Good morning, ladies and gentlemen, and welcome to the Tortilla Mexican Grill PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged; they can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just 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 questions submitted today and will publish those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, we would just like to submit the following poll. If you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to the executive management team from Tortilla Mexican Grill PLC.
Andy, good morning, sir.
Good morning. Thank you for the welcome and welcome everyone to the interim results for 2025. I'm joined here with Josie today who will do a quick intro in a minute. Just as a quick one on myself, I've been the CEO now for about 18 months. I've been with Tortilla now for over eight years, so you can imagine I've eaten a lot of burritos in that time. I love the brand, I love the cuisine. I started my life as an accountant back in the day in a Big Four firm. That's myself. I'll leave you with Josie.
Yeah, I'm Josie. I've been with the business now for three years and just recently started a new Interim CFO position. I'm also a qualified chartered accountant and started my career at the Big Four back in New Zealand. Hospitality is in my blood. My parents run a hospitality franchise business in New Zealand, so it's always been a very important part of my life. I'm happy to be here with you today.
Great. We're going to proceed with this agenda. I'll do a quick summary followed by a strategic and operational review. Then I'll hand over to Josie to run us through some financials, and we'll try and leave plenty of time for Q&A at the end. I guess it's not just six months now. We're in September. We've had a year of significant progress in 2025, which is great, which is much the same as what we reported last time. Some of the highlights are fantastic. Against the backdrop of a difficult U.K. market, we've performed extremely well during that time, which we'll talk much more about. We've outperformed the industry by about 8% in the first half of the year. I'm delighted to say six of the franchises converted by early October. They're all now, those six are all now done actually, so all trading.
We grew our franchise estate substantially as well in the year, and that revenue stream now is worth a significant amount in terms of total assistant sales. We're going to cover that off a bit later. We've signed a pilot with Flavors that's called Grove Kitchen, which we're really excited about. We've improved our staff retention and engagement. I'll tell you a lot more about that. We've talked a lot about people in the past, which is important to myself and the team. We've worked really hard on our food, product launches, our brand, our tech. I'll tell you all about that in the presentation as well. I'm delighted that over half of our sites now have got self-ordering kiosks in, which we continue to see some really good upside on as well. Some really good headlines for us to deep dive into in a minute.
Just to remind everyone, when I started as the CEO, we devised the Vital Five strategic pillars for us, our sort of strategy, if you like. The five areas were to improve our U.K. profitability, to drive our brand, for investing in food and brand, to drive top-line growth, investing in the team technology, which is a key priority in a very people-heavy business. Actually, technology has been something that's been a wonderful addition to our organization. Doubling down on our franchising was a key priority, and to develop the brand internationally, which we have obviously begun that journey on with the acquisition that we made last year. We're going to cover a walk through these five areas over the course of the next 20 minutes. We look at U.K. profitability firstly. It's a really impressive story, actually.
I'm very proud of the team for how hard we've worked to get to this point. If you look at where we launched this strategy back in March 2024, which is identified on the graph, since then, the red line represents our sales, our like-for-like sales growth. It's gone from strength to strength. As you can see, really since September of last year, we've outperformed the industry tracker quite substantially, which is fantastic. That shows no sign of slowing. In September as well, which we'll come on to in current trading, we've had a very strong Q3, which we're really pleased with. As you can see, the industry data is somewhat more challenging. The industry's had a difficult year this year. I think it's even more impressive that we've been able to perform so well in that environment.
What that's led to, which is a fantastic achievement, is a year of record U.K. profitability. Year on year, our profit increased by more than 30% in the first half of the year, which is fantastic. We'll deliver record profit margins both from a pound and a percentage perspective this year, which is fantastic. It really nods to all of the efforts across the Vital Five areas, which we're going to come on to. One other area as well, which we're focusing on, is looking at our estate. We have a small sort of single-digit number of stores which are loss-making, which we are going to try and address. We've addressed a couple of those already. We need to close two units this year. I think actually when we do that, we can get our store EBITDA margins back.
Not back, because we've never been at that level, but close to the 20% level, which has been the traditional milestone that people have aimed for in this industry. I'm really, really pleased with this. Lots of things for us all to be really excited about. This slide sort of covers that point in a bit more detail. One of the things we wanted to look at here is if you look to 2019, actually, pre-COVID, we've increased our adjusted EBITDA. This is our EBITDA story. EBITDA plus your franchise income, that's your head office cost. We've increased that from 7.2% to 10%. A few years ago, we identified 10% as our aspirational target in the short term on that. That's a great result.
