Industry News | September 18, 2017 | By Danny Klein | QSR Exclusive Brief

Hurricanes Take Toll on Pollo Tropical, Taco Cabana

Pollo Tropical lost around 719 operating days due to Irma’s impact through September 14. flickr: Phillip Pessar
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With nearly 25 percent of its company base in the Houston metropolitan area, Fiesta Restaurant Group felt a heavy impact from Hurricane Harvey.

The parent of Pollo Tropical and Taco Cabana said that all but one of its 43 Houston-area Taco Cabana company stores have reopened. And no serious injuries to team members were reported.

Financially, the company said it lost about 319 operating days as a result of Harvey through September 14.

“While these hurricanes have cost us a short-term loss of business and some property damage, the operational and financial opportunity we see resulting from our ‘Renewal Plan’ remains intact,” president and CEO Rich Stockinger said in a statement. “We will be slightly delaying the start of our planned marketing build as our markets recover from these storms but expect to resume an impactful media plan before year-end. In doing so, we intend to regain the positive momentum we were experiencing at Pollo prior to Irma and reintroduce broadcast media at Taco.”

Fiesta Restaurant Group has a sizable Pollo Tropical footprint in Florida and said it is still assessing the impact of Hurricane Irma. “… we do not believe we have sustained significant damage to any of our restaurants and no serious injuries to our team members have been reported,” the company said.

There are 149 Pollo Tropicals in Florida and the Atlanta metropolitan area. About 119 have reopened, Fiesta said, including 70 of its 88 restaurants in South Florida. Some are serving a modified menu and others are operating with limited hours, “or may be unable to offer both dine-in and drive-thrus service.”

In this case, Pollo Tropical lost around 719 operating days due to Irma’s impact through September 14.

Fiesta added that it maintains comprehensive insurance coverage on all restaurants, including property, flood, and business interruption.

In Texas, Taco Cabana served thousands of meals to evacuees and first responders. Pollo Tropical is currently doing the same in Florida. Additionally, through its non-profit Fiesta Family Foundation, the company is assisting many of its own family members who have suffered losses related to the storms.

Fiesta also announced that is permanently closed the six remaining Pollo Tropical company-owned stores in South Texas, including two in Houston that did not reopen after Harvey, as well as four in San Antonio.

“The decision to close these restaurants was due to ongoing uncertainty in south Texas including the effects of Hurricane Harvey and limited awareness of the Pollo Tropical brand,” Fiesta said. “Up to two of the closed south Texas restaurants may be rebranded as Taco Cabana restaurants where Taco Cabana has strong brand affinity and awareness. Where possible, employees impacted by restaurant closures will be offered positions at nearby restaurants.”

The six closed restaurants contributed about $3.7 million of restaurant sales and $1.2 million of pre-tax restaurant-level operating losses for the six months ended July 2.

In August, Fiesta reported first quarter same-store sales declines of 6.7 percent at Pollo Tropical and 4.5 percent at Taco Cabana. The company had a net lost of $15.1 million. Executives, however, stressed confidence in the “Renewal Plan” Stockinger alluded to in his statement. The reboot called for the closure of 30 company-owned Pollo Tropical units, as well as a brand relaunch in mid-October.

“During and after the relaunch of both brands, we will continue to make progress establishing platforms for growth for the future, including new restaurant prototypes that meet or exceed our return requirements, emerging market growth strategies, and systems and processes to build delivery, catering, online ordering and loyalty platforms,” he said at the time.

The plan will also affect 90 percent of each brand’s menu with food and ingredient enhancements, including removing artificial ingredients. Read more about the plan here.