EX-99.1 2 exhibit991q22021pressrelea.htm PRESS RELEASE Document

Exhibit 99.1

FOR IMMEDIATE RELEASE
Investor Relations Contact:
Raphael Gross
203-682-8253
investors@frgi.com



Fiesta Restaurant Group, Inc. Reports Second Quarter 2021 Results
Taco Cabana Divestiture Expected to Close During Third Quarter of 2021
Sequential Improvement in Pollo Tropical Second Quarter 2021 Comparable Restaurant Sales from First Quarter 2021
Income from Continuing Operations was $2.7 Million for the Second Quarter of 2021 Compared to a Loss in the Prior Year


DALLAS, Texas – (Business Wire) – August 12, 2021 - Fiesta Restaurant Group, Inc. ("Fiesta" or the "Company") (NASDAQ: FRGI), parent company of the Pollo Tropical® and Taco Cabana® restaurant brands, today reported results for the 13-week second quarter, which ended on July 4, 2021, and provided a business update related to current operations.
On July 1, 2021 the Company announced the entry into an agreement to sell the Taco Cabana business to an affiliate of Yadav Enterprises, Inc. Additional details regarding the transaction are referenced in the Company's Form 8-K filed on July 7, 2021. The divestiture transaction is expected to close in the third quarter of 2021, subject to the satisfactory completion of customary closing conditions.
Fiesta President and Chief Executive Officer Richard Stockinger said, "We were pleased with Pollo Tropical's performance in the second quarter, characterized by comparable restaurant sales improving to near 2019 levels and strong margins, despite hourly staffing challenges over the quarter. We believe that workforce availability challenges had an increasingly negative impact on sales through the quarter. We took a number of steps to improve recruiting and retention of our hourly workforce, which resulted in improved staffing levels in July compared to the second quarter of 2021."
Stockinger added, "We delivered strong margin performance in the second quarter, which resulted in second quarter 2021 income from continuing operations of $2.7 million and income from continuing operations before income taxes of $1.8 million, compared to a loss for both measures in the second quarter of 2020. Continuing Operations Adjusted EBITDA, a non-GAAP measure(1), was $9.1 million or 10.0% of total revenues compared to $2.6 million and 4.2% of revenue in the second quarter of 2020. Pollo Tropical increased restaurant-level Adjusted EBITDA margin, a non-GAAP measure(1), from 16.3% in the second quarter of 2020 to 20.4% in the second quarter of 2021. In addition, our total cash balance continued to grow, reaching $69.9 million at the end of the second quarter."
Stockinger continued, "We made strong progress on Pollo Tropical's strategic growth initiatives during the second quarter, including our ongoing brand positioning research that will inform our digital, brand expansion and existing unit remodel efforts. The design phase of our digital drive thru customer experience is advancing, and we intend to begin the pilot of this greatly enhanced drive thru platform in select units later this year. We are also testing key restaurant design elements and operating platform improvements in remodels during the balance of 2021, and initial consumer feedback on our first remodel completed in the second quarter has been very positive."
Stockinger concluded, "We expect that the Taco Cabana divestiture will allow us to create a more effective, efficient and focused organization, applying appropriate resources to accelerate the exciting growth potential we believe we have in our Pollo Tropical brand. This will include our ongoing efforts to drive an upgraded customer experience across all service channels, continuing to invest in expanding our growing digital platform and finalizing our new unit expansion plans targeted for 2022."



_____________________________
(1)See non-GAAP reconciliation table below.

1


Second Quarter 2021 Financial Summary

•Total revenues from continuing operations increased 43.7% to $91.2 million in the second quarter of 2021 from $63.4 million in the second quarter of 2020;
•Comparable restaurant sales at Pollo Tropical increased 43.5%. Compared to the same fiscal period in 2019, comparable restaurant sales for Pollo Tropical decreased 1.8%;
•Comparable restaurant sales at Taco Cabana increased 15.6%. Compared to the same fiscal period in 2019, comparable restaurant sales for Taco Cabana decreased 6.7%;
•A net loss of $(0.1) million, or $0.00 per diluted share, in the second quarter of 2021, compared to a net loss of $(8.3) million, or $(0.33) per diluted share, in the second quarter of 2020;
•Net income from continuing operations of $2.7 million, or $0.11 per diluted share, in the second quarter of 2021, compared to a net loss of $(6.6) million, or $(0.26) per diluted share, in the second quarter of 2020;
•Adjusted net income (a non-GAAP financial measure) of $3.4 million, or $0.13 per diluted share, in the second quarter of 2021, compared to adjusted net loss of $(3.1) million, or $(0.12) per diluted share, in the second quarter of 2020 (see non-GAAP reconciliation table below);
•Continuing Operations Consolidated Adjusted EBITDA (a non-GAAP financial measure) of $9.1 million in the second quarter of 2021 compared to $2.6 million in the second quarter of 2020 (see non-GAAP reconciliation table below);
•Adjusted EBITDA for Pollo Tropical of $11.9 million in the second quarter of 2021 compared to $5.0 million in the second quarter of 2020;
•Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) for Pollo Tropical of $18.5 million, or 20.4% of Pollo Tropical restaurant sales, in the second quarter of 2021 compared to $10.3 million, or 16.3% of Pollo Tropical restaurant sales, in the second quarter of 2020 (see non-GAAP reconciliation table below);
•Adjusted EBITDA for Taco Cabana of $3.0 million in the second quarter of 2021 compared to $2.7 million in the second quarter of 2020;
•Restaurant-level Adjusted EBITDA (a non-GAAP financial measure) for Taco Cabana of $8.4 million, or 12.8% of Taco Cabana restaurant sales, in the second quarter of 2021 compared to $7.3 million, or 12.6% of Taco Cabana restaurant sales, in the second quarter of 2020 (see non-GAAP reconciliation table below); and




