News

Fiesta Restaurant Group closes 10 Pollo Tropical units

October 26, 2016

Fiesta Restaurant Group, parent company of Pollo Tropical and Taco Cabana, has closed 10 Pollo Tropical units and will rebrand up to three in Texas as Taco Cabana restaurants. The company also announced that Q3 2016 comparable restaurant sales were down for both brands, with sales dropping 1 percent at Pollo Tropical and falling 4.1 percent at Taco Cabana, according  to a company press release.

"After a period of aggressively growing Pollo Tropical in Texas, we have hit the pause button to focus on building brand affinity, frequency and awareness, while continuing balanced system development over time," said Interim Fiesta President and CEO Danny Meisenheimer. "We believe closing or rebranding these underperforming stores provides the opportunity to further strengthen our operational and financial performance across the remaining restaurants in Texas and across our Pollo Tropical brand as a whole."

The decision to close restaurants was based on a restaurant portfolio examination as part of the company's strategic review process to enhance long-term shareholder value, Meisenheimer said. Affected restaurants include eight in Texas, one in Nashville, Tennessee and one in Atlanta, Georgia. Nearly all employees impacted by closures will be offered positions at nearby restaurants.

"We remain optimistic about the future growth opportunities for both our Pollo Tropical and Taco Cabana brands and believe that the steps we are taking now provide opportunity for success in 2017 and beyond," Meisenheimer said.

The company estimated that it will recognize impairment charges of about $18 million to $21 million in the third quarter 2016, and related lease and other charges of $2 million to $4 million in the fourth quarter 2016 based upon the actual timing of restaurant closures. The closed restaurants contributed approximately $4.8 million of pre-tax operating losses to results in 2016 through the end of the third quarter 2016, according to the company.

"As always, we are focused on delivering the best products and experience to our guests. Although the industry backdrop remains soft and comparable sales at Pollo Tropical continue to be negatively impacted by sales cannibalization, traffic trends improved at the end of the third quarter at both brands, driven, in part, by compelling product and value promotions," Meisenheimer said.