FRGI Fiesta Restaurant

Raphael Gross Manager, ICR
Rich Stockinger President & Chief Executive Officer
Dirk Montgomery Chief Financial Officer
Joshua Long Piper Sandler
Brian Vaccaro Raymond James
Call transcript
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Good afternoon and welcome to Fiesta Restaurant Group Inc. Fourth Quarter and Full Year 2019 Earnings Conference Call. Today's conference call is being recorded. At this time, all participants are in a listen-only mode. [indiscernible] we will conduct the question-and-answer session. Instructions] [Operator

like ICR. call now Gross, to turn at Manager to would over the Raphael I

Raphael Gross

Sherry. Fiesta after you, XXXX today. Thank The earnings full quarter release year and was issued the closed Restaurant market Group's fourth

you on company's section. found If can Investor under the not it, website already it have be the Relations accessed

such forward-looking limitation, that materially begin, and we company's the no expressed inform that operations. based will forward-looking can by give and Actual regarding outcomes various and Important make to forward-looking management historical be results company of such and future the company to are on statements during financial not differ filings. for from without projected and be plans, found is results may that differ in business from results the assurance Before you materially will cause like in statements actual information. company's SEC factors what the the correct. can of those prove statements future objectives These costs could statements statements strategy, forward-looking I'd to today, the statements implied include that forecasted position expressed call or budget, or operations,

release. substitute should measures information during in not call, that discussion measures evaluating earnings be results is in the comparable today's a GAAP believes in in Please for note reconciliation can useful prepared GAAP such and available discussed, certain considered will or non-GAAP conference which financial be be company accordance Any a to as the its company's of with isolation performance.

Financial Executive Officer, Officer, and the On Dirk Stockinger; Rich Chief President and are call Chief Montgomery. today

over the turn to will Rich. I now call And

Rich Stockinger

you Raph. Thank

a on I our fourth want trajectory Before company. direction strategic to results, of we of few the quarter thoughts highlight business and the review

Taco lead return in for to areas. full We the key the number to the while potential, made good quarter key and Cabana our stabilizing positioning Pollo business nurturing a during Pollo Fiesta last is of future quarter the to mentioned fourth I achieve progress at concept the existing of business As its growth. the

at sales operate. growth, third First now consecutive continued accomplish traffic in driven store to the last five momentum the sales and foremost, were through Through traffic Pollo's and in positive tough close quarter check challenging positive increases Fourth up fourth we quarter comp and by which both week of we have months markets size. into quarter the of in XXXX. the generated

were Comp sales for the week last first through positive. quarter

growth in of black gains consecutive XXX successive accretive gain gain each success add-ons basis in LTO accelerated and comp With by data. We basis sequential traffic point market new has successful box to-date menu in is based XXXX. continue share in share in offering both share QX with that QX XXXX -- share on points a momentum to our and to line value our driven traffic four in traffic top the sales traffic quarter XXX and promotions combined This gain items. quarters, check

quarter fourth strides the building growth in XXXX. high for in of with great and made growth off-premise terms in sales capability We hopes in strong

company. new significant be work app compared The improved barriers to quarter. on than the sales including prefer capability We the enjoy and strides channels, Pollo to and customers are app and enjoy dine-in, significant pickup. at of by infrastructure new in additions, including launch strategy our Bottle Rocket, in our to quarter delivery, for eliminate the and for We design building the developed XXXX, eliminating leading the will being ezCater, all a launched online catering digital across team any development second to channel off-premise and time successfully barriers in anywhere our more through they Pollo fourth the sales catering and guests doubled made

exclusive we In Flavor Eats, to DoorDash. delivery and our also the leading other our previously first with providers with are third-party supplement such more quarter, Uber as partnership capability expanding providers

Regarding satisfaction made Taco quarter drive-thru progress in improved in that improved Cabana, we menu reducing the five of noted guest XXXX. improvement through times two-minute minutes by improve satisfaction the scores goal We significant order simplification. and against operations this to guest third quarter into A the continued to cycle we overall quarter first needed fourth orders. our for overall an which

identified are were areas. expectations progress and at in below making three quarter, the declined in have sales and fourth Taco the Although, we key issues

greater-than-expected first unintended items initiatives operations have items the and in menu our of menu improved to choices results. the was back sales. to increase we positive simplified a reduction In day-port already select seen in certain the XXXX, our and consequences quarter achieved guest on sales satisfaction While expanded goal of brought