2

 Second Quarter 2021 Comparable Restaurant Sales

First
Quarter 2021		Fiscal
April		Fiscal
May		Fiscal
June		Second
Quarter 2021
Pollo Tropical
2021 vs. 20204.3%94.4%36.9%18.2%43.5%
2021 vs. 2019-3.3%-1.3%-1.4%-2.9%-1.8%
Taco Cabana
2021 vs. 2020-4.3%26.5%9.2%14.0%15.6%
2021 vs. 2019-17.1%-6.9%-6.7%-6.5%-6.7%

•As a result of the 53rd week in fiscal 2020, our 2021 fiscal year began one week later than our 2020 fiscal year. Changes in comparable restaurant sales are impacted by the shift in weeks as the thirteen weeks ended July 4, 2021 are not directly comparable on a calendar basis to the thirteen weeks ended June 28, 2020.
•For Pollo Tropical comparable restaurant sales comparisons in 2021 vs. 2019, the Fourth of July holiday timing had an impact on fiscal June. After adjusting for the holiday timing difference, June 2021 comparable restaurant sales vs. 2019 would have been 40 to 50 basis points higher.

Cash and Liquidity

•At the end of the second quarter of 2021, we had $65.8 million in cash, $3.8 million in restricted cash and $72.4 million in outstanding debt, which includes $71.5 million of term loan borrowings under our new senior credit facility and $0.9 million in finance lease obligations. In addition, we had $0.3 million in cash and $0.8 million in finance lease obligations within discontinued operations. Our outstanding term loan borrowings under our senior credit facility are net of unamortized debt issuance costs and original issue discount totaling $3.2 million.
•Our cash balance grew from the first quarter balance of $58.8 million at April 4, 2021 to a second quarter balance of $65.8 million at July 4, 2021. Net debt, a non-GAAP financial measure(2), decreased from $13.5 million at the end of the first quarter on April 4, 2021 to $6.6 million at the end of the second quarter on July 4, 2021.
•Proceeds from the sale of Taco Cabana will be used to fully repay our outstanding term loan borrowings under our senior credit facility, and to pay a loan prepayment premium of 3.0% of the principal repaid ($2.2 million).

Second Quarter 2021 Brand Results

Total Pollo Tropical restaurant sales increased 43.4% to $90.8 million in the second quarter of 2021 compared to $63.3 million in the second quarter of 2020 primarily due to a comparable restaurant sales increase of 43.5%. Pollo Tropical dine-in and counter take-out comparable restaurant sales increased 117% from the second quarter of 2020 to the second quarter of 2021 due primarily to the negative impact of the pandemic on dine-in traffic and closures of our dining rooms during a portion of the second quarter of 2020. The increase in dine in channel sales was supplemented by off-premise channel growth. Second quarter 2021 drive-thru comparable restaurant sales increased 18% compared to the second quarter of 2020, while second quarter 2021 delivery comparable restaurant sales nearly doubled compared to the second quarter of 2020. The increase in comparable restaurant sales resulted from a net impact of product/channel mix and pricing of 14.3% and an increase in comparable restaurant transactions of 29.2%. The increase in product/channel mix and pricing was driven primarily by increases in delivery and drive-thru average check and sales channel penetration, and menu price increases of 4.0%. Beginning in April, Pollo Tropical began to experience increased hourly staffing challenges due to workforce availability which we believe had an increasingly negative impact on sales through the remainder of the quarter, driven in part by reduced operating hours.









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(2)We define net debt as long-term debt, including current portion of long-term debt, as reported in our (continuing operations) balance sheet less unrestricted cash as reported in our (continuing operations) balance sheet, which were $72.4 million and $65.8 million, respectively, as of July 4, 2021 and $72.4 million and $58.8 million, respectively, as of April 4, 2021. Net debt is a non-GAAP measures which we believe assist investors in understanding of our management of our overall liquidity and financial flexibility.
3

Comparable Restaurant Sales Mix by Channel - Pollo Tropical
Channel
Second Quarter 2021(1)
% of TotalSecond Quarter
2020		% of TotalSecond Quarter
2019		% of Total
($ in thousands)
Counter(2)
$24,389 27 %$11,262 18 %$44,038 49 %
Drive-thru52,245 58 %44,165 70 %42,970 47 %
Delivery9,012 10 %4,954 8 %1,666 2 %
Online3,100 4 %1,722 3 %1,293 1 %
Catering1,062 1 %477 1 %653 1 %
Total$89,808 100 %$62,580 100 %$90,620 100 %
(1) Second quarter 2021 comparable restaurant sales based on the comparable second quarter 2020 restaurants.
(2) Counter sales include dine-in and counter take-out sales.

