Tortilla Mexican Grill reveals £2.5m accounting hole in French business

(Sharecast News) - Mexican restaurant chain Tortilla Mexican Grill on Tuesday revealed a multi-million pound accounting issue following an audit of its loss-making French business, which is currently undergoing a major restructuring.

The company, which operates across the UK and Europe, said that a review by its new board identified "items of operating expenditure in the French business of up to £2.5 million" which had been recognised on its balance sheet in 2025 and potentially 2024 but which were not expensed through the profit and loss account.

As a result, group adjusted EBITDA is now expected to be just £1.5m, around £2.5m lower than indicated in its latest trading update. UK adjusted EBITDA guidance remains unchanged at £6.5m.

While the adjustment has now impact on group cash flow or its debt position, its leads to "potential retrospective covenant breaches", and Tortilla is now in talks with its lender about appropriate waivers should that be the case. However, the company has received increased facility headroom from its lender.

As part of the "structural reset" of the French business to address losses and improve profitability, the board has initiated a 50% reduction in head office personnel costs and a planned exit of underperforming stores.

Meanwhile, over the in the UK business, trading has been strong since the year-end, with like-for-like sales up 12% year-on-year over the 20 weeks to 17 May, well ahead of the 7.8% growth achieved in the fourth quarter.

The stock was up 2.1% at 74p by 0938 BST.

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