This investor report summarises the key messages and financial outcomes presented by Tortilla Mexican Grill PLC at its interim results for the six months ended 29 June 2025. It draws on management commentary on operational progress, strategic priorities (the “Vital Five”), financial performance, capital deployment and international expansion — notably the company’s newly built central food production facility in Léo and the phased conversion of the Fresh Burritos estate in France. The report aims to present a clear, balanced and investor‑facing view of where the business stands, the milestones achieved in H1 2025 and the questions that remain material to future value creation.

Table of Contents

• Executive summary
• Strategic framework: the Vital Five
• UK performance and profitability
• Technology and the customer experience
• People, training and culture
• Franchising and non‑traditional channels
• International expansion: the France acquisition and the Léo central kitchen
• Financial review — cash flow, leverage and capital deployment
• Operational risks and questions investors should press on
• Outlook and management guidance
• Positive developments to note
• Investor implications and valuation considerations
• Key takeaways
• Suggested questions for forthcoming updates
• FAQ
• Conclusion

Executive summary

Tortilla delivered a strong operational performance in the UK during H1 2025, out‑performing the wider market by approximately eight percentage points for like‑for‑like sales and delivering record UK profitability. Group results were influenced by an investment phase in France following last year’s acquisition of 13 Fresh Burritos restaurants and a large central kitchen (referred to throughout as the Léo facility). The French rollout is still early stage: six conversions completed by early October with a seventh scheduled to open later in the year.

Key headline metrics from management’s presentation include:

• UK like‑for‑like sales growth: c. 5% in H1 (Q3 like‑for‑like reported at 7%).
• Group revenue: £36.0m for H1 2025 (c. +14% year‑on‑year).
• System sales (including franchise sales): c. £50m for H1 2025.
• UK adjusted operating profit (adjusted EBITDAR/EVA): up >30% to c. £2.44m in H1.
• Gross profit improved to £27.7m (absolute) and underlying UK margin benefited from supplier negotiations and a proactive beef hedge.
• Group reported a loss before tax in H1 driven primarily by the French investment phase (French loss ≈ £2m); UK reported a small loss in the period before considering the French impact.
• Estate size: 116 sites at end‑September 2025 (mix of corporate, franchise and international units).
• Burrito Society loyalty membership: nearly 250,000 members.
• Self‑ordering kiosks now in over 50% of the UK estate where physically possible, delivering around a 10% uplift in sales at those sites.
• Delivery currently represents roughly 30% of sales; company has moved to a dual delivery model to enhance delivery margins.
• Free cash outflow of c. £4.0m in H1 reflecting front‑loaded capital investment in the Léo kitchen and French conversions; a Santander refinancing facility of £2.5m was secured, with £1.5m drawn at H1.

Strategic framework: the Vital Five

Since the CEO adopted the role 18 months ago, management has centred the company’s activities around five strategic pillars (the “Vital Five”):

1. Improve UK profitability.
2. Drive brand strength and food innovation.
3. Top‑line growth (volume and product innovation).
4. Invest in team capability and technology.
5. Double down on franchising and develop the brand internationally.

These pillars are consistent with a pan‑European growth thesis: keep the UK as the cash‑generating engine while using franchising and an efficient central kitchen model to expand rapidly in adjacent European markets.

UK performance and profitability

The UK business is the current engine room of the group’s cash generation and the area where management reported its clearest progress in H1 2025.

Like‑for‑like sales and margin improvement

Like‑for‑like sales in the UK rose by c. 5% in H1, and the third quarter continued that momentum at c. 7% like‑for‑like. Management repeatedly emphasised that the UK outperformance has been achieved despite a difficult trading backdrop for the sector. The company also reported record UK profit margins for the year, with UK adjusted profitability increasing more than 30% in H1.

Management attributes the improvement to a mixture of top‑line initiatives (menu refreshes, seasonal campaigns and new products such as “protein pots”), careful cost management and supplier negotiations. A prominent factor in margin resilience was a hedging arrangement put in place for beef early in the year, insulating the business from significant upward price moves in that commodity.

Menu, product and brand initiatives driving volume

Tortilla stressed that its priority has been to grow sales from the existing estate rather than rely solely on new openings. Key initiatives that management highlighted as having direct sales impact include:

• Menu refreshing and improved food quality (ingredients, cooking methods and recipes).
• Seasonal launches and limited time offers; a summer salad rollout and partnerships (Source Shop, Tubby Tom’s) were cited.
• Introduction of high‑margin product innovations such as protein pots (management said c. £12k additional sales per week were being generated by this product without incremental capital investment).
• Packaging, store imagery and uniform redesign to present a more modern, consistent brand experience across touchpoints.