Adjusted EBITDA for Pollo Tropical increased to $11.9 million in the second quarter of 2021 from $5.0 million in the second quarter of 2020, an increase of 139.3%. The increase was primarily due to the impact of higher restaurant sales, and improved cost of sales margins, partially offset by higher advertising expenses and repair and maintenance costs. Restaurant-level Adjusted EBITDA for Pollo Tropical as a percentage of restaurant sales continues to be strong, with second quarter Restaurant-level Adjusted EBITDA as a percentage of restaurant sales of 20.4% in 2021 compared to 16.3% in 2020 and 23.1% in 2019. Continuing Operations Adjusted EBITDA increased to $9.1 million compared to $2.6 million in 2020.

Comparable Restaurant Average Weekly Sales - Pollo Tropical
PeriodAprilMayJune
2021$52,594$50,908$49,351
2020$27,055$37,177$41,744
2019$53,303$51,646$50,827

Pollo Tropical average weekly sales trends from April/May to June/July have historically declined due to reductions in visitors to Florida during summer months and the negative traffic impact of school closures.

Taco Cabana restaurant sales increased 13.5% to $66.1 million in the second quarter of 2021 from $58.3 million in the second quarter of 2020 due primarily to a comparable restaurant sales increase of 15.6%. Taco Cabana comparable restaurant sales increased across all sales channels from the second quarter of 2020 to the second quarter of 2021 due to the negative impact of the pandemic on dine-in traffic and closures of our dining rooms during a portion of the second quarter of 2020. The increase in comparable restaurant sales resulted from an increase in comparable restaurant transactions of 13.0% and an increase in the net impact of product/channel mix and pricing of 2.6%. The increase in product/channel mix and pricing was driven primarily by menu price increases of 4.3%.


4

Comparable Restaurant Sales Mix by Channel - Taco Cabana
Channel
Second Quarter 2021(1)
% of TotalSecond Quarter
2020		% of TotalSecond Quarter
2019		% of Total
($ in thousands)
Counter(2)
$11,595 18 %$6,339 11 %$29,410 42 %
Drive-thru46,977 71 %45,982 81 %37,979 54 %
Delivery4,525 7 %2,727 5 %981 1 %
Online1,698 3 %1,624 3 %1,232 2 %
Catering951 1 %207 — %350 1 %
Total$65,746 100 %$56,879 100 %$69,952 100 %
(1) Second quarter 2021 comparable restaurant sales based on the comparable second quarter 2020 restaurants.
(2) Counter sales include dine-in and counter take-out sales.

Adjusted EBITDA for Taco Cabana increased to $3.0 million in the second quarter of 2021 from $2.7 million in the second quarter of 2020. The increase was primarily due to higher restaurant sales, partially offset by higher repair and maintenance costs including winter storm costs such as repairs and landscaping debris removal costs, increased advertising and higher delivery fee expense. Second quarter Adjusted EBITDA for Taco Cabana as a percentage of total revenues was 4.6% in 2020 and in 2021, and Restaurant-level Adjusted EBITDA for Taco Cabana as a percentage of restaurant sales increased from 12.6% in 2020 to 12.8% in 2021. Second quarter Adjusted EBITDA as a percentage of total revenues decreased compared to 5.3% in 2019 and Restaurant-level Adjusted EBITDA for Taco Cabana as a percentage of restaurant sales increased compared to 12.1% in 2019.

Restaurant Portfolio

As of July 4, 2021, there were 138 Company-owned Pollo Tropical restaurants, 142 Company-owned Taco Cabana restaurants, 29 franchised Pollo Tropical restaurants in the U.S., Puerto Rico, Panama, Guyana, Ecuador and the Bahamas, and six franchised Taco Cabana restaurants in the U.S.

Investor Conference Call Today

We will host a conference call at 4:30 p.m. ET today. The conference call can be accessed live over the phone by dialing 1-412-317-6026. A replay will be available after the call until Thursday, August 19, 2021 and can be accessed by dialing 1-412-317-6671. The passcode is 10158958. The conference call will also be webcast live and archived on the corporate website at www.frgi.com, under the Investor Relations section. A replay of the webcast will be available through the corporate website shortly after the call has concluded.


5

About Fiesta Restaurant Group, Inc.

Fiesta Restaurant Group, Inc., owns, operates and franchises the Pollo Tropical® and Taco Cabana® restaurant brands. The brands specialize in the operation of fast casual/quick service restaurants that offer distinct and unique flavors with broad appeal at a compelling value. The brands feature fresh-made cooking, drive-thru service and catering. For more information about Fiesta Restaurant Group, Inc., visit the corporate website at www.frgi.com.

