Tortilla Mexican Grill PLC (AIM:MEX) dropped 9% on Wednesday after it warned full-year results would fall slightly below the board’s previous expectation.
Revenues should increase 13.8% to £65.7 million in 2023, behind consensus of £69.8 million, while underlying profits will be at £4.5-£4.6 million, having previously been forecast at £5 million, a trading update said.
Management said weak consumer demand across the eating-out market, particularly in the last three months of the year and in less-built-up areas where brand awareness is lower, had caused the slowdown in sales.
Partnerships with fellow LSE constituents Compass, the catering service, and SSP, the food kiosk company, have performed “outstandingly well”.
Next year, the food retailer will open four new franchise stores with SSP as it focuses on growing the area of the business both internationally and in the UK.
Some of the cost pressures are expected to ease in 2024, but a hike to the national living wage and a ramp-up in marketing spend is expected to weigh on expenditure.
Tortilla is down 41% in 2023, trading at around 50p.