Our and enough value promotion now February in and TC discontinued Windows. marketing our did promotion not value transactions prices. incremental offset within promotions discounted Time of each drive promotion this eight to We unique offering

introduce simplification not items for of was the did QX, window our by new LTL the part guests. our we As received final efforts, which of in negatively

in also LTOs accelerated past -- the from and new back identify into exciting that past bringing include will new items item special LTOs ideation value QX well. XXXX new proven QX to We in sold and have offers. items. All We're

from we least highly perspective. we announced a Texas believe that those XXX on and not now to stores of to efficiency impact With XXXX that good we quarter, a to with underperforming we operation progress January. that of basis going XXXX store improve compared closure have made XXX in the profit includes units points XX in fourth portfolio the margins. initiatives, closures, of During plans forward very simplification few viable at in breakeven restaurants are

in I Cabana. for over luck of we And Chuck future This longer the years. more On his Locke announced Taco update Florida. move to a family in with want and endeavors. no thank final the Taco passion spend him last with on allow Chuck will his to Chuck leadership his today, wish best two time

status XXXX. details quarter check. on discuss brand's a that consisted quarter and comparable sales comparable increase With of its Pollo our first initiatives. X.X% growth restaurant was Starting positive the QX, the X.X% which in Tropical, during and since growth increased results in X.X% average The quarter let's of specific transactions restaurant increase sales comparable fourth of our comp third restaurant of notably

gained we over significant mentioned, third from in operate. making Box gains I the we as Black fast-casual by which quarter row As share share a markets of this in Florida benchmark the measured quarter

in Time From unit and to pricing continue of standpoint, our those Pollo see we on value a strength marketing sales promotions. platform optimizing continue

platter sales momentum. increase decrease significant on no unit $X.XX $X.XX During from -- increase the our in took quarter, a to price $X.XX chicken we lunch quarter with

average last GrillMaster Steak at very year respectively. Churrasco Those their and LTO promotional both did and Trio versus $X.XX $X.XX LTO Our and also traffic drove well Platter prices check windows. during of items

to We additional encouraged sales last compared share and gains positive through that market transaction comps quarter with week are momentum and our benchmarks. into continued the our first

for restaurant restaurant-level margin margins as sales. changes and percentage review. quarter in accounting Pollo's wages food other financial Dirk and due his on in to operating trends compared the declined expenses the additional cost provide prior increase largely year color to a will of

EBITDA basis, impact margins of compared in On absent estimated XXXX. of adjusted storms, and changes restaurant to XX% Pollo severe a approximately slightly accounting XX.X% to would year have improved full

brand's Taco restaurant average X% decrease consisted transactions in Turning sales Cabana, comp in of decline restaurant check. decrease comparable during grand fell to the a and -- comparable X.X% The X.X% QX.

are we Although results the to operate. in Taco's we can the was of Texas Texas for no disappointing, performance reflect which below achieve the segment we to the of this think in market ultimately continues U.S., performance topline These Box brand. with in way underperform compared markets benchmark performance level rest Black general the but

As QX partially were that the challenges issues around noted, were focused self-inflicted.

of initiatives QX. improve and issues guest and each aimed satisfaction were simplify of service. operations reducing day-part are and operations availability We progress to making The already at the in improve to item those in critical speed

minutes drive-thru average compared order for seven the cycle quick-serve Our minutes. to five of time

During changes improving day availability, in operations that initiatives on QX, working. menu weekend eliminated -- at eliminated to time high operating improve all cut the highly guest aimed we from satisfaction speed breakfast, complexity of perspective, other were items are the service. Those all the breakfast

have improvements guest five We cycle order in minutes and the satisfaction. to reduced time drive-thru made significant

reintroducing gains menu expanding without on sales daypart of items and those customer some added choices regain expanded. items, quarter first we're we we traction achieved. the in select the satisfaction in sales already a We're we the In back sacrificing to to pickup back XXXX, seeing dayparts

QX margins Taco's higher challenged in were sales restaurant-level cost in the sales. weakness of and highly given

to only review. by storms. decreased For adjusted points changes basis accounting XX.X%, will XX of on margins his margin named and the performance absent details approximately provide in additional impact Again, of would Dirk year, financial have restaurant-level

across points and all by XXX categories. we XXXX, driven improve In expense margins by initiatives to versus basis XXXX, expect cost-saving operating XXX to food