Forward Looking Statements

Certain statements contained in this news release and in our public disclosures, whether written, oral or otherwise made, relating to future events or future performance, including any discussion, express or implied regarding the anticipated closing of the Taco Cabana divestiture transaction and its impact on our future business, our anticipated growth, plans, objectives and the impact of our initiatives, our investments in strategic and sales building initiatives, including those relating to operations improvements, digital infrastructure supporting ordering and online sales, catering and third-party delivery and drive thru improvements and the impact of the COVID-19 pandemic and our initiatives designed to respond to the COVID-19 pandemic on future sales, margins, earnings and liquidity, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are often identified by the words "may," "might," "believes," "thinks," "anticipates," "plans," "positioned," "target," "continue," "expects," "look to," "intends" and other similar expressions, whether in the negative or the affirmative, that are not statements of historical fact. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict, and you should not place undue reliance on our forward-looking statements. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those discussed from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K and our quarterly reports on Form 10-Q. All forward-looking statements and the internal projections and beliefs upon which we base our expectations included in this release are made only as of the date of this release and may change. While we may elect to update forward-looking statements at some point in the future, we expressly disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

6


FIESTA RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JULY 4, 2021 AND JUNE 28, 2020
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended (a)Six Months Ended (a)
July 4, 2021June 28, 2020July 4, 2021June 28, 2020
Revenues:
   Restaurant sales$90,764 $63,292 $178,604 $149,013 
   Franchise royalty revenues and fees391 146 766 550 
      Total revenues91,155 63,438 179,370 149,563 
Costs and expenses:
   Cost of sales27,558 20,321 54,859 48,052 
   Restaurant wages and related expenses (b)21,901 15,108 42,240 36,145 
   Restaurant rent expense5,824 5,660 11,701 11,300 
   Other restaurant operating expenses14,215 10,823 27,520 23,347 
   Advertising expense2,898 1,174 5,273 4,678 
   General and administrative expenses (b)(c)11,050 9,240 21,716 19,458 
   Depreciation and amortization4,875 5,455 9,963 10,948 
   Impairment and other lease charges (d)(202)1,932 (254)5,628 
Closed restaurant rent, net of sublease income (e)966 1,258 1,716 2,381 
   Other expense (income), net (f)170 698 293 927 
      Total operating expenses89,255 71,669 175,027 162,864 
Income (loss) from operations1,900 (8,231)4,343 (13,301)
   Interest expense61 63 122 126 
Income (loss) from continuing operations before income taxes1,839 (8,294)4,221 (13,427)
   Provision for (benefit from) income taxes (g)(841)(1,687)2,236 (3,112)
Income (loss) from continuing operations2,680 (6,607)1,985 (10,315)
Income (loss) from discontinued operations, net of tax(2,763)(1,736)(4,157)(5,345)
Net loss(83)(8,343)(2,172)(15,660)
Earnings (loss) per common share:
Continuing operations – basic$0.11 $(0.26)$0.07 $(0.41)
Discontinued operations – basic(0.11)(0.07)(0.16)(0.21)
Basic— (0.33)(0.09) (0.62)
Continuing operations – diluted0.11 (0.26)0.07 (0.41)
Discontinued operations – diluted(0.11)(0.07)(0.16)(0.21)
Diluted— (0.33)(0.09) (0.62)
Weighted average common shares outstanding:
Basic25,496,038 25,267,404 25,410,123 25,393,325 
Diluted25,496,038 25,267,404 25,410,783 25,393,325 
(a)     The Company uses a 52- or 53-week fiscal year that ends on the Sunday closest to December 31. The three- and six-month periods ended July 4, 2021 and June 28, 2020 each included 13 and 26 weeks, respectively.
(b)     Restaurant wages and related expenses include stock-based compensation of $15 and $27 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $31 and $38 for the six months ended July 4, 2021 and June 28, 2020, respectively. General and administrative expenses include stock-based compensation expense of $1,046 and $850 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $2,040 and $1,348 for the six months ended July 4, 2021 and June 28, 2020, respectively.
(c)     See note (f) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
(d)     See note (c) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
(e)     See note (d) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
(f)     See note (e) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
(g)     See notes (a) and (b) to the reconciliation of net income (loss) to adjusted net income (loss) in the tables titled "Supplemental Non-GAAP Information."
7

FIESTA RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

July 4, 2021January 3, 2021
Assets
   Cash$65,830 $49,778 
Current assets held for sale159,564 8,478 
   Other current assets19,825 25,770 
   Property and equipment, net94,773 97,867 
Operating lease right-of-use assets157,533 164,665 
   Goodwill56,307 56,307 
Non-current assets held for sale— 160,023 
   Other assets6,557 5,855 
      Total assets$560,389 $568,743 
Liabilities and Stockholders' Equity
Current portion of long-term debt$71,541 $816 
Current liabilities held for sale120,956 27,225 
   Other current liabilities39,942 36,868 
   Long-term debt, net of current portion810 71,588 
Operating lease liabilities166,793 174,116 
Deferred tax liabilities2,353 2,269 
Non-current liabilities held for sale— 98,323 
   Other non-current liabilities9,981 9,757 
      Total liabilities412,376 420,962 
Stockholders' equity148,013 147,781 
      Total liabilities and stockholders' equity$560,389 $568,743 

