Taco Cabana parent Fiesta Restaurant Group closed 19 of the fast-casual Mexican chain’s restaurants in Texas—nearly 11% of the brand’s total locations, the company announced Monday.
All of the shuttered units had suffered “significant losses,” contributing an estimated $4.2 million in restaurant-level pretax operating losses in 2019 to the then-173-unit chain, the company said. The closures are part of a margin-improvement plan begun during Q4, Fiesta Restaurant Group President and CEO Richard Stockinger said in a statement.
“The margin-improvement plan includes efficiency initiatives in operations across food and operating expense categories and the closure of 19 underperforming restaurants in Texas,” Stockinger said. “These closures eliminate all stores with significant losses, which we expect will result in a highly viable portfolio of restaurants.”
Taco Cabana shuttered six units between Q3 2018 and the same period the following year.
Most employees from the 19 closed units will be offered jobs at other Taco Cabana locations, the company said.
Dallas-based Taco Cabana reported a same-store sales decline of 4.8% for its quarter ended Sept. 29. Fiesta Restaurant Group, which also operates the Pollo Tropical fast-casual brand, saw systemwide revenues fall 6% to $164.2 million for the period.
Taco Cabana plans to add value meals across all dayparts while also strengthening its catering program in an effort to boost sales.
“We continue to make progress on sales-building initiatives across both Pollo Tropical and Taco Cabana in off-premise sales, including catering, online and delivery,” Stockinger said. “In addition, as our new senior management team enters their first full year together, we are optimistic about improving comparable restaurant sales at both brands in 2020.”
Fiesta Restaurant Group estimates the closures will cost the company an estimated $8 million to $11 million in asset impairment charges in Q4.