. So that's kind of what we energize ourselves talking about. I think there's there's also a view a view probably that we just need to get this business, if you like, a bit more rubber on the road in a way, not just in The UK, but in Europe. And so I guess that's kind of very much what what we're prioritizing here. How do we grow? How do we make a success of what we've got going so far? How do we grow our with average weekly sales in our UK sites another 20%?

49:25 You know, what is the opportunity here? So this is probably the thing for us is we just need to keep executing on what we're doing so far and perhaps spend another couple of years proving out some of these concepts a bit further. Okay. So with our international expansion now a favor on the tiers menu, can you speak on how you will expect FX volatility impact the business going forward at short and medium term? So firstly, at the moment, obviously, France business is not that massive yet. So what we're doing at the moment is we're utilizing a euro account with our bank where we sort of transfer the money across when we feel it's sort of at a favorable position, and we don't sort of really hedge any further than that. As the business grow in Europe, we will look to do some probably FX hedging as most bigger companies would do that have a operation in a different country.

50:17 Can you speak to why it took so long to get the FY 2024 results communicated to investors? The really reason behind this is the acquisition. So we acquired a completely new business. We've had to you know, a component audit in France or the French business and then and then a group audit at at, you know, group level for for overall. So it just takes slightly long, you know, to to have what we have versus last year, about three weeks delay is probably not unreasonable considering we have purchased a completely new business that had to be audited for the first time. And I think the follow-up question today is when can we expect the h one FY twenty five results to be published? We will, as normally, go out with a trading update in some point in July, and then the interims is likely to be published similar ish time to previous years, which is around the sort of end of September time.

51:12 Alrighty. In slide eight, TORTILLA like for like lags the market significantly at the start of '24, and that was an inflection, particularly in November 24 when the TS starts to significantly outperform the market like for like basis. Can you comment on what's changed there and why you like so much previously, and are you now and why you're now outperforming? Maybe that's just back to what we discussed then. Yeah. I guess it's it's the fruition of the Vital Buy strategy, really. I mean, you know, in April, we kicked off a load of different transformation projects around our products. We talked around bringing in our new food director in the summer in June, starting to do limited time offers, getting kiosks in. We trialed those in the early bit of, well, sort of the spring of twenty twenty four, and then we really, after the initial results of those, ramped up our our cadence on getting those into stores quite quickly.

52:12 So I guess a lot of it was back weighted, which is why the profitability will improve considerably in time. So, yeah, it's the it's the the fruits of the labor on that front. I mean, the other thing to to point out is our new loyalty platform and the push on that didn't really start until September. And so that's why you start to see these things kinda compound in terms of their impact and to to kinda really generate some strong sales growth. There's a piece here around the robotics partnership. Yeah. I mean, there's there's all sorts of things we're looking at that. I do believe that if you were to do a a swap diagram on TORTILLA, I think that one of the opportunities of our concept is it will be easier to automate certain manual processes. I don't believe that there are processes that are highly manual and boring in nature. I think there are things that we can get our teams to do that'll be much more exciting for them in terms of interacting with customers.

53:09 So we're gonna be looking at a lot of opportunities to automate back of house processes in the kitchen, but also on the surgery. I think there is a easier route to this than other brands. So I can't talk in detail about that. We're still working through with Kai Kaki on some concepts, but we would love to update in the coming months on some of that in a bit more detail. K. UK company owned stores have been flat now for a few years. At what point do we see TORTILLA start expanding? Is their ROI not attractive enough in the current environment to build company operated stores in The UK? I think to focus on that is really at the moment, our absolute number one priority when it comes to CapEx investment is to convert our stores in France and put the money towards that. So that's why we sort of slowed down The UK kind of rollout to some extent.