8

FIESTA RESTAURANT GROUP, INC.
Supplemental Information
The following table sets forth certain unaudited supplemental financial and other data for the periods indicated
(In thousands, except percentages):
(Unaudited)(Unaudited)
Three Months EndedSix Months Ended
July 4, 2021June 28, 2020July 4, 2021June 28, 2020
Segment revenues:
   Pollo Tropical$91,155 $63,438 $179,370 $149,563 
   Taco Cabana (a)66,352 58,430 122,876 119,004 
      Total revenues$157,507 $121,868 $302,246 $268,567 
Change in comparable restaurant sales (b):
   Pollo Tropical43.5 %(31.6)%21.1 %(19.5)%
   Taco Cabana15.6 %(19.2)%5.5 %(16.4)%
Average sales per Company-owned restaurant:
   Pollo Tropical
Comparable restaurants (c)$662 $461 $1,304 $1,076 
Non-comparable restaurants (d)418 369 760 857 
Total Company-owned (e)658 458 1,294 1,067 
   Taco Cabana
Comparable restaurants (c)$465 $399 $859 $809 
Non-comparable restaurants (d)347 435 767 740 
Total Company-owned (e)464 399 858 806 
Income (loss) before income taxes:
   Pollo Tropical$4,336 $(5,186)$9,271 $(7,013)
   Taco Cabana (a)(4,338)(4,900)(10,029)(13,395)
Adjusted EBITDA:
   Pollo Tropical$11,949 $4,993 $24,296 $13,773 
   Taco Cabana3,039 2,672 3,836 1,765 
Restaurant-level Adjusted EBITDA (f):
   Pollo Tropical$18,498 $10,338 $37,278 $25,772 
   Taco Cabana8,445 7,313 14,824 12,597 
(a)     Results of Taco Cabana are included in discontinued operations. Adjusted EBITDA and Restaurant-level Adjusted EBITDA include corporate allocations that were not included in discontinued operations.
(b)    Restaurants are included in comparable restaurant sales after they have been open for 18 months or longer. Restaurants are excluded from comparable restaurant sales for any fiscal month in which the restaurant was closed for more than five days. Comparable restaurant sales are compared to the same period in the prior year.
(c)     Comparable restaurants are restaurants that have been open for 18 months or longer. Average sales for comparable Company-owned restaurants are derived by dividing comparable restaurant sales for such period for the applicable segment by the average number of comparable restaurants for the applicable segment for such period.
(d)     Non-comparable restaurants are restaurants that have been open for less than 18 months, or that were temporarily closed during the period. Average sales for new Company-owned restaurants are derived by dividing new restaurant sales for such period for the applicable segment by the average number of new restaurants for the applicable segment for such period.
(e)     Average sales for total Company-owned restaurants are derived by dividing restaurant sales for such period for the applicable segment by the average number of open restaurants for the applicable segment for such period.
(f)    Restaurant-level Adjusted EBITDA is a non-GAAP financial measure. Please see the reconciliation from net income (loss) to Restaurant-level Adjusted EBITDA in the table titled "Supplemental Non-GAAP Information."
9

FIESTA RESTAURANT GROUP, INC.
Supplemental Information
The following table sets forth certain unaudited supplemental data for the periods indicated:

Three Months EndedSix Months Ended
July 4, 2021June 28, 2020July 4, 2021June 28, 2020
Company-owned restaurant openings:
   Pollo Tropical— — — — 
   Taco Cabana— — — 1 
      Total new restaurant openings— — — 1 
Company-owned restaurant closings:
   Pollo Tropical— — — (1)
   Taco Cabana(1)— (1)(19)
      Net change in restaurants(1)— (1)(19)
Number of Company-owned restaurants:
   Pollo Tropical138 141 138 141 
   Taco Cabana142 146 142 146 
      Total Company-owned restaurants280 287 280 287 
Number of franchised restaurants:
    Pollo Tropical29 33 29 33 
    Taco Cabana6 7 6 7 
      Total franchised restaurants35 40 35 40 
Total number of restaurants:
   Pollo Tropical167 174 167 174 
   Taco Cabana148 153 148 153 
      Total restaurants315 327 315 327 









