Fiesta Restaurant Group Inc., parent to the Taco Cabana and Pollo Tropical concepts, marked its first year as a stand-alone public company Tuesday by swinging to a profit in the first quarter.
Addison, Texas-based Fiesta, which spun off from Carrols Restaurant Group on May 7 last year, reported net income of $4.8 million, or 20 cents per share, for the quarter ended March 21, compared with a loss of nearly $1.9 million, or eight cents per share, in the same period last year.
Revenue increased 5.9 percent to $133.6 million, from $126.1 million in the year-ago period.
First-quarter same-store sales increased 3.8 percent at Pollo Tropical and 2 percent at Taco Cabana. Guest traffic rose 1.2 percent at Pollo Tropical, but it declined 0.6 percent at Taco Cabana, the company said.
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Tim Taft, president and chief executive of Fiesta, said he was pleased with the results in a challenging consumer environment. “We generated positive comparable sales at both brands over the three-month period against the backdrop of the series of economic factors which limited consumer discretion on spending, tough comparisons from the first quarter a year ago, and wet and cold Texas weather that negatively affected trends at Taco Cabana,” he said in a call with analysts.
Taft added that Pollo Tropical’s same-store sales increase was notable, as the brand posted a 9.4-percent increase in the same quarter last year. He said that quarter was “the most formidable lap the brand will face this year.”
Fiesta opened two Pollo Tropical restaurants in the quarter and two Taco Cabana units. “We have a total of 14 to 17 company-owned and -operated restaurants scheduled to open this year, of which nine to 11 will be Pollo Tropical and the remaining five to six will be Taco Cabana,” Taft said.
“And while this is not specifically included in the 2013 guidance,” he added, “we are pursuing the direction of brand coexistence and the synergies that it could provide our Fiesta business when Pollo Tropical were to move West and Taco Cabana were to head East. We believe that the inherent benefits of situating both brands in the same market include shared infrastructure, managerial oversight, a trained labor source and supply chain optimization.”
Internationally, Fiesta expects to open 10 franchise units this year, including its first restaurant in India, which is expected to open soon.
The company is also stepping up efforts to market the brands in nontraditional venues, Taft said, such as airports, transportation facilities, universities and sports arenas. During the first quarter, the first unit opened at the University of South Florida.
Lynn Schweinfurth, Fiesta’s chief financial officer, said commodity inflation would be about the same as last year. “We're expecting cost increases at Taco [Cabana] between 1 percent and 2 percent, “ she said, “and at Pollo [Tropical] 2 percent to 3 percent.”
As of March 31, Fiesta owned and operated 93 Pollo Tropical restaurants and 162 Taco Cabana units. The company franchised an additional 36 Pollo Tropical restaurants in the United States, Puerto Rico, the Bahamas, Costa Rica, Ecuador, Honduras, Panama, Trinidad and Tobago, and Venezuela, and eight Taco Cabana restaurants in the United States.
Contact Ron Ruggless at [email protected].
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