Taco will Turning be focus plans XXXX, additional on our for margins primary year topline with growth, now at Cabana. focus our to this improving

focus identified three before I key both will highlight concept. that have I specific each plans growth We for cover of areas brands across

up going menu loyalty rapidly, for promotion our First, growing our further programs, members marketing one, Tropical and Two, Pollo grow at both are we're Taco our by; improving firm And Cabana, retail of -- beginning provided analysis three, that using pricing members a in leading XXX,XXX and XXXX. from specializes optimizing and the consulting statistical promotion significantly by Taco by for base Pollo and to currently leveraging business providing innovation. pricing. which menu XXX,XXX

ordering online brands. and and opportunities. and across This We off-premise strong made off-premise continue XXXX growth progress sales catering will our Second, achieving in delivery. for we building encompasses online to in growth future growth infrastructure accelerate both

competitors, for off-premise at significant Pollo is percentage gives us channels. Despite our sales our This and our growth XXXX and sales to in high those of have X.X% we confidence penetration a at rate, X.X% in beyond upside still compared Taco. low as

combined an with channel. in in marketing have now that infrastructure we high-growth catering, this drive place plans In incremental

fully direct close have is online being cater up to BXB product running we both very and staffed Our brands. and ordering easy salesforce now at

We this business in growth significant in XXXX. expect

first providers at in up in brands add progress ramped expect XXXX to strong our mentioned XXXX service across in growth these quarter delivery service as of brands. the both with we activity delivery we -- both And our additional I providers.

great is a competitors with that a penetration our also compared brands. for both sales is opportunity as low be business. very to X% online our believe we ordering growth in key us, to and of online This will in sales noted, incremental total percentage dine-in roughly As penetration

of the station the by rapid and brands. improve year to of growth online pickup efforts the installation course at at our expect accelerate end over stores high-volume QX, to ease-of-access we both With of

infrastructure continue invest technology and channels they improve will our all prevent in wherever they accessing customers and we remove whenever brands Third, our guest to occasions satisfaction and want in to want. that from barriers

order POS Bottle kitchen of initiatives order in process to number reduce investing a times. the times Rocket, ease-of-access and improving upgrading In addition our XXXX, improve initiatives including in systems to entry with be will we display to processing our cycle

brand-specific Now, more initiatives. I'll color growth provide on

For of been a Pollo Tropical, each to large new a promotional items strong available LTO we have that ideas testing ensure pipeline window. of for as possible are items potential number

We as and testing multiple chicken and types just few coconut a are examples. picadillo, empanadas, new chicken fried chicken steak, fried of shrimp

traffic each is check balance year items. this of premium upsell with and calendar window, bills marketing filled products, Our a promotional with drivers priced for and value,

sales, also and specific store tactics traffic are charity the food on couponing, We marketing local ads, with working drops. and restaurants development GEO-target to increase plans as

sales coming year off also up ago. in quarter, with QX catering, is Tropical a XX%, to a compared for Pollo strong

our which see parties party to platform, recurring BXB need gatherings. customers targeting we of sizes, opportunity meet potential social Still, accounts and orders with with big the any emphasis informal to are capture on platters or various therefore designed greater BXC and of by, places Pollo a customers family untapped

BXB with investments programs awareness, and including XXXX build include additional Our programs to EzCater. partnership local marketing store marketing plans catering marketing

we In units delicious XXXX, including upholds food catering in that within we flavorful invested hub are ensure for, high salespeople, restaurants. are fresh, standards our that vehicles, known operation delivery to infrastructure, offering and for

improve across and As believe steps, previously, the ordering Streamlining mobile too near-frictionless, process including is the takes the sales. current because we we for app platforms, and all experience will expressed making too program, many design it loyalty our consumers cumbersome, online complete. to

very a compared competitors. big opportunity. low digital currently penetration to Our is And this is our

delivery Uber the Eats. in front, the partnerships On we process of are launching with

this quarter delivery other DoorDash, service exposure with maximize providers Pollo And to the of Pollo our in at supplement channel. to delivery ongoing partnership

And low, potential incrementality. more, of a has as Our delivery X.X% sales. the very is the sales current in future of XX% percentage be penetration in or to with at

pickup now delivery. for locations. and rapid for To increase This efficiencies have we created Pollo has ordering pick online those feature been out well been to received, themselves rolled all up Tropical has

awareness, launching to and are traffic drive and Tropical we partnerships top-mind Across footprint, the brand entire events brand Pollo affinity.

sharing facility, In the Miami events, in the licensed fact, community multi-year and the loyalty in promotions, a we Airlines includes, just deal arena, the the American building that signed with Heat programs. traffic of

number This partnership drive store a traffic include throughout that store will activation traffic, ideas of the year.