10

FIESTA RESTAURANT GROUP, INC.
Supplemental Information
The following table sets forth certain unaudited supplemental financial and other data for the periods indicated
(In thousands, except percentages):
Three Months Ended
July 4, 2021June 28, 2020
Pollo Tropical:(a)(a)
   Restaurant sales$90,764 $63,292 
   Cost of sales27,558 30.4 %20,321 32.1 %
   Restaurant wages and related expenses21,901 24.1 %15,108 23.9 %
   Restaurant rent expense5,824 6.4 %5,660 8.9 %
   Other restaurant operating expenses14,100 15.5 %10,714 16.9 %
   Advertising expense2,898 3.2 %1,178 1.9 %
   Depreciation and amortization4,844 5.3 %5,233 8.3 %
   Impairment and other lease charges(332)(0.4)%1,932 3.1 %
Closed restaurant rent expense, net of sublease income567 0.6 %671 1.1 %
Taco Cabana (b):
   Restaurant sales$66,132 $58,255 
   Cost of sales18,823 28.5 %17,486 30.0 %
   Restaurant wages and related expenses20,640 31.2 %18,639 32.0 %
   Restaurant rent expense5,657 8.6 %5,619 9.6 %
   Other restaurant operating expenses (c)10,574 16.0 %8,275 14.2 %
   Advertising expense (c)2,017 3.0 %965 1.7 %
   Depreciation and amortization (c)3,992 6.0 %4,332 7.4 %
   Impairment and other lease charges (c)494 0.7 %353 0.6 %
Closed restaurant rent expense, net of sublease income (c)640 1.0 %1,159 2.0 %
Six Months Ended
July 4, 2021June 28, 2020
Pollo Tropical:(a)(a)
   Restaurant sales$178,604 $149,013 
   Cost of sales54,859 30.7 %48,052 32.2 %
   Restaurant wages and related expenses42,240 23.7 %36,145 24.3 %
   Restaurant rent expense11,701 6.6 %11,300 7.6 %
   Other restaurant operating expenses27,284 15.3 %23,100 15.5 %
   Advertising expense5,273 3.0 %4,682 3.1 %
   Depreciation and amortization9,782 5.5 %10,511 7.1 %
   Impairment and other lease charges(222)(0.1)%5,628 3.8 %
Closed restaurant rent expense, net of sublease income807 0.5 %1,273 0.9 %
Taco Cabana (b):
   Restaurant sales$122,456 $118,620 
   Cost of sales34,608 28.3 %36,031 30.4 %
   Restaurant wages and related expenses38,345 31.3 %38,097 32.1 %
   Restaurant rent expense11,413 9.3 %11,318 9.5 %
Other restaurant operating expenses (c)19,686 16.1 %17,400 14.7 %
Advertising expense (c)3,630 3.0 %3,244 2.7 %
Depreciation and amortization (c)7,980 6.5 %8,484 7.2 %
   Pre-opening costs— — %69 0.1 %
Impairment and other lease charges (c)262 0.2 %890 0.8 %
Closed restaurant rent expense, net of sublease income (c)1,491 1.2 %2,189 1.8 %
(a)    Percent of restaurant sales for the applicable segment.
(b)    Results of Taco Cabana are included in discontinued operations.
(c)    Includes corporate allocations not included in discontinued operations.
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FIESTA RESTAURANT GROUP, INC.
Supplemental Non-GAAP Information
The following table sets forth certain unaudited supplemental financial data for the periods indicated
(In thousands):

Consolidated Adjusted EBITDA (including Continuing Operations Adjusted EBITDA and Discontinued Operations Adjusted EBITDA) and Restaurant-level Adjusted EBITDA are non-GAAP financial measures. Adjusted EBITDA is defined as earnings (loss) attributable to the applicable operating segments before interest expense, income taxes, depreciation and amortization, impairment and other lease charges, goodwill impairment, closed restaurant rent expense, net of sublease income, stock-based compensation expense, other expense (income), net, and certain significant items for each segment that are related to strategic changes and/or are not related to the ongoing operation of our restaurants as set forth in the reconciliation table below. Adjusted EBITDA for each of our segments includes an allocation of general and administrative expenses associated with administrative support for executive management, information systems and certain finance, legal, supply chain, human resources, construction and other administrative functions. Restaurant-level Adjusted EBITDA is defined as Adjusted EBITDA excluding franchise royalty revenues and fees, pre-opening costs and general and administrative expenses (including corporate-level general and administrative expenses). The "Other" column includes corporate costs that were allocated to Taco Cabana and are not included in discontinued operations.

Adjusted EBITDA for each of our segments is the primary measure of segment profit or loss used by our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance. In addition, management believes that Consolidated Adjusted EBITDA and Restaurant-level Adjusted EBITDA, when viewed with our results of operations calculated in accordance with GAAP and our reconciliation of net income (loss) to Consolidated Adjusted EBITDA and Restaurant-level Adjusted EBITDA (i) provide useful information about our operating performance and period-over-period changes, (ii) provide additional information that is useful for evaluating the operating performance of our business, and (iii) permit investors to gain an understanding of the factors and trends affecting our ongoing earnings, from which capital investments are made and debt is serviced. However, such measures are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income or cash flow from operating activities as indicators of operating performance or liquidity. Also, these measures may not be comparable to similarly titled captions of other companies.

