Fiesta Restaurant Group, parent company of the Pollo Tropical and Taco Cabana restaurant brands, has reiterated its plans to spend around £1m on new catering equipment for both chains this year.
In updated guidance to the market following the publication of its Q1 results, the group said full-year capital expenditures in 2019 would include the opening of three new company-owned Pollo Tropical restaurants in South Florida and three to four new company-owned Taco Cabana restaurants in Texas.
Total capital expenditures are expected to be $45m to $55m including $11m to $14m to develop new company-owned restaurants, $9m to $11m to implement information technology and other systems projects and $1m in catering equipment.
In addition, ongoing reinvestment in its Pollo Tropical and Taco Cabana company-owned restaurants in 2019 is expected to include $16m to $18m for restaurant remodeling, equipment to support new menu platforms and other facility enhancements, and $9m to $12m for capital maintenance.
During the first quarter of 2019, Fiesta opened two Taco Cabana restaurants in Texas. As of 31 March 2019, there were 139 company-owned Pollo Tropical restaurants, 164 company-owned Taco Cabana restaurants, 31 franchised Pollo Tropical restaurants in the U.S., Puerto Rico, the Bahamas, Guyana and Panama and eight franchised Taco Cabana restaurants in the US.
Total revenues during the quarter decreased 2.1% to $165.9m, while net income fell from $4.2m to $2.3m year-on-year.
Fiesta president and CEO, Richard Stockinger, said, “Due to recent changes in accounting standards, particularly with respect to lease accounting, it may be difficult to appreciate the progress we have made in improving our operating margins and positioning the Company for greater profitability in the future.
“We generated higher first quarter adjusted EBITDA and restaurant-level adjusted EBITDA margins compared to the year-ago period, despite the negative impact of an increase in expense resulting from the new lease accounting standard. These improvements come from our constant focus on improving our operations and managing costs, while enhancing the experience and value proposition for our customer; however, we have yet to realize the benefits of this enhanced customer experience in terms of comparable restaurant sales growth.”