development, unit stores, we eight XXXX, open being four of our in terms units company-owned to to in with In market. plan core two

franchised, universities, Florida commitments units with locations, for highway two and areas, airports, system units underway rest will be remaining The in Ecuador. non-traditional in international

positive and revenue to expect growth year low comparable In restaurant single-digit for at generate to the total Pollo, summary, versus we mid XXXX. sales,

expect this We off-premise promotional the improved over to pricing, implement build sales course we we and as up opportunities. XXXX, opportunities. sequentially growth And of ramp

innovation. Turning promotions, continuing part key intend to and optimize by now improving resources, new our in and product we XXXX, to to increasing focus Cabana, Taco sales value our stabilize day choices, on

believe, to strategy a proven building in of we value to areas Taco. our tactics, will In formula success, continue and be, segment LTOs that We for with to addition, is off-premise combined a and attractive plans. our check revenue those promotion growth our offering perfect add-ons growth need key, at

growth to negatively became over everyday with It to intended. impacting value platform contrast clear checkout. performed the targeted not Pollo transaction that and as the TC has of promotion Tropical, Time QX, course was driving, This us

the Time promotion and We the offerings, window value within are promotion therefore to TC, course targeted planning this over eliminated earlier each XXXX. of month offer

being a the and of or including advance new new of Moreover, our we XX launch. in that XX and items innovation tests believe in-store therefore product to needs LTO improvement have are potential been filling pipeline qualified

From Tampico evaluating creative new, as fit leverage items past, innovative are such our platform. items sausage. Kiolbassa recipes. And popular operating that the the and including We Shrimp brand

PR and also We support. are strategies our promotion creative reevaluating our marketing and firm

in and catering and -- needed Taco the to need in infrastructure XXXX Cabana's in in marketing plans we build are on sales we Finally, those in delivery off-premise significant implementing place market. a channels, trial awareness, to support heavy growth drive have including that focus

optimistic are positioning existing future our and we the at summarize, concept Pollo the achieve full nurturing of to To about its potential. The business, key momentum, Fiesta is Tropical. lead our Pollo to

we And We the believe we're opportunities XXXX. and at that Taco QX on impacted that will also off-premise growth issues have significant progress making capitalize sales. over

comp targeting over stabilize as sales in second the year, initiatives are we lap implement softer We we And XXXX of to the growth half comps. store noted.

our of proud team. am executive I Lastly, industry-leading

future I as stride, confident Tony, Fiesta, its With working this feel team Patty Hope, Dirk, Lou, and in hits Willy, bright together. of the of

With greater go let Dirk, the call me that, turn to over detail. to over our in financials

Dirk Montgomery

revenues the Thank Total and $XXX.X quarter Rich, X.X% primarily period year sales Taco decreased you, good due Cabana. restaurant everyone. the at comparable from decline prior fourth to afternoon, to is million,

competitors. the to to we and during well And catering We in it continue still sales is in than off-premise quarter, compared make year should last delivery. progress the sales Off-premise below, our be to of penetration online, doubled compared consisting mentioned, our Rich what fourth more as quarter. believe

$XX.X items million in $X.XX establishing was negative tax share $X.XX valuation including $X.X impact, impairment unusual per diluted $XX.X including through net allowance, a or share, million The several charges. loss million consolidated a per diluted

of million net closed to $X.X or fourth $XX.X And of including primarily negative per in million million XXXX. restaurant compared charges in $X.XX and a in lease $X.X diluted impairments charges other rent quarter share, impact $X.XX a loss from

of share for diluted our been compared and loss details. $X.X This quarter see of table higher, On net per earnings share reconciliation the $X.XX lease was the adjusted $X.XX $X.XX Please non-GAAP accounting absent changes. or in million would net million an XXXX. more per in or diluted the adjusted income $X.X basis, release have fourth to

to sale leaseback longer a adopting accounting we the million operations sale go gains to lease benefit Prior results The accounting standard, gain new no deferred to fourth lease With quarter. amortized expense. let significant a county we from to receive reduction which deferred rent our $XX.X us impact of to the entries the rent expense. continue of new leaseback due standard through in some that in as

deferred to Cabana, three Taco approximately we previous expense and and for not the Amortization for which gains transactions XX, we $X.X restaurants million closed period a Pollo Similar ended reserves standard. sale-leaseback would Tropical number respectively. December $X.X and have had for the from XXXX accounting recognized under of million quarter last have months current previous totaled of

