Fiesta Restaurant Group, Inc. (“Fiesta” or the “Company”) (NASDAQ:FRGI),
parent company of the Pollo Tropical® and Taco Cabana® fast casual
restaurant brands, today announced that it has closed 10 Pollo Tropical
restaurants and will rebrand up to three of these restaurants in Texas
as Taco Cabana restaurants. The Company also announced expected
impairment, lease and other charges for the third and fourth quarters
2016 and third quarter 2016 comparable restaurant sales results.
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. 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
Interim Fiesta President and Chief Executive Officer Danny Meisenheimer
said, “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.
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.”
Mr. Meisenheimer added, “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.”
The Company currently estimates it will recognize impairment charges of
approximately $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
Preliminary Third Quarter 2016 Comparable Restaurant Sales Results
The Company also announced the following comparable restaurant sales
results for the third quarter 2016, which ended October 2, 2016:
Comparable restaurant sales at Pollo Tropical decreased 1.0%; and
Comparable restaurant sales at Taco Cabana decreased 4.1%.
Mr. Meisenheimer concluded, “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.”
The Company will release full third quarter 2016 financial results on
Monday, November 7, 2016 after market close and will hold a conference
call at 4:45 PM ET. The conference call can be accessed live over the
phone by dialing 201-689-8562. A replay will be available after the call
until Monday, November 14, 2016, and can be accessed by dialing
858-384-5517. The passcode is 13646683. The conference call will also be
webcast live from the corporate website at www.frgi.com,
under the investor relations section. A replay of the webcast will be
available through the corporate website shortly after the call has
About Fiesta Restaurant Group, Inc.
Fiesta Restaurant Group, Inc. is the parent company of the Pollo
Tropical and Taco Cabana restaurant brands. The brands specialize in the
operation of fast-casual, ethnic restaurants that offer distinct and
unique Caribbean and Mexican inspired flavors with broad appeal at a
compelling value. The brands feature made-from-scratch cooking, fresh
salsa bars, drive-thru service and catering. For more information about
Fiesta Restaurant Group, Inc., visit the corporate website at www.frgi.com.
Except for the historical information contained in this news release,
the matters addressed are forward-looking statements. Forward-looking
statements, written, oral or otherwise made, represent Fiesta's
expectation or belief concerning future events. Without limiting the
foregoing, these statements are often identified by the words "may,"
"might," "believes," "thinks," "anticipates," "plans," "expects,"
"intends" or similar expressions. In addition, expressions of Fiesta's
strategies, intentions or plans are also forward-looking statements.
Such statements reflect management's current views with respect to
future events and are subject to risks and uncertainties, both known and
unknown. You are cautioned not to place undue reliance on these
forward-looking statements as there are important factors that could
cause actual results to differ materially from those in forward-looking
statements, many of which are beyond Fiesta's control. Investors are
referred to the full discussion of risks and uncertainties as included
in Fiesta's filings with the Securities and Exchange Commission.
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Source: Fiesta Restaurant Group, Inc.