TIDMMEX
RNS Number : 4666M
Tortilla Mexican Grill PLC
23 May 2022
23 May 2022
Tortilla Mexican Grill PLC
("Tortilla" or the "Group")
Tortilla completes strategic acquisition of Chilango
Tortilla, the largest and most successful fast-casual Mexican
restaurant group in the UK , is delighted to announce the
acquisition of Chilango Limited ("Chilango") for a total
consideration of up to GBP2.75 million (the "Acquisition") from
investment firm RDCP Group Ltd.
Chilango is an award-winning fast-casual restaurant chain
specialising in Mexican food including burritos, salads and tacos.
The business operates from an estate of eight premium location UK
sites, which offer both eat-in and take away options, as well as
through its delivery channel supported by delivery kitchens.
Strategic rationale
The Acquisition strengthens Tortilla's position as the UK's
leading fast-casual Mexican chain and accelerates the Group's
expansion across the UK, a key pillar of its long-term growth
strategy. The acquisition further bolsters Tortilla's presence in
central London, with six of the eight units positioned in Zone 1.
The Group wishes to take advantage of the high-quality locations
operated by Chilango and the trend of workers returning to
offices.
As outlined at its IPO in October 2021, the Group plans to open
45 sites over the next five years. The acquired Chilango sites are
additional to the targ et of 45.
The Acquisition also adds a complementary, premium brand to the
Group, enabling Tortilla to capitalise on the popularity of the
Chilango brand and the widespread growing demand amongst consumers
for fast-growing sector trends including healthy eating,
convenience and ethnic and customisable cuisine.
As a result of the two companies' similar product propositions,
the Group has identified several synergy opportunities, including
but not limited to leveraging the Group's favourable buying power
and 5,500sq ft central production kitchen in Tottenham Hale.
Tortilla intends to retain and continue to operate the Chilango
brand at certain locations and via the delivery channel in a number
of Tortilla sites.
Transaction overview
The total consideration of GBP2.75 million is paid entirely in
cash, with GBP0.25m of this total to be paid via an earn-out
following the satisfaction of certain criteria relating to the
leases which is expected to take approximately six months. The
transaction was done on a debt-free and cash-free basis, with the
majority of the transaction consideration used to satisfy
intercompany loans and other creditors.
For the 52-week period to 26(th) December 2021, Chilango
delivered revenue of GBP7.3 million and loss before tax of GBP0.2
million.
The acquisition is expected to contribute EBITDA (pre-IFRS-16)
of c.GBP0.1 million to the Group for the remainder of FY22 and FY23
EBITDA onwards of c.GBP1.0m.
Richard Morris, CEO of Tortilla, commented : "We are delighted
to announce Tortilla's acquisition of Chilango.
Chilango is a highly complementary brand that, similarly to
Tortilla, provides a fantastic value-for-money proposition and
embraces popular and growing sector trends for healthy,
customisable food from an estate of restaurants situated in premium
locations in London and Manchester.
This acquisition accelerates our ambitious plans to further
expand the Tortilla brand and these sites are in addition to our
initial target of opening 45 UK restaurants over the next five
years, helping us to surpass this target. It also adds another
brand to the Tortilla Group, enabling us to further strengthen our
leading position in the UK's fast-casual dining market.
We're very excited about this acquisition and look forward to
leveraging our combined knowledge and expertise within the Mexican
fast casual dining sector."
Sameer Rizvi, Chairman of Chilango and Founder/CEO of RDCP
Group, commented: " When we acquired Chilango in August 2020, the
business and the sector were facing significant headwinds. However,
Richard Franks, his management team and the board members,
including Iryna Dubylovska and Wagamama COO Nigel Sherwood, worked
to stabilise the business, agree good deals with landlords and
manage the supply chain. Chilango took advantage of the growing
delivery market, which allowed the business to grow quickly and
stay profitable even during national lockdowns. Today, the business
has been successfully turned around and is ready for its next stage
of growth. Tortilla are the strongest operators in this space and
the perfect strategic fit for Chilango.
I would like to take this opportunity to thank Richard Franks
and the whole Chilango team as well as our loyal guests who have
helped to develop the business into the established and popular
brand it is today, and I look forward to seeing Chilango enter the
next phase of its journey as a much-loved brand under Tortilla's
ownership."
ENDS
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act
2018.
ENQUIRIES
Tortilla Mexican Grill PLC Via Hudson Sandler
Richard Morris, CEO
Andy Naylor, CFO
Liberum Capital Limited (Nominated Adviser, Tel: 020 3100 2222
Sole Broker)
Andrew Godber
Edward Thomas
Nikhil Varghese
Hudson Sandler (Public Relations) Tel: 020 7796 4133
Alex Brennan tortilla@hudsonsandler.com
Lucy Wollam
Charlotte Cobb
For further information , visit tortillagroup.co.uk
About Tortilla Mexican Grill plc
Tortilla is the largest and most successful fast-casual Mexican
restaurant group in the UK specialising in the sale of freshly made
Californian-inspired Mexican cuisine. The Group had 68 sites
worldwide as of 31 March 2022, comprising 52 sites in the UK
operated by the Group, three sites franchised to SSP Group in the
UK, four sites franchised to Compass Group UK & Ireland and
nine franchised sites in the Middle East.
The Group was founded in 2007 by Brandon Stephens, originally
from California who, upon his arrival in London in 2003, found it
difficult to satisfy his desire for quality burritos and tacos. As
a result, Brandon established Tortilla with a mission of offering
customers freshly prepared, customisable, and authentic
Californian-inspired Mexican food.
The brand is synonymous with an energetic, vibrant culture, and
with providing a great value-for-money proposition. It embraces
fast-growing sector trends (including eating out, healthy eating,
provenance, ethnic cuisine, delivery) across a variety of
locations, through a differentiated product offering which is
popular with a broad customer base, and a clearly defined
multi-channel marketing strategy. It benefits from flexible site
locations and formats, and a scalable central infrastructure.
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