Why Pollo Tropical is recording strong growth

By

Updated

Pollo Tropical

Fiesta Restaurant Group’s total revenue growth for the second quarter comes from growth from its two brands, Pollo Tropical and Taco Cabana. In 2Q14, Pollo Tropical restaurant sales increased 16.7% to $75.3 million compared to the corresponding period last year. The increase was primarily due to a comparable restaurant sales increase of 6.7% along with a net increase of 16 company-owned restaurants.

Pollo tropical growth

The growth in comparable restaurant sales resulted from a 5.6% increase in comparable restaurant guest traffic along with a 1.1% increase in average check. Menu price increases drove average check, which increased restaurant sales by 1.6%.

Article continues below advertisement

For the 19th consecutive quarter, the brand has delivered positive comparable restaurant sales growth. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for Pollo Tropical, a non-GAAP financial measure, increased 12.1% to $13.4 million compared to the corresponding period last year.

Pollo Tropical’s initiatives to fuel sales growth

Pollo Tropical has adopted many initiatives to fuel sales growth with media efficiencies reaching across markets that it operates. The company has also developed an elevated restaurant format outside of South Florida, which has produced a compelling consumer proposition.

The three strategic pillars in the menu of Fiesta restaurants are customization, portability, and healthy options. With its new prototype in Texas, the company has enhanced its brand impact and appeal, and it continues to promote value proposition.

Lastly, Fiesta has adopted an off-premise access to its brand through drive-throughs, points of distribution, catering, online ordering, and a smart phone app for curbside delivery. This enhances the customer base and provides flexible options to appeal to consumers.

Fiesta’s industry peers include Chipotle Mexican Grill, Inc. (CMG), Jack in the Box Inc. (JACK), Yum! Brands, Inc. (YUM), and McDonald’s Corporation (MCD). Investors can access the restaurant industry via exchange-traded funds (or ETFs) like the PowerShares Dynamic Leisure and Entertainment (PEJ) and the PowerShares Dynamic Food & Beverage (PBJ).

Advertisement

More From Market Realist