Fiesta Restaurant Group Inc., parent to the Pollo Tropical and Taco Cabana chains, saw same-store sales decline at both concepts in the second quarter ended July 3, the company reported Wednesday.
The Dallas-based fast-causal operator said same-store sales fell 1.4 percent at Pollo Tropical, with a 2.6-percent decline in customer traffic. Same-store sales decreased 3.8 percent at Taco Cabana, with a 5.5-decline in customer traffic.
Net income for the quarter fell 20.1 percent, to $8.9 million, or 33 cents a share, from $11.2 million, or 42 cents a share, in the same period last year. Revenue rose 5.6 percent, to $181.5 million, from $171.9 million the previous year.
Tim Taft, Fiesta president and CEO, said in a statement that the first half of 2016 had been “challenging” in sales and profits, with oil-related economic impact in Texas, expected sales cannibalization with Pollo Tropical’s expansion and rainy weather in Texas.
In the second quarter, the company opened 11 new Pollo Tropical units — six in Texas, three in Florida and two in Georgia — and two Taco Cabana restaurants in Texas.
“As we look to the second half of 2016, our mission is to strengthen our sales and margin trajectory through several initiatives as we navigate a challenging consumer environment,” Taft said. “Effective media spending to further build brand awareness is already benefiting newer media markets such as San Antonio and Nashville, and we are encouraged by early traction in Atlanta, where we launched media in June.”
In guidance, Fiesta said it expected same-store sales for the year to be down between 1 percent and 3 percent at Taco Cabana and to be in the range of down 1 percent to up 1 percent at Pollo Tropical.
The company said restaurant wages and related expenses as a percentage of restaurant sales increased 130 basis points in the second quarter, primarily because of higher labor costs and the addition of restaurant managers who will be deployed to new restaurants opening later in the year.
As of July 3, Fiesta had 172 company-owned Pollo Tropical restaurants, 164 company-owned Taco Cabana restaurants, 37 franchised Pollo Tropical restaurants in the United States and abroad, and seven franchised Taco Cabana restaurants in the U.S.