Actually, when you look at the since 2019, the amount of capital we've invested in the business through either expansion capital, whether that's adding new stores or the acquisition of Chilango, and then the EBITDA less the maintenance costs growth that we've seen over that same five-year period. We've delivered a 24% royalty during that time, which I think is a great result, actually, considering that we entered into some smaller towns across the U.K. where the brand awareness was lower. We're going to talk a bit more about that later in the presentation, how those sites are maturing. I think that's a pretty reasonable return on capital, actually. I think once we rationalize the estate, as I mentioned, with a small number of units, that royalty will look really, really good. On the right-hand side, you can see corporate margin post-maintenance capex.
It's a really fantastic news story of where we are now this year. I just wanted to talk a bit about what's driven the top line. I guess that's really fundamentally the thing that's driven that profitability. It's always great when you can generate sales growth through your core estate rather than necessarily adding new sites to drive growth. That's, I guess, been our mission. We've been really focused on how do we drive volume? We want more people eating burritos. We'll talk a bit more about volume later on. Essentially, the main things that we've done is we've improved our core menu quite significantly, as we talked about before, whether that's quality of ingredients, cooking methods, or recipes. Our food is really substantially better than it used to be. There's still some exciting stuff being trialed at the moment that will come live in the coming weeks.
Really excited about those changes. We've also jumped on to sort of seasonal menu rollouts. We launched a summer salad to compete with what was quite a big growing food trend in the U.K. at the time of the year where the meeting of the customer is what they want. That was really successful. Huge growth on that year on year. We innovated with a new product, our protein pots, which drove some substantial sales. That's about my point about you know, you don't necessarily need to add sites to grow your business when you've got products that you can bring to the market to drive sales growth. They were really well received. Everyone can see when you walk around the supermarkets that there's a lot of protein badges on food now. It's a big trend. We jumped on that.
I think we're really able to capitalize on that food trend. We've been doing some limited-lifetime offers, which have been really well received. We had one with a sauce shop, which is coming next week. We've worked with Tubby Tom's. We've worked with a ton of different businesses. It just creates some buzz that people get excited about. Yeah, we will continue to do that. Moving on to some of the work we've done on our brand as well. The imagery you can see on here looks very different to our tone of voice and our imagery a year ago, really. We've worked incredibly hard to create a really bold and consistent storytelling and really heroing the food. I think as these pictures go to show, the food looks vibrant. It looks fresh.
I think the message is just really clear and concise and consistent across all customer touchpoints as well, whether that's on the loyalty app, whether it's on our website, whether or not it's on social media. Actually, we'll talk about this later in the presentation. This is the way that we've designed our stores in France as well. People will see this brand show up equally across all areas. Yeah, we think it looks great and a lot more, a lot more modern, I guess, than what we had before. Just to sort of talk a bit more about some of the things that we've done on the marketing side as well, around building community as well. We've done some strategic partnerships. We worked with Jab, where we did fun work at their gym, which is a boxing thing. Big reach on that. We've done some supper clubs.
As you can see here, we did a guac bar a couple of weeks ago in the National Avocado Week. Yeah, it's been really fun. We've been working with social media. We've created quite a lot of hype around the brand. I think that's only going to be something that continues to build. Looking at a few other areas, the picture on the left is the store. This is something that we'll cover a bit more later on. The store, that's a location in France that we built. It's a lot cleaner, sharper, simpler design than what we have in the U.K. at the moment. We're really proud of the work and effort that we invested in that brand. Our digital platform looks very different. We've enhanced our burrito society application. I think we've had some good traction through that, which we'll come on to.
Our packaging looks better, and our staff uniform. People have been really excited to wear a more sort of interesting, fresher-looking uniform. I think that whole interaction a customer has across all those touchpoints does make it nice and consistent. Talking about our team, this is something that's hugely important. I think sometimes it is often overlooked. I've talked about it a lot before. It means a lot to our organization. We have a lot of employees, and those employees, if they're motivated and morale is high, are likely to give the customer a great experience. Other than the food, the customer service is something that can really make or break somebody's experience of any business. That's why we've invested hard in it. We've seen our new manager retention up 7 points, which is fantastic. We've been promoting internally through the centers of excellence that we have.
We talked before about the Habanero Highway in a previous presentation. This is a career pathway that we've built for our team members. You can see there's various graduations here on the slide, which is fantastic. That's created an improved skill set within the organization, and the training team has done a fantastic job with that. The other thing just to highlight in here is we implemented our burrito master's competition last year for the first time. We're doing it again in a couple of weeks. This is a bit of fun, but it's each restaurant. We identify the best burrito roller in each restaurant, and then we do regional heats where we find the best in the region.
We've got a national competition, or I should say international competition, because we've got the best from France and the best from Dubai coming over as well to really celebrate the fact that we're a global business now. Lots of fun to be had with these things, and it's definitely something that's added to morale and the feeling in the organization and the growth. Very quickly on customer service as well, we've implemented a new feedback tool to have a little bit more precision, I think, in types of reporting to see what customers are saying. A couple of themes that came out of that, a reasonably deep dive on that, was portion size and value for money. Since really doubling down on portion size, we've been able to improve the negative feedback on that quite substantially. This goes to show you can use data to act quickly.
