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Fiesta Restaurant Group aims to turn sales around

After a lackluster Q4, the company looks to alcohol, patio parties, reduced hours and more at its Taco Cabana and Pollo Tropical brands.

After posting bleak Q4 2017 earnings, Fiesta Restaurant Group is rolling out a host of new efforts—from alcohol and patio parties to reduced operating hours—in an attempt to stem the bleeding.

Shares of Fiesta’s stock dropped 14% this week on news that the company’s Q4 revenues decreased 5.3% from the previous year. During the period, its Taco Cabana brand saw a same-store sales plummet of 7.4%, while Pollo Tropical’s comps dipped 0.1%.

Fiesta is in the midst of a turnaround plan for both quick-service brands, a plan that was delayed in 2017 due to back-to-back hurricanes in the third quarter, officials for the Texas-based company said during an earnings call this week.

Some of Fiesta’s initiatives that are currently planned or underway for 2018 are:

  • A switch to “no antibiotics ever” chicken at Pollo Tropical.
  • The addition of a boneless fried chicken platform at Pollo, which will include a citrus-marinated crispy chicken sandwich in coming months.
  • Introducing regionalized menus at Pollo.
  • Reducing hours at Taco Cabana (going from being open 24 hours a day to closing at 1 a.m. Sunday through Wednesday).
  • All-day breakfast tacos at Taco Cabana, as well as large-format taco boxes that hold a dozen.
  • Test of beer and sangria in select Taco Cabana units, with plans to expand the test.
  • A TC Patio Party for Q2, which will include entertainment, alcohol and shareable menu items, hosted on Taco Cabana patios.
  • New websites, mobile apps and loyalty programs slated to launch in Q2.
  • Investments in delivery, catering and off-premise.

“We are encouraged by momentum at Pollo and early signs of improvement at Taco,” Lynn Schweinfurth, Fiesta’s chief financial officer, said on the earnings call. “Guest metrics are improving, and we are optimistic about momentum building in 2018, and as sales build, margins should follow soon.”

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