This we Pollo net respectively. for income Tropical to of recorded right-of-use December reserve months million and when was ended adopted $X.X asset is adjustment and the for expense standard each $X.X as Taco three new the related million an Cabana to restaurant recognized lease period. accounting the Closed closed rent expense XXXX totaled restaurants XX, sublease and now

charge restaurants XXXX. a January income fourth closed Cabana recorded in non-cash unfavorable impact million $X.X $X.X an share impairment we million of net related Taco the XXXX quarter primarily in which per subsequently had or diluted were Lastly that of $X.XX to on

restaurant At to a in in X.X% the X.X% in turning increase of to restaurant brands. quarter inclusive traffic individual transactions X.X% Now of increase X.X% year's our sales compared comparable This comparable decrease a improvement Pollo check fourth Tropical consisted year. pricing. approximately or last in increased average and X.X%

Rich comparable earlier, transaction to Pollo basis. the Tropical in mentioned and compared continues the by market black outperformance as to As gain a evidenced sales box both share

We our new from Florida the store fourth within XX impact also quarter core point estimated cannibalization market. experienced basis during South an

positive However, our guest the overall for the it market. experience allows we the to view share in new a growing development while is total brand us enhance since

XXXX. million with filings or standard. by associated as new impact fourth to sales was There EBITDA restaurant defined quarter measure from accounting million restaurant-level $X.X million Turning our adopting million to a in in lease adjusted of $XX.X the $XX.X the or SEC negative of Pollo decreased restaurant the XX.X% $X.X brand's profitability non-GAAP for sales a XX% at

being was year full the last as of below Absent rate million $X.X of EBITDA Pollo's restaurant-level to have including estimated accounting adjusted those the full storms items lease been release year adjusted up prior and non-comparable summer in XX.X% Both year. impact press EBITDA $X.X slightly compared Maine non-comparable restaurant-level XXXX. of the to to XX.X% Pollo rate slightly margin and million. year negative in detailed items margin impact would the of

percent expense due expenses costs, workers' Pollo the higher expenses related other in quarter of sales food to accounting Tropical and due increases to fourth lease the experienced LTO of sales a rent standard of and expenses. restaurant medical operating and restaurant higher wages due As to cost in compensation new

expense other the higher and fees delivery services contracted and offset real increases third-party cleaning from by more costs included reclassification of taxes The operating of to repair estate rent. operating expenses than maintenance the impact

of our million SEC $X.X Tropical partially have and offset by to sales. were filings positive maintenance it in decreased XXXX, in adoption by Pollo defined new non-recurring. repairs were accounting lease million cleaning restaurant and $XX.X considered non-GAAP in would absent the EBITDA quarter higher accounting changes the A measures resulting comparable services the for of the impact fourth Adjusted been portion and million year-over-year higher significant from increase from These contracted costs standard. $X.X of

EBITDA last This increase sales decrease to year's restaurant compensation due a Cabana off-premise X.X% restaurant decline average a in decreased and transactions the ago in moment G&A a check. investments decrease restaurant-level lower referenced accrual addition X% to timing the and comparable In a incentive in of Taco adjusted comparable X.X% year. fourth consisted of X.X% compared expense we support. adjustments At higher also the in to experienced quarter

million a quarter XXXX. decreased XX.X% $X.X $X.X of restaurant to restaurant-level the restaurant or new adjusted was non-GAAP million and profitability accounting from by impact with standard. million sales or filings brand's in a X% our There associated adopting Turning million SEC $X.X negative sales Taco in lease measure Cabana of is fourth defined to EBITDA $X.X to

year. year rate detailed storms the prior items Maine full EBITDA release of in of negative was million. $ full impact restaurant margin Taco's standard level to last and Both of million as of summer the lease non-comparable press being below X.X the accounting adjusted including $X.X impact year year the

of XX.X% non-comparable margins items would basis XX initiatives are Taco have significantly XX.X% margin underperforming restaurant-level stores only rate Absent those XXXX. points efficiency in closing EBITDA at XXXX. to compared and adjusted expected down The improve to impact the restaurant Taco been in

increase higher commodity and new and Taco and and the sales in As costs lower of maintenance a higher due delivery operating sales incurred due considered higher standard maintenance the other activity and Cabana addition and are in non-recurring. of costs impact significant advertising fees restaurant fourth in negative the to promotional quarter rent comparable cost sales. expense A of of portion expenses to higher increased repairs discounting to year-over-year percent including restaurant costs repairs accounting the

defined Adjusted lease million we changes of is $X.X Taco EBITDA and million quarter have fourth accounting the to by standard. XXXX measure higher absent of $X.X resulting $X.X in our to new the non-GAAP in filings SEC decreased been accounting negative Cabana from million adoption but

accrual addition, also we higher to investments timing of the experienced due in compensation In adjustments and expenses G&A incentive off-premise support.