Taken together, these initiatives aim to increase transactions and average order value (AOV), with kiosks also providing an important conversion lever.

Estate rationalisation and site performance

Management acknowledged that a small number of corporate sites are underperforming. Two have already been closed in the year and further rationalisation is planned for a “small singledigit” number of loss‑making restaurants. The stated objective is to remove persistent underperformers to take the corporate margin closer to historic targets (management referenced a 20% store‑level EBITDAR milestone in the sector).

One important nuance for investors: Tortilla’s newer regional sites opened in 2022–2023 started in more marginal catchments with lower brand awareness. The company described these as having a short‑tail effect on like‑for‑like performance, which is now moderating as those sites mature and brand recognition increases.

Technology and the customer experience

Technology has been a core enabler for Tortilla’s recent performance. Management reported a rapid kiosk rollout (more than half the estate where feasible) and measurable benefits from self‑ordering kiosks: on average a c. 10% sales uplift at kiosk‑enabled sites and positive effects on both transaction volumes and AOV.

Management’s approach has been pragmatic: kiosks are deployed where they enhance customer flow and choice but implemented in a way that preserves the option to order face‑to‑face (to avoid alienating customers who prefer human interaction). The leadership team highlighted investment in data warehousing, analytics and the use of AI tools to accelerate decision‑making.

On loyalty, the Burrito Society app now counts nearly 250k members. Management emphasised they prefer to use loyalty to reward frequency rather than discount the core in‑store product; the loyalty model includes a free burrito after five paid purchases.

People, training and culture

People remain a central theme for the business. Management pointed to improved manager retention (up seven percentage points) and a focus on internal promotion through a “Habanero Highway” career pathway. The company runs training programmes, regional and national burrito‑making competitions (Burrito Masters), and other initiatives aimed at creating a strong culture and pipeline of talent.

Management argued that improved staff morale — combined with a better food offer — materially improves the customer experience and thus drives commercial outcomes.

Franchising and non‑traditional channels

Franchising has been a major engine of growth for Tortilla. The company’s operating model is designed for franchise scale: a central kitchen supplies slow‑cooked meats and bases while lighter, simpler in‑store preparation enables franchisees to operate without chefs or heavy extraction. This reduces capital intensity for franchised stores and facilitates expansion into formats such as travel catering.

• Franchise distribution channels: Tortilla has been opening SSP travel locations (airports and stations) where stores delivered double‑digit like‑for‑like growth in H1. The company is progressing discussions with Compass and other partners in the contract catering space.
• Franchise economics: Management described the typical financial trade‑off between corporate ownership (higher store EBITDAR, but capital and operational intensity) versus franchising (lower direct store EBITDAR but recurring fees + supply margin and significantly lower capital required from the parent company). Franchising therefore supports faster, less capital‑intensive expansion, particularly across Europe.
• Ghost/virtual kitchen pilots: Tortilla has signed a pilot with Growth Kitchen to test a licence/ghost kitchen model for delivery‑only sites in London. Management emphasised they will maintain control over food quality and supply chain, and that these pilots will operate under selected partners rather than Tortilla directly operating the kitchens.

International expansion: the France acquisition and the Léo central kitchen

Management made clear that the strategic rationale for the Fresh Burritos acquisition was to create a springboard for European growth. Key facts and the rollout status:

• 13 Fresh Burritos restaurants were acquired in a mix of high footfall locations (e.g. Gare du Nord) and other retail locations.
• Management has converted six of these sites to the Tortilla brand (design, menu, and operating standards) and had all six trading by early October; a seventh is scheduled before year‑end; the remainder will be converted next year.
• The Léo production facility (central kitchen) is approximately three times the size of the UK central kitchen and was designed to supply a significantly larger estate. Early comments from management imply the Léo facility could support “a few hundred” restaurants — subject to the calculations and market geography of potential expansion.
• Management’s immediate European targets are contiguous markets (France, Belgium, Netherlands, Germany) with later opportunities in Spain and Portugal and selective experiments in other territories such as the Middle East.

Management stressed the deliberate, quality‑first approach to market entry. Converting the Fresh Burritos estate has taken longer than initially hoped but the converted stores follow the refreshed Tortilla design language and are intended to make a strong first impression in a new country.

