Fiesta Restaurant Group announced Monday that it will be acquired by a private equity firm in an all cash transaction.
The Wall Street Journal reported that the company was being sold for $225 million.
The chicken chain will be under Authentic Restaurant Brands, a platform that features casual-dining concepts Primanti Bros., P.J. Whelihan's, and Mambo Seafood. The group is a portfolio company of private equity firm Garnett Station Partners, which also has investments in Firebirds Wood Fired Grill, Checkers and Rally's, and Burger King franchisee Carrols Restaurant Group.
When the transaction closes, Fiesta will independently operate Pollo Tropical as a privately held company. Headquarters will remain in Miami and so will brand leadership.
“We have been fans of Fiesta and their Pollo Tropical restaurants for some time,” Alex Macedo, chairman of Authentic Restaurant Brands, said in a statement. “Pollo Tropical restaurants are a mainstay on the dining scene throughout Florida, and we are confident that ARB is a perfect partner to harness the power of the brand for the future.”
As of July 2, Pollo Tropical had 134 corporate stores in the U.S. and 28 franchised restaurants in the U.S., Puerto Rico, Panama, Guyana, and the Bahamas. The chain's same-store sales grew 9.6 percent in the second quarter year-over-year, fueled by a 3.6 percent lift in transactions and a 6 percent net impact from product mix and pricing. Drive-thru mixed 52 percent in Q2, followed by counter sales (32 percent), delivery (12 percent), online (3 percent), and catering (1 percent).
Restaurant-level operating profit margin was 19.3 percent thanks to same-store sales growth and margin improvement actions. Pollo Tropical also swung a net income of $3.9 million, primarily because of higher restaurant sales, timing in advertising expense, and higher restaurant-level operating profit. Pollo Tropical took a 5 percent menu price increase in March. That was preceded by a 4 percent jump in September 2022, a 1.4 percent rise in June 2022, and a 5 percent lift in March 2022.
In terms of development, the chain is undergoing a remodel program that's "generating a consistent sales lift," the company said. Forty refreshes and remodels were completed by the end of Q2.
The company said drive-thru speed of service times improved 15 percent in Q1 compared to 2022. Additionally, guest satisfaction—as measured by net promoter scores—grew 19 percent in Q1 versus last year. Monthly scores in March and April were the highest since 2021. Some of that is linked to better staffing levels. Hourly turnover in Q1 reached its lowest level since before 2019 and management turnover was well below 2022.
The move comes a little more than two years after Fiesta sold Taco Cabana to Yadav Enterprises for $85 million. At the time, the company said the move would allow it to focus more on accelerating Pollo Tropical's growth. But the brand has fewer restaurants systemwide than it did in July 2021 when the transaction was announced.
Former CEO Richard Stockinger stepped down at the end of 2022 and was replaced by CFO Dirk Montgomery on an interim basis. Montgomery's title was made permanent in April.
“The transaction validates the actions we have taken to position Pollo Tropical in our markets, enhance the guest experience and improve performance across our footprint," Montgomery said in a statement. "With this transaction, Fiesta will be better positioned financially and operationally to advance our mission of providing great food and hospitality to our guests."