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Three Months EndedPollo TropicalOtherContinuing OperationsTaco CabanaOtherDiscontinued Operations
July 4, 2021:
Net loss$(83)$(2,763)
Loss from discontinued operations, net of tax2,763 — 
Provision for (benefit from) income taxes(841)922 
Income (loss) before taxes$4,336 $(2,497)$1,839 $(4,338)$2,497 $(1,841)
Add:
     Non-general and administrative adjustments:
          Depreciation and amortization4,844 31 4,875 3,992 (31)3,961 
          Impairment and other lease charges(332)130 (202)494 (130)364 
          Interest expense994 (933)61 973 933 1,906 
         Closed restaurant rent expense, net of sublease income567 399 966 640 (399)241 
          Loss on extinguishment of debt— — — — — — 
          Other expense (income), net130 40 170 76 (40)36 
          Stock-based compensation expense15 — 15 24 — 24 
Total non-general and administrative adjustments6,218 (333)5,885 6,199 333 6,532 
     General and administrative adjustments:
          Stock-based compensation expense641 405 1,046 561 (405)156 
          Restructuring costs and retention bonuses18 — 18 14 — 14 
          Digital and brand repositioning costs335 — 335 275 — 275 
Transaction costs401 (401)— 328 401 729 
               Total general and administrative adjustments1,395 4 1,399 1,178 (4)1,174 
Adjusted EBITDA(1)
$11,949 $(2,826)$9,123 $3,039 $2,826 $5,865 
Adjusted EBITDA as a percentage of total revenues13.1 %10.0 %4.6 %8.8 %
Restaurant-level adjustments:
          Add: Other general and administrative expense(a)
6,940 2,711 9,651 5,626 (2,711)2,915 
Less: Franchise royalty revenue and fees391 — 391 220 — 220 
Restaurant-level Adjusted EBITDA(1)
$18,498 $(115)$18,383 $8,445 $115 $8,560 
Restaurant-level Adjusted EBITDA as a percentage of restaurant sales20.4 %20.3 %12.8 %12.9 %
Three Months Ended:Pollo TropicalOtherContinuing OperationsTaco CabanaOtherDiscontinued Operations
June 28, 2020:
Net loss$(8,343)$(1,736)
Loss from discontinued operations, net of tax1,736 — 
Benefit from income taxes(1,687)(56)
Income (loss) before taxes$(5,186)$(3,108)$(8,294)$(4,900)$3,108 $(1,792)
Add:
     Non-general and administrative adjustments:
          Depreciation and amortization5,233 222 5,455 4,332 (222)4,110 
          Impairment and other lease charges1,932 — 1,932 353 — 353 
          Interest expense625 (562)63 612 562 1,174 
          Closed restaurant rent expense, net of sublease income671 587 1,258 1,159 (587)572 
          Other expense (income), net644 54 698 140 (54)86 
          Stock-based compensation expense27 — 27 42 — 42 
Total non-general and administrative adjustments9,132 301 9,433 6,638 (301)6,337 
     General and administrative adjustments:
          Stock-based compensation expense523 327 850 436 (327)109 
          Restructuring costs and retention bonuses452 133 585 439 (133)306 
          Digital and brand repositioning costs72 — 72 59 — 59 
Total general and administrative adjustments1,047 460 1,507 934 (460)474 
Adjusted EBITDA(1)
$4,993 $(2,347)$2,646 $2,672 $2,347 $5,019 
Adjusted EBITDA as a percentage of total revenues7.9 %4.2 %4.6 %8.6 %
Restaurant-level adjustments:
          Add: Other general and administrative expense(a)
5,491 2,242 7,733 4,816 (2,242)2,574 
Less: Franchise royalty revenue and fees146 — 146 175 — 175 
Restaurant-level Adjusted EBITDA(1)
$10,338 $(105)$10,233 $7,313 $105 $7,418 
Restaurant-level Adjusted EBITDA as a percentage of restaurant sales16.3 %16.2 %12.6 %12.7 %
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Six Months EndedPollo TropicalOtherContinuing OperationsTaco CabanaOtherDiscontinued Operations
July 4, 2021:
Net loss$(2,172)$(4,157)
Loss from discontinued operations, net of tax4,157 — 
Provision for (benefit from) income taxes2,236 (822)
Income (loss) before taxes$9,271 $(5,050)$4,221 $(10,029)$5,050 $(4,979)
Add:
     Non-general and administrative adjustments:
          Depreciation and amortization9,782 181 9,963 7,980 (181)7,799 
          Impairment and other lease charges(222)(32)(254)262 32 294 
          Interest expense1,964 (1,842)122 2,026 1,842 3,868 
          Closed restaurant rent expense, net of sublease income807 909 1,716 1,491 (909)582 
          Other expense (income), net196 97 293 (28)(97)(125)
          Stock-based compensation expense31 — 31 50 — 50 
Total non-general and administrative adjustments12,558 (687)11,871 11,781 687 12,468 
     General and administrative adjustments:
          Stock-based compensation expense1,242 798 2,040 1,081 (798)283 
          Restructuring costs and retention bonuses18 — 18 14 — 14 
          Digital and brand repositioning costs651 — 651 534 — 534 
          Transaction costs556 (556)— 455 556 1,011 
Total general and administrative adjustments2,467 242 2,709 2,084 (242)1,842 
Adjusted EBITDA(a)
$24,296 $(5,495)$18,801 $3,836 $5,495 $9,331 
Adjusted EBITDA as a percentage of total revenues(a)
13.5 %10.5 %3.1 %7.6 %
Restaurant-level adjustments:
          Add: Other general and administrative expense(b)
13,748 5,259 19,007 11,408 (5,259)6,149 
Less: Franchise royalty revenue and fees766 — 766 420 — 420 
Restaurant-level Adjusted EBITDA(a)
$37,278 $(236)$37,042 $14,824 $236 $15,060 
Restaurant-level Adjusted EBITDA as a percentage of restaurant sales(a)
20.9 %20.7 %12.1 %12.3 %
Six Months EndedPollo TropicalOtherContinuing OperationsTaco CabanaOtherDiscontinued Operations
June 28, 2020:
Net loss$(15,660)$(5,345)
Loss from discontinued operations, net of tax5,345 — 
Benefit from income taxes(3,112)(1,636)
Income (loss) before taxes$(7,013)$(6,414)$(13,427)$(13,395)$6,414 $(6,981)
Add:
     Non-general and administrative adjustments:
          Depreciation and amortization10,511 437 10,948 8,484 (437)8,047 
          Impairment and other lease charges5,628 — 5,628 890 — 890 
          Interest expense1,108 (982)126 1,090 982 2,072 
          Closed restaurant rent expense, net of sublease income1,273 1,108 2,381 2,189 (1,108)1,081 
          Other expense (income), net751 176 927 941 (176)765 
          Stock-based compensation expense in restaurant wages38 — 38 67 — 67 
                Total non-general and administrative adjustments19,309 739 20,048 13,661 (739)12,922 
     General and administrative adjustments:
          Stock-based compensation expense833 515 1,348 902 (515)387 
Restructuring and costs and retention bonuses452 133 585 439 (133)306 
          Digital and brand repositioning costs192 — 192 158 — 158 
               Total general and administrative adjustments1,477 648 2,125 1,499 (648)851 
Adjusted EBITDA$13,773 $(5,027)$8,746 $1,765 $5,027 $6,792 
Adjusted EBITDA as a percentage of total revenues9.2 %5.8 %1.5 %5.7 %
Restaurant-level adjustments:
          Add: Pre-opening costs— — — 69 — 69 
          Add: Other general and administrative expense(b)
12,549 4,784 17,333 11,147 (4,784)6,363 
          Less: Franchise royalty revenue and fees550 — 550 384 — 384 
Restaurant-level Adjusted EBITDA$25,772 $(243)$25,529 $12,597 $243 $12,840 
Restaurant-level Adjusted EBITDA as a percentage of restaurant sales17.3 %17.1 %10.6 %10.8 %
(a)    We estimate that Winter Storm Uri negatively impacted Taco Cabana and Consolidated Adjusted EBITDA and Taco Cabana and Consolidated Restaurant-level Adjusted EBITDA by approximately $3.1 million in the six months ended July 4, 2021. We estimate that Winter Storm Uri negatively impacted Taco Cabana
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Adjusted EBITDA as a percentage of total revenues and Taco Cabana Restaurant-level Adjusted EBITDA as a percentage of restaurant sales by approximately 2.4% and 2.2%, respectively.
(b)     Excludes general and administrative adjustments above.

