It was a challenging third quarter for Fiesta Restaurant Group, parent company of Pollo Tropical and Taco Cabana, which blamed bad weather, labor costs and more for its sales and revenues slide.
The Dallas-based company posted a same-store sales decrease of 3.8% at Pollo Tropical and a decline of 4.8% at Taco Cabana for the quarter ended Sept. 29. Systemwide revenues fell 6% to $164.2 million for the period.
Fiesta ended the quarter with 172 Pollo Tropical units and 173 Taco Cabana stores. That’s eight fewer Pollo Tropical locations and six fewer Taco Cabanas than in 2018.
Fiesta has hired a third-party research firm to help broaden the consumer appeal of fast-casual chicken concept Pollo Tropical, Fiesta CEO and President Richard Stockinger said during a call with analysts Tuesday evening.
After hurricanes and tropical storms, both brands fared better in September, he said.
Fiesta is working to turn around the sales declines at both brands. Among the initiatives at Pollo Tropical are:
- A value-focused menu platform that includes chicken lunches and dinners, as well as a weekend family meal. The chain on Wednesday raised its value menu pricing 50 cents, to $4.49, following a limited test. “I don’t like to raise prices, but reducing that discount a bit is helping us out,” Stockinger said.
- A new, lower-priced catering menu of party platters.
- Exploring delivery partners beyond DoorDash, whose exclusive contract with both concepts ends in February. Delivery represented 2.3% of Pollo Tropical sales in September. “Although it is early in this rollout, we are seeing a very solid sales pickup in the locations in which we have added rapid pickup,” Stockinger said.
- Working to improve speed of service, including adding remote POS tablets at drive-thrus, as well as simplifying menu and operations by eliminating poor-performing items and highly complex ones.
- Remodeling a dozen restaurants.
Turnaround plans at Taco Cabana include:
- A value menu for breakfast, lunch, dinner and family meals.
- A lower-priced catering menu and an investment in catering infrastructure, including additional salespeople, catering hub operation units and delivery vehicles.