You can jump on trends that are coming up. That's something that our operations team has been very focused on recently and will continue to be a big focus. On technology, this has been an area that we've been really focused on since the launch of the Vital Five. It's been fantastic that we've managed to implement so many self-ordering kiosks in such a short period. Over half of our estate in the U.K. now has kiosk sites where it's possible to put them in. We would intend to put them in pretty much everywhere because we see a substantial improvement for some customers in the customer journey who feel perhaps a little bit nervous with the fact you get lots of questions at the line. If you find it's perhaps a little bit intense, it creates more of a calm process for those individuals.
We've worked really hard to do it in a way that doesn't detract from those that do want to come to the line and order in the traditional way. Getting the customer journey right in terms of where you position them and signage, we've put a lot of effort into making that a good customer journey. Fantastic returns that we see on those kiosks, both in terms of transaction volume growth and average order value as well. The burrito society continues to be a fantastic success. We're at nearly a quarter of a million members now, which is fantastic. It looks great. It's got the new design, as I said, the new branding. We continue to work hard to encourage our customers to come quite regularly. We don't ever really want to discount our in-store products. We're trying to provide value for our loyal customers by rewarding loyalty.
They get a free burrito after they've ordered five. We're continuing to evolve and explore a potential robotics partnership with Kaikaki, which we talked about before, which is fantastic. We've been working on our data warehousing and how we use information to make quick decisions. I think we've all agreed that the world has moved on very rapidly over the last year or so in the world of AI. It's fantastic when you can get to the bottom of questions and decisions and analysis more quickly by using the tools that are now available in the marketplace. We talked before as well, and then onto the other pillar around doubling down on franchising. This is an area that I think the graph is fairly indicative that we have doubled down on franchising over the last five years. It's been a big thing for us.
Just to remind, to tell those of you that are not so familiar with our business, we have a really strong effective operating model for franchising. We have slow-cooked meats and beans that are cooked in the central kitchen, and that creates a really fantastic, consistent product. A lot of those cooking processes benefit from slower cooking times, which is more easily achieved in the central kitchen. What we do at the store level is much more simple because we just have to prepare some fresh sauces, which is super simple. It means we can build sites without extraction and complicated, expensive kitchens. We don't need chefs. It's a very nice model for our franchisees where they receive the food from us, and then they just do the small bits of preparation themselves on site. SSP has been growing fantastically with us.
We're looking at some opportunities with Compass as well. SSP, just to talk about that business, we've opened a number of stores recently, airports, train stations, and they're in double-digit like-for-like growth in the first half of the year with us, which is fantastic. Compass, we're looking at some other sectors as well. That's a relationship which is going well. E-Floss, again, even in even bigger like-for-like growth. It's fantastic the job the team have done there. They've opened some sites this year, and there will be one more later on in this year as well in Dubai Mall, which should be fantastic. We're looking at some other opportunities. I mentioned earlier, we signed a pilot with Grove Kitchen, which will be exciting. There will be three sites, I think, for the next few months. We've just opened with SSP in Glasgow Central Train Station.
The site looks fantastic to the new brand design guidelines. We're actively progressing discussions with some European partners now that we've got the springboard for growth in Europe through our big kitchen in Lille, which we'll come on to. We're actively working on that as well. Talking about then, as we've said, way into developing the brand internationally. This is ultimately why we bought Fresh Burritos. It wasn't to do a corporate rollout of our own stores, but it was to create a platform for growth in Europe. We bought a business with 13 of our own stores, and they're in fantastic locations like garden or railway station, probably one of the best units in the busiest railway station in Europe. That's fantastic. We've got a great property portfolio over there, which we're busy converting. As I said earlier, we've now converted six of those locations.
Still early days, but some really encouraging signs coming out of that. We'll look forward to talking more about that later in the year when we've got some more information. We've got a team in place led by Gill. We're really motivated. We've built the central kitchen as well, which has been in operation now for some time. Huge facilities, three times as large as the U.K. one, which obviously supplies about 100 restaurants. We've got a facility there that can supply a lot of restaurants. The plan for us then is to franchise our brand in various countries close to France: France, Belgium, Netherlands, Germany. We're also looking at opportunities in Spain as well and Portugal. There's a lot of white space opportunity in Europe. I guess that's why we made that strategic acquisition in the first place. We've been in an investment phase there.
This is some imagery of some of the stores that we've converted in France. I hope you agree that it looks a lot more modern and fresh and a sort of cleaner design. We're really pleased with it. It has meant that we took a bit longer to convert the sites, but we feel that you have one chance to enter a new market, and you've got to do it well. I think what we have done here is, it has taken us a bit long, but we have done a good job of it. The sites look great. We're really excited about the opportunities. That's that on the left is about the Europe. One in the middle is Lille. They look great. The outside looks great. The inside looks great.