54:02 And also, we, in The UK, have focused our management bandwidth really on all of the other sides of driving food, the marketing, the technology, and we still see room to progress that much further throughout 2025, hence, where we sort of slowed it down. Following that, we would we will look start to look at opening UK owned stores again, but we're probably already targeted on where those are in sort of prime sort of grade a locations, central towns and shopping centers. Should things come up there, we would for sure look at it. And then when we have converted all the stores in France, that would be then how we will will when we will start looking at all the stores again. But in the meantime, we're still growing, and I think it's important to say that that franchise growth has been strong. We already, as I said before, have four new store openings through franchising this year and expecting another two to four this year. So could be up to eight stores in franchise opening across The Middle East and UK.

54:58 Just to build on that, what I would highlight as well is just the graph shown in the presentation and the improvement of the business here in The UK in tertiary locations, smaller towns that we've opened in like Durham or Canterbury and places like this. The growth we're seeing in those is so strong that it does give you that confidence that The UK wide space opportunity is really there in those smaller locations. And so I think there's there is a lot of opportunity to grow the business within The UK. I think also from a return on investment point of view, the returns on kiosks and the server equipment that we've put into stores is so significant in terms of the improvement in the like for likes, but also the payback on kiosks is so quick that it makes much more sense to deploy any cash that we do want to spend in The UK on that rather than new sites at the moment, like Maria said, whilst we're also working on our French opportunity.

55:55 So it's conscious decision that's making that we're making right now. But obviously, we will revisit this when the situation changes and we've got further growth behind us. Okay. Two questions here. What's the EBITDA margin target? And is it fair to say that for the existing sites, the growth in revenue is mostly due to hike in prices? I'll take that first. So the EBITDA margin, I think what we saw before here in store EBITDA is that we grew it by two percentage points last year. We're now at 16.3, and that's across the full estate. So our mature stores would be over 20 store EBITDA, that's really where we're looking to be for the whole estate. But specifically now as our sort of new store openings is starting to mature and not dragging that p and l down. So we expect that to go up further and get to that sort of 20% mark at a total level. I think previously, Andy, we have said around 10% as our store EBITDA as a corporate level, and we sort of stand by that still at that sort of target for the longer term.

56:57 Yeah. I mean, hopefully, even more than that with the world of tech and automation franchising. Yeah. And sales growth. But, yeah, I think that is our sort of shorter term target is to try and get back to that over the coming years and sort of see how some of these other initiatives come come to bear some results in time as well. And I think that maybe the last bit, is this existing sites is mainly growth is mainly driven by revenue. Yeah. And I think, yes, there is revenue growth in there. But as I said before, we are growing with 6%, four and a half is pricing. We're still in volume growth, which is quite significant to point out because if you compare with the market that's also priced, they are not seeing that volume growth at all at the moment. We're conscious we've only got two minutes, so it might be a good time to sort of wrap up. I think given that, yeah, we're nearly at the end of the slot.

57:46 Yeah. That's great. Andy, Maria, I'd just like to thank you for answering the questions from investors. Of course, company can view the questions submitted today and we will publish responses on the Investor Meet company platform. Perhaps just before redirecting investors provide you with their feedback, which is particularly important to the company, Andy, could I just ask you for a few closing comments? Yeah. I think thank you for dialing in to listen to the update. Hopefully, can take away a feeling that we're making some big progress in The UK. It's been a it's been a busy twelve months, I think it's fair to say. But, you know, with busyness comes excitement and the team are very energized. We've got a very strong management team in the business now. We spent a lot of time getting that right. And, yeah, we see lots of opportunity to continue on the same journey in The UK. I think that's, you know, there's still a lot of levers that we've not fully pulled, and we'll be pulling those over the next twelve to twenty four months to keep that kind of cash generation building. And then, yeah, we're looking forward to getting some sites looking like TORTILLA in France and seeing some good results from that expansion. You know, that was a strategic step for us. And, yeah, we're dead excited about that. And, hopefully, all of you listening are feeling the same way about the kind of retail opportunity in Europe.

58:57 So, yeah, that's that's probably about it from us now. So thank you very much for your time, everyone. Thank you. That's great, Andy. Maria, thank you once again for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback and all the management team can better understand your views and expectations. On behalf of the management team of TORTILLA MEXICAN GRILL PLC, we'd like to thank you for attending today's presentation, and good morning to you all.