Taco Cabana, Pollo Tropical parent cites $7.5 million savings
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Fiesta Restaurant Group Inc., which in April closed 30 additional Pollo Tropical restaurants, on Tuesday laid off a number of corporate staff.
Sources in the company said the number of layoffs was 49, but the company’s press representative said she had no information beyond a filing early Wednesday that referred to savings as the company struggles.
In a Tuesday letter to employees forward to Nation’s Restaurant News, Rich Stockinger, Fiesta CEO and president, said, “Regretfully, these cost reductions will include eliminating certain field and corporate positions across the organization.”
Stockinger, who was named president and CEO on Feb. 27, added, “This is a very tough decision that I don’t take lightly, but it is necessary.”
The company, which is in a proxy fight over two board candidates with activist JCP Investment Management LLC, also issued a letter to shareholders that was released Wednesday. The board seats will be decided at Fiesta’s annual shareholder meeting on June 7.
“The company implemented a reduction in force that will result in a total of approximately $7.5 million of annualized general and administrative expense savings in 2018,” Fiesta said in the letter, “including approximately $2.5 million of previously announced cost savings associated with the recent restaurant closures.”
For this year, Fiesta said it expects to lower related general and administrative expenses by about $1.8 million after severance and other costs.
“Operating with a more efficient cost structure is critical to improve Fiesta’s financial results and offset the impact of investments being made to enhance the guest experience,” the company told shareholders.
For the first quarter ended April 2, Fiesta reported a loss of $15.1 million, or 56 cents a share, compared to a profit of $9.9 million, or 37 cents a share, in the same quarter last year. Revenues declined 0.6 percent to $175.6 million in the quarter.
Same-store sales at Pollo Tropical declined 6.7 percent in the quarter and fell 4.5 percent at Taco Cabana.
Fiesta has 328 restaurants systemwide. The company owns 120 Pollo Tropical restaurants and 167 Taco Cabana restaurants. Franchisees own and operate 34 Pollo Tropical restaurants and seven Taco Cabana units.
Contact Ron Ruggless at [email protected]
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