I think it's going to be a good opportunity for us to really showcase the brand in a new market. Just to cover off a bit of a store table, now before I hand over to Josie on the financials, we're now at 116 sites at the end of September, which is fantastic. We're by far the largest in Europe. There's no business-owned burritos that's anywhere near our site, which is great. It gives us a good strategic advantage. We've got a good mix of, you know, countries, franchise stores, owned stores. As I said earlier, the focus at the moment in the U.K. at least is to continue on the journey to drive volume and profitability in the U.K. business. We'll look at expansion opportunities in the years to come. I think there's enough to go at in the U.K. in terms of that side of things.
With Europe, the opportunity is obviously fantastic. There's lots of countries, lots of great shopping centers, lots of great train stations, lots of high-footfall locations that we feel really confident that the brand will perform well in. As you can see from here, this is a sort of a good reconciliation of the existing estate. Over to Josie now to run us through some of the financials.
Let's flip the slides as well. Great. Thank you, Andy. I'll start with some of the financial highlights, which I think really confirm the progress that we've made in the U.K. this year, as well as the progress towards our European expansion strategy. Firstly, the U.K. sales like-for-like growth was 5% over H1, which Andy mentioned was significantly ahead of the market. Our revenue was GBP 36 million for H1, which was just over a 14% increase year on year. System sales reached GBP 50 million, which is fantastic to see. That's including our franchise sales as well. Overall, our adjusted EBITDA reduced as a result of the investment phase in France. Importantly, the U.K. adjusted EBITDA increased over 30% to GBP 2.4 million, which I'll speak to later in the insights. Great. Taking a look at the income statement, I will speak to revenue and adjusted EBITDA further down.
I've got some more graphs which I can take you through. We're looking at our gross profit margin increased to GBP 27.7 million, which, importantly, the U.K. margin actually increased to 78.3% year on year. Despite inflationary pressures, we had strong supplier negotiations. I think it's important to highlight that these prices have increased significantly in the market this year, which we haven't been exposed to due to a hedge that we completed at the beginning of the year. That's really where that margin improvement has come through. Overall, we did have a loss before tax, which we view as a near-term consequence of the investment phase in France. This was largely driven by France, GBP 2 million, with a smaller loss in the U.K. Great. I think this really demonstrates the strong like-for-like sales performance that we've had across the U.K. this year.
As Andy mentioned, we've been really focused on really squeezing our existing estate, which is really the best way we can grow our sales. Some of the initiatives mentioned were our protein pots, which are generating sort of GBP 12,000 a week in additional sales without any capital outlay, which is a great example of how we can grow our sales without significant capital. Overall, as Andy mentioned, for H1, we outperformed the market by over 8%, which is just fantastic to see. That's continued into Q3, and we're expecting Q4 to be strong as well. Great. As Andy mentioned, we do have a short tail, which are largely in our regional sites, where we opened quite a few sites across 2022 and 2023.
I think this graph is fantastic to show that despite us opening the sites in more regional areas with lower brand and lower product and causing awareness, we're actually seeing really strong sales like-for-like performance across these sites now. With that short tail and the sort of low single digits, if we were to remove that, this performance would be even stronger in those regional areas, which is just fantastic to see. Great. This wonderful graph just shows our revenue growth from H1 last year to H1 this year, which is a record, as I mentioned earlier. A significant portion of that is due to the Fresh Burritos acquisition, but also our growth in our franchise income, where we've opened a couple of sites over H1, and U.K. sales like-for-like growth as well. Really a good acknowledgement of U.K. growth whilst also acknowledging our U.K.'s international expansion strategy.
This is also another wonderful graph, which just shows how we got from our H1 EBITDA last year to EBITDA in H1 this year. Again, a significant portion of that reduction is due to France, which we view as a near-term impact of being in our Fresh Burritos investment phase. The first arrow points out that actually our U.K. adjusted EBITDA increased over 30% to GBP 2.4 million for H1, which is just great to see, mainly driven by our top line, as Andy Naylor mentioned. We've got the initiatives from the like-for-like sales growth, as well as some cost savings, which really show our focus on ensuring that we're optimizing costs as well as growing that top line. Great. Moving on to cash flow and leverage. Importantly, our mature U.K. estate continues to deliver stable cash generation, with free cash flow reflecting our investment-led growth strategy.
Our adjusted EBITDA of GBP 1.2 million there, you can see, converted to an operating cash outflow of GBP 1.8 million, which was driven by working capital movements, which was largely time-driven in the U.K., as well as our Fresh Burritos operational investment. Yeah. The free cash flow of four, free cash outflow of GBP 4 million really reflects our planned investment in the U.K., where we can see we've invested in tech, which is our self-ordering kiosks investment, as well as mainly our Fresh Burritos investment expansion. It's worth acknowledging that this free cash outflow reflects being at the early stage of the investment cycle. We've front-loaded the investment spend, as Andy mentioned, with the central production kitchen, as well as the initial conversions, which has temporarily weighed on cash.
