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Fiesta Group reports strong Q3 results

November 6, 2013

Revenues are up for Fiesta Restaurant Group, parent company of Pollo Tropical and Taco Cabana. The chain reported that total revenues increased 9.8 percent to $140.7 million, compared to $128.2 million in the prior year period results for the third quarter of 2013. The company also provided initial operating targets for 2014.

Highlights of Q3:

• Comparable restaurant sales increased 6.5 percent at Pollo Tropical and 1.8 percent at Taco Cabana.
• Comparable restaurant guest traffic increased 3.2 percent at Pollo Tropical and decreased 0.1 percent at Taco Cabana.
• Four company-owned Pollo Tropical restaurants were opened.
• And net income increased 38.2 percent to $5.0 million, or $0.21 per diluted share, compared to net income of $3.6 million, or $0.16 per diluted share, in the third quarter of 2012.

"We had an exceptionally strong third quarter characterized by positive comparable restaurant sales, increased restaurant-level profitability and meaningful growth in earnings per share," said Tim Taft, Fiesta's president and CEO. "Additionally, the infrastructure investments we've made have enabled us to substantially complete the administrative transition from Carrols while further providing ongoing support to our growing restaurant footprint. We expect to end 2013 with 18 new company-owned restaurants, of which 12 are Pollo Tropical and six are Taco Cabana."

Taft also said he was optimistic about 2014.

"In addition to backfilling Pollo Tropical in Florida, we are also building our presence in Georgia and Tennessee," he said. "The restaurants in these markets are already generating healthy sales volumes despite not having yet achieved media efficiency."

In 2014, the chain expects to nearly double the pace of company-owned Pollo Tropical restaurant openings, which will include the first Texas-based Pollo Tropical restaurant, in Dallas.

"Development of Taco Cabana restaurants was limited to Texas in 2013, but next year we will be entering Georgia with our new elevated concept that we believe will emerge as a growth vehicle for the Taco Cabana concept outside of Texas," Taft said. "Above all, we are fortunate to have two concepts that possess significant brand equity and are positioned to make meaningful contributions to our success."

2014 targets

• Comparable restaurant sales growth of 3 percent to 5 percent for Pollo Tropical.
• Comparable restaurant sales growth of 1.5 percent to 3.5 percent at Taco Cabana.
• 20 to 22 new company-owned restaurant openings for Pollo Tropical and two to four new company-owned restaurant openings for Taco Cabana.
• General and administrative expenses of approximately $48 to $50 million.
• An effective tax rate of approximately 37 to 38 percent, assuming the reinstatement of the Work Opportunity Tax Credit in 2014.
• And capital expenditures between $60 and $65 million.

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