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Fiesta Restaurant Group makes gains with its renewal plan

But traffic at Pollo Tropical and Taco Cabana continues to tumble.
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In the midst of a turnaround plan for its Pollo Tropical and Taco Cabana brands, Fiesta Restaurant Group is finally seeing some traction in same-store sales growth. But traffic continues to decline as the brands struggle to lure more customers, according to Fiesta’s second quarter earnings.

Same-store sales climbed 3.4% for Pollo Tropical and 3.1% for Taco Cabana for the quarter ended July 1. Total transactions, meanwhile, dropped 1% for Pollo Tropical and a whopping 7.1% for Taco Cabana.

Fiesta stock was down about 6% midday Tuesday on the earnings news.

Company executives blame the decline in traffic on a move away from value pricing and other discounts. They’re mulling a variety of ways to boost traffic, including:

  • Increasing promotion of and adding items to the crispy chicken platform at Pollo Tropical, a range that currently makes up 15% to 20% of all purchases.
  • Using targeted social media.
  • Upgrading POS tablets to securely accept credit cards to increase speed of service.
  • Testing kiosk-based ordering.
  • Piloting a new loyalty program.
  • Beefing up the catering program for the holiday season by hiring new catering managers.
  • Planning to begin third-party delivery later this year.
  • Improving employee training.

Fiesta plans to focus on increasing sales opportunities at existing stores, rather than opening new company-owned or franchised units, Richard Stockinger, company CEO and president, said during a conference call with analysts this week.

“We’re not ready to go full-blown on franchising,” Stockinger said.

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