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Fiesta Restaurant Group, Inc. [NASDAQ: FRGI], the parent company of Pollo Tropical and Taco Cabana, announced on Monday that store sales dropped in its last quarter and 2016. Its net income of $16.7 million dropped by well over half of what it was in 2015.
On the same day Fiesta announced that with such poor results and with no one offering to buy the firm, it was ditching its idea of selling the company. The time is not right. Instead, it has recruited leadership to turn both fast-casual chains around.
In 2016 same-restaurant sales for fast-casual chain Pollo Tropical fell by 1.6 percent while store traffic dropped by 3.1 percent. At sister fast casual chain Taco Cabana, same-restaurant sales in 2016 shrank by 2.5 percent while traffic dropped by 3.6 percent.
In its last quarter of 2016, same-restaurant sales at Pollo Tropical decreased by 4 percent compared to the fourth quarter of 2015. It had one less reporting week for the quarter than in 2015. Restaurant visits fell precipitously by 7.3 percent. Taco Cabana decreased 3.5 percent in same-restaurant sales for the fourth quarter while transactions dropped 4.5 percent.
Pollo Tropical has 177 company-owned and 35 franchised restaurants. Taco Cabana has 166 company-owned and 7 franchises.
The company's board appointed Stacey Rauch as its new non-executive chairwoman. She has been a non-executive director of Fiesta since 2012. She is a director emeritus of McKinsey & Company, where she served 24 years with the firm in various leadership positions, including retail and consumer goods practices.
The company also appointed Paul Twohig of Dunkin' Brands as a non-executive member of its board of directors. Twohig joined Dunkin' Brands in 2009 and currently serves as president of Dunkin' Donuts U.S. and Canada. Prior to joining Dunkin', Mr. Twohig served as a senior vice president of the eastern division for Starbucks Corporation.
Fiesta announced it has appointed Richard Stockinger as its president and chief executive officer to replace its interim CEO since September of last year, Danny Meisenheimer. Stockinger most recently has been a consultant with private equity firm Bruckman, Rosser, Sherrill & Co and Not Your Average Joes, a private restaurant company. He served as president and CEO of Benihana Inc. from 2009 to 2014.
Regarding Stockinger becoming CEO, chairwoman Rauch said, "Rich is a respected, results-driven industry veteran who understands the value of our Pollo Tropical and Taco Cabana brands and has the skills and experience necessary to be a strong and effective leader in advancing our strategic initiatives at this critical juncture."
Former interim CEO Danny Meisenheimer will be Fiesta Restaurants' new chief operating officer and senior vice president.
Chairwoman Rauch was optimistic about Fiesta's ability to increase guest visits and open new sales channels in 2017. "Significant opportunities remain for growth in Pollo Tropical and Taco Cabana's existing markets, and while our expansion into Texas for Pollo Tropical has been challenging, we continue to believe in the long-term attractiveness of the business model and its potential beyond its traditional markets," said Rauch. "With an energized team in place, we are eager to continue to deliver to our loyal guests the quality and value they have long appreciated at Pollo Tropical and Taco Cabana and to introduce new guests to our unique and craveable product offerings."