Fiesta Restaurant Group Inc. will separate its Pollo Tropical and Taco Cabana concepts into two companies in 2017 or 2018, the company said Wednesday.
Addison, Texas-based Fiesta said it would distribute 100 percent of Taco Cabana’s stock to Fiesta shareholders and rename Fiesta as Pollo Tropical.
“We believe that each of our two brands can be even more successful as standalone companies through focused strategies and fully dedicated execution,” Tim Taft, Fiesta president and CEO, said in a statement.
Fiesta was created in May 2012, when the two brands were spun off from Burger King franchisee Carrols Restaurant Group Inc., based in Syracuse, N.Y.
The separation plan will be subject to the approval of Fiesta’s board and regulatory agencies.
“Pollo Tropical is a unique, once-in-a-generation brand, and it has been our growth engine since the company spun out of Carrols Restaurant Group in 2012,” Taft said. “The Pollo Tropical brand has delivered operating metrics and results that are considered among the best in the fast-casual segment.”
Taft added that Taco Cabana has reached annual restaurant sales volumes of $1.9 million. “We are also developing a cost-efficient Taco Cabana prototype to begin accelerating its restaurant growth, initially in smaller Texas markets,” he said.
“We believe establishing two entirely focused companies through our proposed separation offers both the potential for improved shareholder value and for aligning each brand with its respective shareholders’ objectives,” Taft said.
In the meantime, the company will build two independent management teams and corporate structures.
As of Jan. 3, Fiesta had 190 Pollo Tropical restaurants, with 35 of those units franchised, and 168 Taco Cabana units, with six of those locations franchised.
Also on Tuesday, Fiesta reported that net income for the fourth quarter ended Jan. 3 fell 1.6 percent, to $8.8 million, or 33 cents a share, from $9 million, or 34 cents a share, in the same period a year ago. Revenue in the quarter rose 14.9 percent, to $179.5 million, from $156.2 million in the prior-year period.
Same-store sales at Pollo Tropical increased 0.4 percent in the quarter. Same-store sales at Taco Cabana grew 3.3 percent, the company said.
Fiesta said it intends to continue building scale in its new Pollo Tropical markets to reach media efficiency and to accelerate new restaurant development at Taco Cabana.