The infrastructure is sort of now in place with the heaviest spend behind us, and future rollouts will be much more efficient. In terms of the financing to support the growth, we secured in H1 an additional GBP 2.5 million of refinancing of Santander, of which at H1 we had drawn GBP 1.5 million, further money to be drawn in H2 to just continue supporting this growth, really, which is great. I think that sort of summarizes the financials.
Yeah. I guess just to summarize, we've got through the presentation quite quickly. There'll be lots of slides and Q&A. One of the headlines and the things we want you to walk away from this knowing, the U.K. is in a great position, better than ever. We want that to continue. That is always, at the moment, at this stage in the business, going to be the cash-generating engine of the organization to support growth. In terms of outlook, one thing we wanted to highlight on the outlook side of things is that we continue to trade well in the U.K. Our like-for-like in the third quarter was 7%, which compares favorably, actually, to the first half of the year with 5%. That's fantastic. We've got six sites converted. We're going to do one more this year before the end of the year.
We'll be looking forward to coming back with some information on how we're trading in the coming months towards the end of the year. We hedged, and that was continuing, as Josie mentioned, to help us protect our U.K. profitability in what is quite a volatile food market at the moment from an inflationary point of view. Franchising growth, we've got, as I said, a couple of sites to open in the second half of the year. One of those is Glasgow, which is now open. The other one will be Dubai Mall later in the year. On top of that, there's the three pilot locations we're planning with Grove Kitchen as well. That's really exciting. We as a board remain really excited about the opportunity. We are the pan-European winner with the largest business selling burritos in Europe. Scale is everything in this industry.
The fact that there's lots of businesses now talking about European expansion, it's great that we're not just talking about it, but we're doing it. We've got the infrastructure built now. We've got the kitchen there. We've got the team there. We've got some stores designed. We're on that journey. That's really exciting for us all. That's why we're all here. I think having then the U.K. engine regenerating the great profits, that's a fantastic combination. The business is really going to succeed over the coming years. We remain really excited. Hopefully, this presentation has helped highlight some of that opportunity for you all as well. I think there's one more slide. Yeah, this is the summary. We're coming back to the Vital Five. This does remain the priority. We are going to continue improving U.K. profitability.
Some of those steps we talked about in terms of the initiatives that we've launched this year, having the full year of those next year, whether that's disposals we've made of a short tail of sites or other initiatives like kiosks, will continue to provide a lot of value in the future. We're going to continue investing in our food and our brand to drive growth. I think there's more opportunity there. I'm going to work really hard with the team to keep pushing that because product is absolutely everything in this industry. I keep investing in the team and technologies we have so far. Talked about franchising. That's already well set up, but we want to get harder at that as well. Now we've got the Lille kitchen built, which ties in with our objective of developing the brand internationally. We're all of the view that it's very exciting.
Hopefully, as I said, you are as well. That does take us to the end of the presentation. There are some questions, I think, which have been submitted. I just realized our camera, sorry, is moving me to move the laptop, unfortunately. We can run through some questions now. We'll work down the list shortly. The first one here is a pre-submitted one about how are we capturing the vegan vegetarian market. The answer to that is we launched the new vegan chili product last year. It's a really, really strong product that's very popular, actually. It does remain something that we offer. Obviously, you can also get a vegetarian burrito and have guacamole in it. We do have a couple of options. Actually, what we're seeing is not a huge growth in the vegetarian vegan market.
I think there are other food trends which have sort of grown more quickly, like the protein pots and things like that. Whilst it's something that we look at, I guess that's the beauty of having an adaptable menu, as we can cater to that market. Next on the list, can you detail self-ordering on self-ordering kiosks delivering a strong uplift and rapid paybacks? Can you quantify the average sales uplift per site and what proportion of U.K. sites do you expect to be kiosk-enabled by the end of the year?
Yeah, absolutely. We are seeing strong like-for-like sales up of our kiosk sites, about a 10% sales uplift compared to the sites that don't have kiosks. We are very focused on continuing to deploy those across the nearest stage. There are some sites where it's not going to be possible to have kiosks installed, shopping centers that won't allow us. All of the sites that we can install kiosks, it's on our agenda to do so.
Great. Next one is, what is the restaurant opening strategy? Will you open yourself or prefer franchise? It would definitely be the latter. I guess it depends on the market we're talking about, to be fair. Certainly in Europe, that would be the plan is a franchise rollout. Of course, we'd always look at opportunities if a fantastic store came up that we felt we could do ourselves. We could look at it, certainly in the U.K., where we have the operational skill set to operate sites. When you enter a new country, say somewhere like Germany, it is easier to find franchisees because we don't have the operating infrastructure in that market. We don't know the market from a recruitment point of view, a property point of view.