the related recorded year. During to also of charges closed Taco beginning were at Cabana the $X.X the of underperforming XX impairment the primarily restaurants we quarter that million

of at has to price suspended, or Directors. repay factors investment Turning being excess on items. of total repurchased million now share timing a during the a quarter. repurchases levels at Board look X.X shares terminated we be debt that common current fourth we'll the That in note approximately any good In limit. the also repurchased repurchased stock the may is of see additional shares any time no of that shares also share by Under modified, It also repurchase repurchases depend we cash XXXX. will the to few a superseded and current time our program number continue we and X.X Please number million financial flow. said, program of to

million, low XXXX was in at original may you recall end were the guidance. our of expenditures capital which Total $XX.X

$XX.X have line of on year-end. new million borrowing our of restaurant restaurant credit consisted million as $X.X and for million $XX.X for $X.X of corporate company-owned available development, perspective, and than maintenance, we expenditures more liquidity technology at Our for remodeling. capacity From million $XX.X for adequate million a

loan revolver balance is ratio by defined our adjusted in sheet. EBITDA balance agreement maintain we and divided intend our our simple defined conservative times Our as to X.X as leverage

XX-week note briefly to sales now to Turning driven our XXXX recap the of fiscal in our week reporting last our goals with the XXrd for a financial XXXX the period this year. that being I'll is in following, that plans. include Please period return strong XXXX, expect comparable and the sales Pollo growth off-premise we over year, Tropical with positive to in by in part sales comps up restaurant delivery online. we of in as growth course the catering ramp off-premise sequential

We year are and categories. stabilize key on trends the Taco Food sales for commodity sales likely to are achieve course sequential the projected commitments to year, costs working have we to place the remain versus at over prior year be Cabana improvement first across stable expect the comp already during supply are of to the of XXXX in although current negative. based half

basis year closures two core respect prior With to XXX Pollo units initiatives. store in company-owned compared to at efficiency we Taco, simplification and points Pollo by our eight expect being XXXX with recent restaurant-level geographies. margins margins, XXX by to improved in stores plan maintain four open at and to margins adjusted We to the operations EBITDA to driven in

of openings are As franchise the Rich mentioned, units. remainder the

expect million. expiration. expected are of XXXX we year to can used one operating should purchases one closures and is year currently trade plans, in to for locations challenging challenging due below unit the are We new flow trade XXXX this expenditures in currently in we cash remainder is finally, repayment. to or location achieve open debt lease the $XX expected generate that has share We two to the be at at which areas. to in closure or And opportunities in approximately are for Cabana the first level growth additional excess to planning after area one be a quarter. our Taco CapEx, capital exit that if

of a the which In are we XXXX the course over expect momentum closing, to year. improvement, year build results of be of

sustainable, Taco higher sales Pollo topline Cabana demonstrating margins. We the expect and stabilized with year much Tropical to with momentum finish restaurant

Operator? listening for you to open we Thank and now call questions. up will the


from Instructions] [Operator Piper Our Joshua is question with Please first proceed. Sandler. Long

Joshua Long

trends And how for outlined or that dig of then, the positive net in the sounds timing like to full you stabilization Great. improvement build there guidance. context wanted further of debt do provide we that's positive trends to course It the both think if in that at here being as mentioned from Taco there. into Could think about to quarter? the suggest to stabilize. taking year questions. and in if then at to we you sequentially the I accelerated half color are see ability Does the in Pollo we least brands quarter-to-date be the Thank of the you negative about return comps given able of the with the initiatives year? terms quarter? that over might the some in And Cabana and first of some that have the faded more terms and year second opportunity you where of of an the ended you've the that

Rich Stockinger

question. the for Thanks yes. Sure,

over are So fourth quarter-to-date quarter. with Pollo we sequentially Tropical, are they and improved positive the -- trends

the we're on improvement other number of over things service a color year. over and give is due quarter-to-quarter on that reason that of delivery we're the The over providers will momentum on additional of to just the expecting the delivery sequential to the year doing course the the year. side the Just their the now improvement fact course launching that build

higher in the half the we in certainly year half year. of first the expect of the back So, comps