Financial review — cash flow, leverage and capital deployment

From a finance perspective, H1 2025 was an investment quarter: revenues and system sales increased, but free cash flow was negative due to capital expenditure and working capital timing. The headline financial points are:

• Group revenue: £36m (H1).
• System sales (including franchise sales): £50m.
• UK adjusted operating metric (adjusted EBITDAR/EVA) increased by >30% to c. £2.44m.
• Group recorded a loss before tax in H1, primarily driven by French investment costs (c. £2m loss in France).
• Operating cash outflow of c. £1.88m from adjusted DAR; free cash outflow of c. £4.0m reflecting investment in France and technology (kiosks).
• Refinancing: a Santander facility of £2.5m was added, £1.5m drawn at H1 with £1.0m available to draw in H2.

Management’s commentary emphasised that the heavy capital phase for France is largely behind the company, the Léo kitchen is operational, and future French conversions should be more capital‑efficient. The strategy is therefore to allow the matured UK engine and the growing franchise network to deliver cash generation that will reduce leverage over time.

Operational risks and questions investors should press on

The management presentation was optimistic, yet several areas warrant close attention from investors. Below are the principal operational and financial questions that investors should seek clarity on in future updates:

• French roll‑out economics: What is the clear timetable to break‑even for the French estate at corporate level? How sensitive are projected margins to delivery vs. in‑store sales mix and local labour/food cost inflation?
• Léo kitchen utilisation: Management suggested the Léo facility could support “a few hundred” sites, but what specific throughput (meals/day) is required to reach attractive operating leverage and what is the expected payback profile on the facility capex?
• Kiosk roll‑out saturation: Kiosks are adding c. 10% uplift where implemented. What is the remaining addressable estate for kiosks and the expected capital cost, payback and incremental margin per installed kiosk?
• Franchise pipeline clarity: Management highlighted partnerships with SSP, Compass and other franchisees — what are the committed openings and financial terms (franchise fees, royalty rates, supply margins) for each contract to help model revenue versus fee income?
• Leverage target and cash runway: The company took on additional debt to fund the Léo build and conversions. What is the board’s explicit leverage target (net debt / EBITDA or similar) and timing to return to net cash or comfortable leverage levels?
• Delivery margin strategy: Delivery is c. 30% of sales and often has a margin dilution effect. The group moved to a dual delivery model — what are the expected net margins on delivery versus in‑store once the optimisation is complete?
• Hedging and commodity policy: Beef hedging materially helped margins in the period. What is the company’s ongoing hedging policy for key commodities (beef, avocados, chicken) and how are hedging costs and risks communicated?
• Store rationalisation criteria: The board intends to close loss‑making sites. What are the precise thresholds and governance for closure decisions and expected one‑off exit costs?
• Return on capital for new openings: For corporate stores, what is the target store‑level EBITDAR and payback period? For franchisees, what is a realistic time to profitability and expected returns after franchise fee and supply margins?

Outlook and management guidance

Management provided constructive near‑term indicators: Q3 like‑for‑like was reported at c. 7% and the firm expects a strong Q4. The board remains committed to the Vital Five, prioritising UK profitability while continuing to invest prudently in brand, food, technology and a franchise‑led European roll‑out. Six French stores have been converted and trading, with one more scheduled to open before year‑end.

Management’s financial framing is: H1 reflects the cost of establishing a pan‑European platform (capex and conversion costs), but the UK cash engine is performing strongly and the infrastructure is now in place to scale across Europe more efficiently.

Positive developments to note

• Robust UK operating performance in a weak market — consistent like‑for‑like growth and margin expansion.
• Meaningful progress on brand refresh and product innovation — positive consumer reactions to new menu items and seasonal offers.
• Large central kitchen capacity in Léo provides a strategic asset to scale rapidly across contiguous European markets.
• Rapid technological adoption (kiosks, data warehousing and loyalty) which is driving AOV and frequency and can be rolled out cost‑effectively.
• Franchising model validated by the growth of non‑store channels (SSP and partnerships) and the planned Growth Kitchen pilots for delivery coverage.

Investor implications and valuation considerations

From an investor standpoint, the mid‑term value creation case rests on three related outcomes:

1. Consolidating UK profitability at the new, higher margin level and converting the short tail of underperforming stores to avoid margin dilution.
2. Proof points from the French rollout — consistent unit economics and a clear path to profitability for converted stores would materially de‑risk the European expansion thesis.
3. Efficient franchising roll‑out leveraging Léo to grow high‑margin recurring revenue streams (royalties, supply margins) without heavy additional capital.

If management achieves these outcomes, there is a credible path to improved group returns and a meaningful re‑rating. The two principal risks to monitor remain: (i) whether the French conversions achieve the U.K.‑like unit economics and (ii) the company’s ability to retain UK margin through inflationary pressures and changing delivery economics.