I think it would be a wise strategy to have a capital-light model where we're then also supplying foods to those businesses, which enables us to utilize the buying power of having that food come through our supply chain. Also, we're able to have a financial benefit, but then we can control consistency as well, which is super important. I think in the U.K., we'll see. I think it's something we're going to keep thinking about as a board and assess perhaps a hybrid model in the future. The next one we've got here is how to explain the lower like-for-like growth for restaurants opened in 2024 versus the cohort opened in 2022-2023. New restaurants should have higher growth because starting from a lower base. And they do. Last year, I can't remember what site we opened last year. We had Norwich, I think.
Yeah, Norwich. I think when I explained that slide, that 2022-2023 comparisons to our existing estate, not to the site openings in 2024. I might have confused you on that slide. You are right. The 2022-2023 are really our newest cohort, and they are outperforming the existing estate in terms of those like-for-like sales.
Yeah. There's a question here. How likely is the U.K. model success to translate to France? That's a brilliant question. I guess we believe very well there are businesses doing what we do in the U.K., in France, as some other organizations, and they're moderately successful doing that. We believe our product is better, and we think our price point is better. We can leverage our supply chain and processes from the U.K. too. I think synergies from a supply chain point of view, some of our food comes from Europe anyway. There's opportunities to consolidate supply chains and benefit from that. In terms of the model success, what we're seeing in terms of food trends, I guess, is that people want to be able to customize their meal. Our meal is obviously fully customizable. People want healthy food, but they also sometimes want indulgent food.
Our proposition ticks both of those boxes. Another trend is obviously the fact that delivery is a key growth area in the industry. We're very lucky in that our product travels very well, particularly the burritos, which are wrapped obviously in foil. They travel really well. That's I think driven a lot of the growth we've seen in the U.K. I think when you look at the other European markets, you see those same trends as well. The question around, can you remind us the kitchen capacity in the U.K. and France? How long do you think it will take to fully utilize these kitchens? In France, certainly many years of opportunity with that. It's three times the size of the U.K. The U.K. facilities supply around 100 restaurants. It's a good question as to how many the U.K. facilities can supply.
I think it depends a little bit in the future around our strategy. Do we want to put additional food items through the central kitchen if we grow our menus? That's something we are working on. There's no risk of that running out of capacity. We could open it more days of the week, run more shifts. There's definitely more space in there for growth in the future. There's another question here around the Lille production facility. We're curious about the capacity of that facility. A lot more work needs to be done on that. Broadly speaking, as I said, it's three times the size. The U.K. wanted to supply 100 stores. Some quick maths could obviously extrapolate that to a few hundred locations. We need to do some more work on that.
Our priority and focus has been very much on growing the U.K. profitability and obviously making success in France. There's no sort of issue that that facility is going to be large enough to support the business. I think that probably the bigger limiting factor when we're exploring other countries is actually the commercial question of whether or not it's better to travel the food shorter distances. You know, if you open up in Portugal, it's not going to make sense to move the food from Lille all that way. I think each market needs to be looked at on a case-by-case basis in terms of the commercials and the food quality. It's not just about the commercials. We don't operate a frozen supply chain at the moment. It's fresh. These are all things that we need to play around with and have a think about.
I guess our focus with the unit in Lille was always going to be in the short term for us, Germany, Netherlands, really. They're the locations which are easiest for us to expand into. The right space research that we did previously identified those as the markets that would have the greatest immediate potential for us. What is the mix of sale on deliveries and the objective in the long term? Do you want to take that?
Yeah. It's about 30% currently, which I think is about the right level for us, really. We are, as I mentioned earlier, really focused on growing our in-store sales. Obviously, it's margin impact on delivery. It's a really important channel for us, the delivery sales. We recently changed our delivery strategy to a dual model, which we've mentioned before was a great option for us in terms of improving our profitability. I think it's around that 80% mark.
Okay. So there's a question here around U.K. company-owned stores have declined over the last couple of years and talks about optimization of the portfolio, which could mean closures. Thus, for the U.K. market, is it saturated for company-owned stores? Then a follow-up, you showed that our franchisees generate more than GBP 20 million sales, which is great. Wouldn't it be amazing if that was all Tortilla, not simply a royalty? Great question. Looking at the first bit of that, does that mean closures? Probably. We've got a couple of sites where the rent is either too high now. It could be Central London ones where work from home means that you only get three days a week from some of those sites now, not five days like you used to. There are also some smaller towns in Rome, which are a bit of a challenge.
