Operations

Fiesta Restaurant Group to shutter 23 units

The closures include all Pollo Tropical units in the Atlanta area, as well as nine Taco Cabanas in Texas.
Photograph: Shutterstock

Fiesta Restaurant Group, the parent company of fast-casual brands Pollo Tropical and Taco Cabana, announced Thursday it is shuttering 23 units as it aims to get its finances in order after lackluster earnings in the most recent quarter.

The closures include 14 Pollo Tropical restaurants in Florida and Georgia, as well as nine Taco Cabana units in Texas. The Pollo Tropical closures include all nine of the restaurants in the Atlanta market.

The 14 closed Pollo Tropical units contributed roughly $15 million in restaurant sales and $4.6 million in pretax operating losses for the 11 months ended Dec. 2, the Dallas-based restaurant company said. The nine Taco Cabanas that were closed added about $9 million in sales and $1.5 million in pretax losses during the same period.

The closures continue a pullback for the brands that began in 2016. Fiesta Restaurant Group operated 150 Pollo Tropical units and 171 Taco Cabana restaurants as of Sept. 30. That's down from 203 Pollo Tropical stores and 173 Taco Cabanas in 2016, according to data from Restaurant Business' sister company Technomic.

“In completing our strategic renewal plan with this comprehensive restaurant portfolio review, we will enter 2019 with a keen focus on building traffic, improving margins and rebranding Pollo Tropical for future expansion outside of South Florida, Richard Stockinger, Fiesta Restaurant Group’s CEO, said in a statement. “We believe that these steps will build the foundation for growth beginning in 2020.”

He cited new loyalty programs at both brands, as well as enhancements to the catering programs at Pollo Tropical and Taco Cabana and a third-party delivery test at Pollo Tropical, as potential sources for growth.

Nearly all employees from the stores that are closing in Florida and Texas will be offered jobs at nearby units, the company said.

Fiesta’s stock fell more than 1% in early trading Thursday, nearly its lowest point in the past year and nearly half what it was at its high point last summer.

The company, which has been in the midst of a turnaround, is struggling to boost traffic. Same-store sales increased 6.5% at Pollo Tropical and 12.2% at Taco Cabana for the quarter ended Sept. 30, but the jumps were driven largely by price increases.

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