Key takeaways

Tortilla Mexican Grill PLC reported a strong H1 2025 in the UK and has made important strategic investments in Europe. The business is in the invest‑to‑grow phase in France, with the Léo central kitchen in place and early store conversions live. The fundamental strengths are the scalable central kitchen + franchising model, an improved product and brand, a growing loyalty base and technology that demonstrably increases AOV and transactions. The principal near‑term priorities for investors are (i) to see a clearer timeline and evidence of profitable scaling in France, (ii) to understand the utilisation and economics of the Léo facility in more granular terms, and (iii) to track leverage reduction as UK cash generation normalises.

“We remain really excited about the opportunity. We are the pan‑European winner. We’re the largest business selling burritos in Europe.” — Andy (CEO)

Suggested questions for forthcoming updates

• Provide a break‑even analysis for the French portfolio: per‑unit sales, margin assumptions and time to payback for a typical converted store.
• Quantify the Léo capacity in weekly meals and the number of stores required to reach attractive operating leverage in the Léo facility.
• Disclose more granular franchise economics: typical franchise fee, royalty percentage, supply margin and expected franchisee IRR.
• Provide sensitivity tables showing group margin impact under different delivery penetration scenarios and different commodity price trajectories (with and without hedging).
• Clarify net debt / EBITDA targets and the timeline for returning to a conservative leverage position.
• Report kiosk roll‑out schedule, average capex per kiosk and observed payback period across the estate.

FAQ

Q: How meaningful is the French acquisition to Tortilla’s strategy?

A: The acquisition is central to management’s European roll‑out strategy. The rationale was to acquire stores and an operational footprint (Léo kitchen) that provide a fast route to scale in continental Europe. Near term the acquisition has introduced an investment drag (contributing a c. £2m loss in H1) but management expects that the heavy capex phase is largely behind it and that converted stores plus franchise growth will deliver accretion over time.

Q: What level of sales uplift do self‑order kiosks deliver?

A: Where kiosks have been installed, Tortilla reports an average like‑for‑like uplift of about 10% per site, along with increases in transaction volumes and average order value. Management intends to continue rollout where physical store constraints allow.

Q: What proportion of sales is delivery, and is that a concern for margins?

A: Delivery represents roughly 30% of group sales. Delivery typically carries lower margins than in‑store sales. Tortilla has migrated to a dual delivery model (combination of platforms and direct) aimed at improving delivery margins. The company believes that delivery is an important channel for growth, particularly given the product’s resilience to travel, and that delivery margins can be improved through channel optimisation.

Q: Will the company continue to open corporate stores or favour franchising?

A: Management favours a franchise‑led expansion model for international growth due to lower capital intensity and faster scale. In the UK there may still be selective corporate openings where they make strategic sense, but the board views franchising as the primary route to European scale.

Q: What is the status of the Burrito Society loyalty programme?

A: The loyalty scheme has c. 250k members and is a key marketing asset. The programme is designed to increase frequency and lifetime value by rewarding repeat visits (for example, a free burrito after five purchases) rather than discounting the in‑store product.

Q: How will the central kitchen support international roll‑out?

A: The Léo central kitchen is roughly three times the size of the UK facility and has been positioned as a supply hub for France and proximate European markets (Belgium, Netherlands, Germany). Management suggests the facility has meaningful spare capacity and could support a few hundred restaurants, but actual supply strategy will vary by market depending on logistics and commercial considerations (e.g. whether it is sensible to supply Iberia from Léo).

Q: What are the plans regarding the Growth Kitchen pilot?

A: Tortilla is piloting a partnership with Growth Kitchen to run delivery‑focussed, licensed kitchens in London (three pilot sites). These will be operated by third parties under Tortilla’s supply and quality controls, intended to increase delivery coverage without requiring corporate investment in store fronts.

Conclusion

Tortilla Mexican Grill PLC entered H1 2025 at an important inflection point: the UK business is stronger than it has been for some time and appears to be delivering sustainable like‑for‑like momentum and margin gains. The company has also laid down the infrastructural foundation for European growth with the Léo central kitchen and the Fresh Burritos acquisition. The near‑term trade‑off is evident: investment drag from the French conversion programme has produced a group loss in H1, but management argues that the heaviest capital has already been spent and that the UK cash engine plus franchise fees and supply margins will deliver payback and de‑risk the opportunity.

For investors, the critical task is monitoring the proof points: successful French conversions with robust unit economics, progressive utilisation of the Léo kitchen, disciplined leverage management and continued UK margin resilience amid commodity and wage inflation. Clearer data on unit‑level returns for converted France stores, franchise deal economics and the capacity utilisation case for Léo will materially aid modelling and valuation. If management delivers on those proof points, the combination of a fortified UK business and a scalable European franchise machine could underpin attractive medium‑term value creation.