We're going to look at it. We've got a very small number of stores we're talking about here. I think it's right if you can extinguish some losses within your organization with, you know, exiting a couple of locations. That feels like one of the key ways to get into that 20% story a bit dark. It definitely doesn't mean the U.K. is saturated. There are many great shopping centers and high streets that we're not in. What it does mean is we entered a couple of locations that we probably shouldn't have in hindsight. For a business with as many stores as we have, it's not unreasonable to look at those and address any sort of underperformance. I don't believe the U.K. is saturated, but I do believe that the franchising strategy is the right one.
Although you obviously make more money if you open your own stores, if you've got a 20% story a bit down model, which as an average, which is a great average to get to, but you can make 5% from a franchisee plus another 3% or 4% on supply chain effectively by leveraging your buying power. Then potentially you'd get a marketing fee as well. You can get to nearly 10% with franchising, which versus 20% where you're not putting any capital down. It's a really appealing model. It means that you can go faster at growth as well than we could with our own resources. Franchising is absolutely the right strategy for us in Europe. Where there is opportunity to open a corporate store, a flagship type location, of course, we'd look at it.
I think our philosophy at this stage is franchising is the thing that we'll be looking at harder. Is there any outstanding earnout on former acquisitions? When are the cash out expected? Do you want to answer that one?
The answer to that is no. That we launched in H1. There was a contingent consideration relating to prior year acquisition, but that's now all been sealed. There's no more future outflows.
Okay. How many restaurants rebranded in France? How many are waiting to be rebranded? We have six corporate stores rebranded now and open trading. A seventh one will open later this year in the Gare du Nord railway station. The remainder will be next year. That's the sort of split. There are 13 sites in total, so just over half will be done this year. There's a Grove Kitchen here for Ivey. The question is, Ivey, do you recall Tortilla using Grove Kitchens before, but you have no physical retail presence, but are active on delivery apps? You later closed these down. I'm wondering why you are revisiting this approach and why you use a third party. Can you address the potential risk of quality and brand equity here? It's a slightly different model we're going to explore with Grove Kitchen.
When we were running the kitchens before, we were running them ourselves. This time, we're going to be licensing the use of our brand, but we will be controlling the food in the same way as we deal with the franchisee. It is no different, really, to a franchise relationship. We know the guys at Grove Kitchen well. They're good operators. They've actually got one of our former employees working in their business that knows our business very well. We feel that we went through the right process to be quite selective on the partners that we look at this model with. I think it is an interesting model to grow your brand. These are all London locations at this stage, to kind of saturate some of your delivery areas with some high-quality operations. It also means that you can get your food to the customer more quickly.
It's a slightly different approach to what we did previously. We feel confident with the food protection quality and the fact that we know this business very well, that we can protect our brand equity, as you raised in your comment. Follow up on the Lille comments. If the CPU is three times the size of the U.K. and has 100 units, does this imply you can support 200- 300 units in Europe with a single central kitchen? Yes, essentially it does. I don't have the exact number because we haven't done the full maths of it. The reason we bought such a substantial unit was to embark on a large franchise rollout in Europe. I guess ultimately what we're saying is we believe that there is an appetite for this cuisine in Europe. For example, in Germany, it's a, in many ways, a burrito.
It's a wrapped breaded product. It's full of carbohydrate, protein. It's fresh. Our view is it doesn't have to be spicy. A lot of people sometimes think, well, other countries don't like spicy food. Burritos don't have to be spicy. They can just be tasty without the spice. We do believe there's a big opportunity. As I say, the limiting factor, I think, for us on central kitchen will be more the size of the markets near there rather than the manufacturing capacity of the central kitchen. We are also exploring opportunities to perhaps supply business to business as well from our central kitchen. We could do something like that as a food manufacturer. It's early days. I guess our focus has been on the mission at hand, converting the stores. If the kitchen is substantial, it would be able to support a big size of estate.
The question here on the U.K. and Europe, have you ever considered the United States? It's a very interesting question. Obviously, some brands have come from Europe to the United States. I guess the honest truth is Chipotle have got a massive number of units in the U.S. They are the hero in that market. You could argue that there's space for another large player, a bit like you've got in the, I guess, the burger or chicken markets in the U.S. There's not just one business doing it. To be quite honest, I think the obvious priority for us, given that we are the largest in Europe, is to continue cracking on in Europe. You never know with the U.S. Maybe one day, but it's not something we'll jump at immediately. There are other markets that are also interesting, like I say, the Middle East, Saudi, Dubai.
I think we've got enough expansion opportunity on our hands at this stage. Question around why we made our Lille facility so large. Surely a waste of money on any reasonable timeframe. We got it for a very good price. Actually, it was very well fitted out before we even entered the unit. The truth is we haven't really paid a lot more for a large facility there. In fact, the rent on that facility is lower than our U.K. facility. The CapEx was lower as well than it would have been if we'd developed it from a shell because of the work that the landlord had already done on the unit. I take your point. It seems like a bit excessively big, but actually, when you look at the commercials, it made a lot of sense for us. Sweden, next one.
