Second quarter revenue growth is positive for Fiesta

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Nov. 26 2019, Updated 4:59 p.m. ET

Revenue growth

For 2Q14, Fiesta’s total revenues recorded an increase of 9.4% to $154.2 million from $140.9 million in the corresponding quarter last year. Restaurant sales rose to $153.5 million from $140.3, mainly led by 18 net company-owned restaurant openings. Franchise royalty revenues and fees rose to $670,000 from $604,000 in the same period.

During the quarter, seven company-owned restaurants opened, including six Pollo Tropical restaurants and the first company-owned restaurant under the elevated, non-24 hour Taco Cabana format, Cabana Grill.

Cost of sales and other expenses

Cost of sales as a percentage of restaurant sales improved 40 basis points compared to the corresponding period last year. Modest menu price increases, a favorable sales mix, and supply chain management initiatives more than offset commodity cost increases.

Restaurant wages and related expenses as a percentage of restaurant sales held steady compared to the corresponding period last year, as higher medical expenses offset the positive impact of sales increases.

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Other restaurant operating expenses as a percentage of restaurant sales increased 30 basis points compared to the corresponding period last year. Lower utility expenses partially offset the higher repair and maintenance expenses like costs from the conversion to Coca-Cola products at Pollo Tropical restaurants and higher insurance expenses.

Fiesta’s industry peers are 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).

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