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Pollo Tropical closes 10 locations

Decision comes after strategic review of the chain’s restaurant portfolio

Pollo Tropical has closed 10 of its 209 locations, most of them in Texas, as part of parent company Fiesta Restaurant Group Inc.’s review of the chain’s restaurant portfolio.

Fiesta announced the closures late Monday, when it pre-announced a 1-percent decline in same-store sales in the third quarter ended Oct. 2, along with a 4.1-percent decline at the company’s 171-unit Taco Cabana concept.

“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,” Fiesta interim president and CEO Danny Meisenheimer said in a statement. “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.”

Eight of the closures are in Texas, while one is in Nashville, Tenn., and another is in Atlanta. Fiesta will rebrand as many as three of the locations in Texas as Taco Cabana.

Fiesta estimated that the closures would cost it $18 million to $21 million in impairment charges in the third quarter, and $2 million to $4 million in lease and other charges in the fourth quarter.

“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.

The closures follow a difficult period for Dallas-based Fiesta. The company’s stock is down 19 percent this year, but has been more than cut in half in the past 18 months amid weak sales at its concepts.

Former CEO Tim Taft retired in August and was replaced on an interim basis by Meisenheimer. Fiesta stopped a plan to separate its Taco Cabana concept, and also reconsidered the primarily Florida-centric brand’s development in Texas.

Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze

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