Financing

Pollo Tropical calls it quits in Texas

The Pollo Tropical Latin-chicken chain said it is ceasing operation of its six remaining restaurants in Texas because of what parent Fiesta Restaurant Group described as uncertainty about the market and a lack of brand awareness there.  

Meanwhile, Fiesta indicated that 30 of its Pollo Tropicals in Florida and Atlanta remain closed because of power outages and an inability to get the needed supplies in the wake of Hurricane Irma. Some of the 119 opened stores in those areas are serving limited menus during shortened hours, with some services curtailed. The company noted in particular that some units are unable to provide both drive-thru and dine-in service.

The chain has lost 719 operating days because of Irma and the storm that preceded it, Hurricane Harvey.

One unit of Pollo Tropical’s sister brand, Taco Cabana, remains shut in Texas because of Harvey’s impact. The chain lost 319 operating days because of the storm, Fiesta said.

The six Pollo Tropicals in Houston and San Antonio were closed because of the hurricane. Fiesta said it has decided not to reopen the restaurants, but raised the possibility of converting two into Taco Cabanas.

The company said it would take a $7 million to $9 million impairment charge for the closures, and would incur lease and related charges ranging from $1 million to $2 million.

Early this year, Pollo Tropical shut 30 stores, in Texas, Atlanta and Nashville. Six restaurants in southern Texas were kept in business as what Fiesta described as a “beachhead” for penetrating the Texas market. The stores were also serving as a test of sorts for changes in Pollo Tropical’s menu.

The restaurants had been losing money at the collective rate of $2.4 million a year, on annualized sales of $7.4 million.

The decision not to reopen the branches is the latest blow for Fiesta, which has changed leadership and strategic direction in recent months to stem a decline in business. Fiesta tried to sell its two fast-casual brands, but eventually pulled them off the block, saying no serious offers were forthcoming.  

The closings leave about 186 Pollo Tropicals in operation, according to Technomic.

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