Fiesta Restaurant Group Inc., parent to the Pollo Tropical and Taco Cabana brands, will add activist investor Andrew Rechtschaffen of Arex Capital Management L.P. to its board later this month, the company said last week.
The Dallas-based fast-casual company said it is expanding its board to nine directors and Rechtschaffen, founder of Arex Capital, will be appointed as an independent director during a board meeting later this month.
In late January, Arex Capital Management L.P. said it had acquired 8.5% of Fiesta’s shares. Earlier in the month, Fiesta had announced it was immediately closing 19 Taco Cabana restaurants.
Prior to founding Arex, Rechtschaffen served as a partner at Greenlight Capital, a founder and portfolio manager at Obrem Capital and a managing director in the Principal Strategies Group at Citadel Investment Group.
“Fiesta has a long history of constructive engagement with all of our shareholders, including Arex,” said Stacey Rauch, Fiesta’s chair, in a statement. “The board looks forward to working collaboratively with Andrew as the company continues to review all strategic options to unlock the value of its brands.”
Richard Stockinger, Fiesta’s CEO and president, added: “He brings financial expertise that Fiesta looks forward to leveraging as we drive value for the company and our shareholders.”
Fiesta also said it had entered into a cooperation agreement with Arex and its affiliates that led to the board appointment.
For the third quarter ended Sept. 29, Fiesta swung to a net loss of $22.8 million, or 84 cents a share, from income of $2 million, or 8 cents a share, in the prior-year period. The loss included impairment charges. Revenues fell 6%, to $164.2 million, from $174.6 million in the third quarter 2018.
Same-store sales in the third quarter were down 3.8% at Pollo Tropical and down 4.8% at Taco Cabana.
As of Sept. 29, before the 19 closures were announced in January, Fiesta said it owned and operated 141 Pollo Tropical restaurants and 165 Taco Cabana units. All of the Pollo Tropical restaurants were in Florida, and all of the Taco Cabana restaurants were in Texas. Fiesta franchised 31 Pollo Tropical restaurants and eight Taco Cabana units.
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