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.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Workforce

Restaurants have a hot opportunity to improve their reputation as employers

Reality Check: New mandates for protecting workers from dangerous on-the-job heat are about to be dropped on restaurants and other employers. The industry could greatly help its labor plight by acting first.

Financing

Some McDonald's customers are doubling up on the discounts

The Bottom Line: In some markets, customers can get the fast-food chain's $5 value meal for $4. The situation illustrates a key rule in the restaurant business: Customers are savvy and will find loopholes.

Financing

Ignore the Red Lobster problem. Sale-leasebacks are not all that bad

The decade-old sale-leaseback at the seafood chain has raised questions about the practice. But experts say it remains a legitimate financing option for operators when done correctly.

Trending

More from our partners