Fiesta Restaurant Group, parent company of Pollo Tropical and Taco Cabana, saw its stock price climb nearly 30% Thursday after reporting improving sales for its second quarter.
For the quarter ended June 28, the Dallas-based chain said same-store sales fell 31.6% at Pollo Tropical and 19.2% at Taco Cabana. Things improved in July, however, with Pollo Tropical posting a 12.2% comps decline and Taco Cabana seeing same-store sales fall 13.4%.
With units heavily concentrated in Texas and Florida, areas in which rates of the coronavirus are climbing, Fiesta Restaurant Group temporarily closed all of its dining rooms on July 12.
The company is looking to improve the off-premise experience, with expanded delivery partners, enhanced online ordering, new curbside pickup options and an emphasis on improving drive-thru efficiency, Fiesta President and CEO Rick Stockinger told analysts.
“We’re testing a modular kitchen line that is more flexible and reduces ordering time,” Stockinger said.
The company launched a new app for Pollo Tropical late last month and plans to debut one for Taco Cabana in September.
Systemwide revenues decreased 28.9% to $121.9 million in Q2. The company had $101.4 million in cash on hand at the end of the quarter and reported total debt of $56 million at the end of July.
Pre-pandemic, nearly a quarter of Pollo Tropical’s sales were dine-in, the company said. For Q2, off-premise sales of online, catering and delivery made up 11.5% of total restaurant sales, compared to 4% of total sales during the same period a year earlier.
Pollo Tropical spent $1.6 million during the quarter on costs related to the coronavirus, including incentive pay, quarantine pay, masks and sanitizer.
At Taco Cabana, off-premise sales made up 8% of total sales in Q2, compared to 3.7% the year before. The taco chain spent $1.8 million during the quarter on COVID-related costs. The brand has seen success with its off-premise alcohol offerings, including record sales of margaritas on Cinco de Mayo and during a National Tequila Day promotion last month.
But, Stockinger said, “When you’re doing $2 margaritas, that’s not a great margin. But it’s helping drive traffic.”
As of June 28, Fiesta had 141 company-owned Pollo Tropical units and 33 franchised restaurants. It had 146 company-owned Taco Cabana stores and seven franchised locations.
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