Cabana, trend are seeing On the Taco stabilized. we

We the are better. still trend But down. is

quarter. continue We see also the to they customer in satisfaction were than scores better fourth

ongoing also had still we down, they're but is, seeing we're for hoped what stabilization So, of is even what satisfaction. though customer improvement sales, an in

Joshua Long

be then out first the the and called half Great. and expect appreciate last one Taco -- to helpful negative. on that exiting one for that, of more The there Thanks into there XXXX an half we Cabana And piece. still back that run stabilization year? Any kind for Does that. is would still and opportunity color the be I on the rate helpful. that the of XXXX? anticipate Is of in an positive trends color

Dirk Montgomery

it's predict the the difficult have mean, the year trending our But pace I the flat of us the traffic in Taco towards and absolute in the for year half year. to half for basically to of back for the back improvement. Sure. of goals stable

So the in position the -- comps second us head of from channels off-premise growth be be toward XXXX with if that XXXX. point year the we that certainly you half into in to a flat-to-positive the combine as should in categories for

Joshua Long

little currently or comment is study or if any opportunity, such you to the would could has maybe a to for on great. mix have as users think still Thank is bit decisions? brand, pricing to an influence as be you about Because be the we general but low? this that as proven as inherent off-premise trying then help third-party kind pretty how the the being both the I'm that to And also Great. lend you're it user around game? a anything brands there timelines that. being off-premise contextualize said high-level both current be of why opportunity it challenge? brands just as And of differently off-premise And think there any of thinking the like XXXX well, either themselves pricing the about we working of to driver with just why that a just would about and Should to able seems late sort we should

Rich Stockinger

Rich. Yes Josh, it's

the over software where et of people lot work remember to foundation several had a like the delivery. And and off-premise issue on you Punchh to we more the we do if last cetera. in think and and a system issue headed of when Olo that's years, I bring a

floor. from infrastructure building mentioned we year. which than took the ground we us last anticipated It So the we longer had were

concepts shortly with we'll delivering Rocket we're agree developing of we're then in I to running. the at the up in live, app Pollo quarter and you. the So with and and late quarter Bottle Again, be game. Both the second themselves extremely to thereafter the have the midst these Taco's online expect of lend end new be successful ordering. in and we next up and

them, a from just week an perspective, had with within signed to be and not – and excited we're we're other late with. this the what game just to we just providers able that We're the we're So on the really four days. pretty what started infrastructure again, more past results see now from excited just Uber we've Eats was in get three, just but that we'll

Dirk Montgomery

speak really And Tropical you we're Pollo we at Pollo works just price that had years. Yeah. to Tropical a recall then on basically increase The a may significant haven't in whose two initial that, the on work pricing focused doing.

date to comfort higher the certainly pricing. of the we which some than one us tick is found our so we we've that done gives have actually that findings value And are of were of to customers that, that, ago encouraging some the now couple from years perceptions work a room they

then and conservative our at store a pricing to of It's planning price that second to refine a level of based That are be quarter. take We work store-by-store. in going increases prices. the continuing on targeted at level a should also promotion very absolute kind kick-in to combination

in that approach traffic. much this from an process very said, roll conservative where don't to And small is changes some tested in and overall an a had in be perspective, where make we quarter, then we chicken that the successfully small change changes, offer test Time Pollo As the first additional that promotion we going in we're quarter quarter. the the Rich fourth platform diminish made so

and be that On in want until traffic the on quarter trends that we doing considered research be the started us the work going very extremely the that opportunities going to to will given second back Obviously, some Taco. work won't we're we're careful Taco side, doing year. of we the to we're anticipate of be half any that the but be making going where is to same be but do price conservative when those point moves, in take brand to we at the

Joshua Long

you. Thank Great.