Company has gone from GBP 6.6 million in cash in 2021 to GBP 10.7 million in 2025. What are the moving parts of this? What is the strategy with respect to cash and how to fund future growth? That is really reflective of our investment strategy in France, where we have, as I mentioned, sort of at the beginning of our investment cycle here, where we've outlaid a lot of capital to acquire our central production kitchen, which Andy Naylor mentioned we did get a good price for, as well as the additional capital outlay for the early phase of the conversions. We're really at the beginning of the cycle here where we have laid out the capital and we're expecting future returns to come from that.
The question here about essentially how many restaurants does the central kitchen need to break even.
The answer is roughly the number that we've got because one of the reasons we looked for a strategic acquisition was that we wanted to build a central kitchen and we knew that we needed around about 15 restaurants to enable that facility to cover its costs. That was part of the rationale for buying a business of the size that we did to create that stepping stone for our expansion. It's sort of roughly of that order. Obviously, from this point onwards, if we can franchise the business in other markets in time, which is the plan, then the kind of unit economics of that kitchen really start to make a lot more sense. It's covering its cost at the moment. Just trying to flick through to see if we've missed anything. The level of borrowings is edging closer to the max capacity you have available.
Any thoughts on when you would prioritize paying down borrowings? I guess we've never had the intention of being a business carrying a lot of leverage. It's never been our mission. I think that's still our philosophy, frankly. Obviously, we're at a more levered position than we have been previously because we are in that investment phase. I think it's important to remind ourselves that a lot of that investment has now been done in the central kitchen and the sites that we've built. Yeah, we feel like we're in a good place to bring that leverage down in time, particularly as well with having the U.K. business pumping out some really good numbers. That's going to generate more cash for us in the coming years as well. Our intention is not to continue to grow our leverage in any way. I think we've covered most of them.
How do you develop in the Middle East? Sorry, we missed that one. Where are the kitchens for this market? In the Middle East, they use one of their restaurants to produce some of the food for the others. They do produce more of their food on site, which is a model that the U.K. business used to use, obviously, back at the start. It does work well as well. Ultimately, the food for us is easy to produce, whether it's in a central kitchen or the store. For us, it makes a lot of sense to our scale to produce en masse in a central kitchen because we can control the quality. I have to say that the guys in the Middle East do a fantastic job of retaining food quality. In fact, their operation is extremely good. We have one of our former operators over there.
They're sort of key kiosk directors. It's a model that works well, and they can control their food quality really well. There's actually not that many adaptions for the menu over there as well. It's quite similar to our kind of U.K. model. There's a question about the term of the franchise, royalties, flat fees. I guess terms, for example, we developed an agreement with SSP. It's a five-year agreement. It's an example. Usually with that, there's an exclusivity in whichever market. It can be an exclusivity and an exchange of commitment from the franchisee to open stores. That's the traditional model we've used. The franchise fees vary depending on the partner. Obviously, I would want to kind of commercially say what they are for each partner, but that's sort of the typical level that you see in the industry.
The other advantage that we have is ultimately, as we're supplying businesses outside of our own organization with food, it means the cost to serve a lot of our own stores in the U.K. is brought down because there's just efficiencies in costs from supplying external businesses as well. On top of that, everyone benefits from our increased buying power on product lines like the chicken and the beef and avocados. As you can imagine, we're one of the largest buyers of avocados in the U.K. It's great because we've got that buying power that we can then pass on to our franchisees as well, and they can generate some good returns also. I think we're pretty much at the end of the presentation. I think we've done all of the questions from what I can see as well.
We can probably wrap up, I think, at that stage if we want to hand back.
Perfect, guys. That's great. Thank you very much for your presentation and for being so generous with your time and addressing all of those questions that came in for investors this morning. If there are any further questions that do come through, we'll make these available to you after the presentation just for you to review. Andy, perhaps before really now, just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great.
Absolutely. Hopefully, we've conveyed key messages this year. I guess the key takeaway is record year in the U.K. at odds with, I guess, the sector that struggled this year. That's fantastic and a testament to the hard work of the team. That will continue. We've made progress in France. We'll have seven sites open by the end of the year. We've got six of them already. It's fantastic. Yes, it's taken us a bit longer to get there, but actually, the designs look fantastic as a result of that. I think it was important to get that right and entering a new market. We're really excited. I guess as we've talked quite a lot about the central kitchen, hopefully, investors can see that this is a strategic position that we made to provide the springboard for a lot of future growth.
Hopefully, everyone's as excited as we are and the board are about that opportunity as well. That's really the key messages from us today.
That's great. Andy, Josie, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order for the management team to really better understand your views and expectations. This might only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Tortilla Mexican Grill PLC, we would like to thank you for attending today's presentation. That now concludes today's session. Good morning to you all.