Fiesta Restaurant Group Inc.’s marketing cutbacks were partially to blame for declines in same-store sales at the Pollo Tropical and Taco Cabana brands in the second quarter, the company CEO said Monday.
Dallas-based Fiesta said same-stores sales declined 7.7 percent at Pollo Tropical in the quarter and fell 4.7 percent at Taco Cabana. Comparable transactions were down 10 percent at Pollo Tropical and 4.5 percent at Taco Cabana.
“We significantly reduced our media presence and moderated promotions and discounts, which negatively impacted our quarterly revenues,” said Richard Stockinger, Fiesta president and CEO, in a statement.
The company began a strategic review of its business in April after closing more than 30 Pollo Tropical restaurants in Georgia, Tennessee and Texas in April. Those closures followed 10 others earlier in October.
Stockinger said the company’s “Strategic Renewal Plan” has already included operational changes as well as the cutbacks in marketing, including fewer promotions and discounts.
The company said Pollo Tropical has retained a new advertising agency, and new creative advertising campaigns are being developed at both brands to including marketing and digital strategies.
“We are now preparing to relaunch Pollo Tropical in October and Taco Cabana shortly thereafter once the material aspects of our plan are in place, including new and impactful creative advertising campaigns,” Stockinger said.
By early 2018, he added, “we intend to implement incremental strategies for growth including digital solutions aimed at building effective programs to foster loyalty and grow online ordering, delivery and catering sales.”
For the second quarter ended July 2, Fiesta swung to a loss of $2.2 million, or eight cents a share, from a profit of $8.9 million, or 33 cents a share, in the same period a year ago. Revenues were down 4.9 percent, to $172.6 million from $181.5 million in the same quarter last year.
As of July 2, Fiesta owned and franchised 361 restaurants, including 185 Pollo Tropical units and 176 Taco Cabanas.
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