Tim Taft will retire as president and CEO of Fiesta Restaurant Group Inc. by year’s end, the parent to the Pollo Tropical and Taco Cabana fast-casual concepts announced Thursday, and the company’s board is reconsidering the separation of the two brands.
The company’s board said it has launched a search for a successor and it is also reconsidering the announced separation of the two brands into two companies.
Fiesta announced in February that it planned to separate the Pollo Tropical and Taco Cabana concepts into two separate companies.
“In light of this transition, as well as challenging market conditions affecting the entire industry,” the company said in a statement, the board “intends to review the company’s strategic plan, including the previously announced separation of Taco Cabana."
“Mindful of Fiesta’s relatively low tax basis in Taco Cabana of approximately $60 million (as of year-end 2015), a tax-free spin-off may remain a viable route to maximizing shareholder value, however, the board intends to reconsider fully Fiesta’s options, including the possible continued ownership of Taco Cabana,” the company said.
The board also said it would review planned store openings and other capital expenditures “in light of new market dynamics and recent operating performance, as well as the company’s leadership transition.”
Jack Smith, Fiesta’s chairman, in a statement: “Tim was instrumental in guiding the company through its successful transition as an independent public company and during his tenure improved operations at both brands, refined our marketing strategies and set the stage for ongoing growth.”
Taft said he was grateful to the Fiesta team. “I've been honored and privileged to lead this outstanding company and work with many wonderful colleagues,” he said in a statement, “and they are largely responsible for the substantial growth and progress Fiesta has attained.”
For the second quarter ended July 3, Fiesta reported net income of $8.9 million, or 33 cents a share, down from $11.2 million, or 42 cents a share, in the prior-year period. Revenues increased 5.6 percent to $181.5 million from $171.9 in the previous year.
Pollo Tropical’s same-store sales were down 1.4 percent and Taco Cabana’s same-store sales were down 3.8 percent.
As of July 3, Fiesta had 172 company-owned Pollo Tropical restaurants, 164 company-owned Taco Cabana restaurants, 37 franchised Pollo Tropical restaurants and seven franchised Taco Cabana restaurants.