Rich Stockinger

Joshua. you, Thank


next is James. Brian with from Raymond Our proceed. Vaccaro question Please

Brian Vaccaro

gaining and at breaking that can the maybe that? of some product new right? obviously through underlying little evening. resumption the dynamics off-premise the But value Thanks at that that incremental you there. Tropical and and behind quantify in encouraging of or seems to It's share a brand. delivery intros traction it and good any is And certainly growth hear helping is better Is Pollo the gains

Rich Stockinger

$X.XX our surprise special we was food, special. a items more Brian, from it's And with eyes basically special were menu different to do saw Pollo it's continued a that to That Time but Rich. We were up on we – It's effect had and up and significantly of opened fourth quarter out impact we actually up. slightly, at that well. to surprised trading that see they to barbell willing it $X.XX. the has our again that pleasantly a stayed people the – put and people was December the the trade it

going We We we successful how do. time, not chance but but – at the So a $X.XX chain. were the $X.XX surprised. that there. weren't throughout a in exactly we well to same sure been little At offering lunch has entire was core something only special, you're took took

Brian Vaccaro

more right. you you with in sticking can the helpful. provide regionally on Pollo And then core of and in color some saw Florida markets non-core quarter? fourth South All what That's the the the some comps, just

Rich Stockinger

a that’s question. Brian, Yeah. great

We core. core. are market – Orlando of other higher, was stronger in terms in We're in outside also especially be outside strong than stronger improvements continue the XXXX core by throughout share but not in the being all of of which market. inside of the And actually has led only company led core higher to comps markets

be improvement led there's outside to core strong, Orlando. higher core share continue but seen we've by is So significantly of market

Dirk Montgomery

in share we operate market that every in. And did gains single market see we

Brian Vaccaro

Can than completed seem the on in – comps that to that since assuming know that you be provide the more think of I XXX think All bips shifting XXX right. you're you I to margin store said, targeting a and Taco. great. XXXX of improvement by achieved That's half closures is little gears that XXXX I And then in XXXX. into efficiencies in baked confirm earlier to the year. you're at details And can Taco. you've outlook significant you you second negative They in fairly that's right? more then

more quantification we've and So detail just maybe baked the of of in? some efficiencies some

Dirk Montgomery

Sure. Yeah.

points correct, efficiency that's through basis costs, of XXX so well, on improvement quarter good very three XXX and points is services, to food maintenance. assumed And those the the really The closures. in store initiatives on XXX basis the closures rest directionally and into programs. the categories: have implementing fourth quarter repairs operation And had -- the in we success first both over

suppliers. being like a It's see against before being a quality food-related way all of pack ways in have sizes. compromise activities that does advantage tested not out without things think to cost that we contracts renegotiating changes set and don't consumers quality, of of compromising the we efficiency surprises any with our combination those initiatives including roll I'm that But take sure changing the competitive done out. is are we to against it the finding product we make including

repairs very in maintenance renegotiating combination more best now tortilla contracts for are efficiencies of and just the also practices repairs which and employing efficient is and a are customized. the that on example the An maintenance The side. services of and being maintenance operational in in-sourced we've that machines,

on have already general of do implemented of In things inside itself techs to and in -- place. it's been that that and also XX% to other that. at team can in a working a level the initiatives addition dedicated total know over lends the machines so And efficiency-improvement are and really out

improvement guided. really those about -- to feel the with capability level that we we good So, achieve our that of margin

Brian Vaccaro

what at infrastructure your And in business G&A? the current place do taken quite current is -- G&A studies or you've guess for Or you a in efficiencies willing store to you at there run you state? some you reasonable be can embedded XXXX guidance like feel And a dive would sounds like level? think the It might the right. its the necessary I Do about you've in drive initiatives that's to All talk be opportunities? level there. to share any bit this

Dirk Montgomery


answer second place the of is over to feel need the into at that that years. growth infrastructure the couple in So, the what part first, drive XXXX we next to the business put end we we of

for evaluating efficiency in evaluating our plans the started year terms infrastructure we're are across in are our what that of much the XXXX. made In getting we line opportunities on on assumed of three the we G&A investments that, just the really that efficiencies hold our XXXX tail-end pretty at We've and locations. opportunities

driving sales staff things that but force, There there impact So, in -- of like bit a no we significant late from wasn't not XXXX is that a added increases of catering full little wraparound G&A. in year myself, kind also to G&A the are any focus of really line. really drive staff. that is level only increases resources on in make line on and nature that corporate hold been top investments line our to top going But

Brian Vaccaro

it I’ll pass right. you. thank All and

Dirk Montgomery

Thanks Brian.


of conference to end would I the session. our the like reached management to have for turn We back closing over question-and-answer remarks.

Raphael Gross

I been by concepts as the everybody. Thank as want as Pollo, most thank night. has Pollo is far both well for Again, Good future led I year. tough just you to to thank for teams. importantly want the everyone. a Taco. But This we're as concerned bright


today's Thank This conclude does conference. you.

lines this your at and disconnect You may time, for participation. thank you your