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Fiesta to close 30 more Pollo Tropical restaurants

Company pulls back in Georgia, Tennessee and Texas markets

Fiesta Restaurant Group Inc. will close 30 more Pollo Tropical restaurants in Georgia, Tennessee and Texas as it works to improve its performance, the company said Monday.

In October, Pollo Tropical closed 10 of its then 209 locations, most of those in Texas, as part of a portfolio review. 

On Monday, Dallas-based Fiesta said it was closing all Pollo Tropical locations in Dallas-Fort Worth and Austin, Texas, and Nashville, Tenn. Fiesta said it would continue to operated 19 Pollo Tropical restaurants outside its original market of Florida, including 13 units in Atlanta and six locations in south Texas.

As many as five closed Pollo Tropical units may be converted to Fiesta’s Taco Cabana brand, the company said.

“Where possible, employees impacted by restaurant closures will be offered positions at nearby restaurants,” the company said in a statement.

“Fiesta’s recent growth initiatives diverted resources from our core markets, and some amount of renewal is required to restore momentum in these markets,” said Richard Stockinger, who was named Fiesta president and CEO in February, in a statement.

Fiesta said preliminary same-store sales for the first quarter ended April 2 showed declines continued at both its brands. Preliminary same-store sales fell 6.7 percent at Pollo Tropical and dropped 4.5 percent at Taco Cabana. The company will announced first-quarter earnings on May 8. 

“Industrywide headwinds, which were particularly prevalent in Florida and Texas, and the impact of sales cannibalization continued to negatively impact topline performance,” the Fiesta statement said.

Stockinger added, “While the decision to close restaurants is never easy, we believe it is vital to focus the company’s resources and efforts on markets and locations that have proven successful for our brands.” 

Fiesta said it estimated impairment charges with closures to be $33 million to $37 million in the first quarter 2017, and related lease and other charges of $9 million to $12 million in the second quarter 2017.

The closures come as part of Fiesta’s “Renewal Plan,” which will include relaunching the Pollo Tropical brand in September and the Taco Cabana brand late in the year. 

For the fourth quarter ended Jan. 1, Fiesta reported net income of $2.4 million, down from $8.8 million in the same quarter last year. Revenue declined 4.6 percent, to $171.3 million, from $179.5 million the previous year.

Fourth-quarter same-store sales at Pollo Tropical declined 4 percent and fell 3.5 percent at Taco Cabana. 

As of Jan. 1, Fiesta had 177 company-owned Pollo Tropical restaurants and 166 company-owned Taco Cabana restaurants. The company also franchised 35 Pollo Tropical units and seven Taco Cabana locations.

Contact Ron Ruggless at [email protected]

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