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FIESTA RESTAURANT GROUP, INC.
Supplemental Non-GAAP Information
The following table sets forth certain unaudited supplemental financial data for the periods indicated
(In thousands of dollars, except per share amounts):

Adjusted net income and related adjusted diluted earnings per share are non-GAAP financial measures. Adjusted net income is defined as net income (loss) before discontinued operations, impairment and other lease charges, goodwill impairment, closed restaurant rent expense, net of sublease income, other expense (income), net, board and shareholder matter costs, restructuring costs and retention bonuses, certain legal settlements and related costs and other significant items that are related to strategic changes and/or are not related to the ongoing operation of our restaurants. Management believes that adjusted net income and related adjusted earnings per diluted share, when viewed with our results of operations calculated in accordance with GAAP (i) provide useful information about our operating performance and period-over-period growth, (ii) provide additional information that is useful for evaluating the operating performance of our business, and (iii) permit investors to gain an understanding of the factors and trends affecting our ongoing earnings, from which capital investments are made and debt is serviced. However, such measures are not measures of financial performance or liquidity under GAAP and, accordingly should not be considered as alternatives to net income or net income per share as indicators of operating performance or liquidity. Also, these measures may not be comparable to similarly titled captions of other companies.

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(Unaudited)
Three Months Ended
July 4, 2021June 28, 2020
Income (Loss) Before Income TaxesBenefit From Income Taxes (a)Net Income (Loss)Diluted EPSLoss Before Income TaxesBenefit From Income Taxes (a)Net Income (Loss)Diluted EPS
Reported - GAAP Net Income$(83)$— $(8,343)$(0.33)
Loss from discontinued operations, net of tax2,763 0.11 1,736 0.07 
Income (loss) from continuing operations$1,839 $(841)$2,680 $0.11 $(8,294)$(1,687)$(6,607)$(0.26)
Adjustments:
    Non-general and administrative expense adjustments:
          Income tax due to tax law change (a)— — — — — 662 (662)(0.03)
          Deferred tax asset valuation allowance (b)— 255 (255)(0.01)— (734)734 0.03 
          Impairment and other lease charges (c)(202)(50)(152)(0.01)1,932 482 1,450 0.06 
Closed restaurant rent expense, net of sublease income (d)966 241 725 0.03 1,258 314 944 0.04 
          Other expense (income), net (e)170 42 128 0.01 698 174 524 0.02 
               Total non-general and administrative expense934 488 446 0.02 3,888 898 2,990 0.12 
     General and administrative expense adjustments:
         Restructuring costs and retention bonuses (f)18 4 14 — 585 146 439 0.02 
         Digital and brand repositioning costs (g)335 84 251 0.01 72 18 54 — 
               Total general and administrative expense353 88 265 0.01 657 164 493 0.02 
               Adjusted - Non-GAAP$3,126 $(265)$3,391 $0.13 $(3,749)$(625)$(3,124)$(0.12)
(Unaudited)
Six Months Ended
July 4, 2021June 28, 2020
Income (Loss) Before Income TaxesProvision For Income Taxes (a)Net Income (Loss)Diluted EPSLoss Before Income TaxesBenefit From Income Taxes (a)Net LossDiluted EPS
Reported - GAAP Net Income$(2,172)$(0.09)$(15,660)$(0.62)
Loss (income) from discontinued operations, net of tax4,157 0.16 5,345 0.21 
Income (loss) from continuing operations$4,221 $2,236 $1,985 $0.07 $(13,427)$(3,112)$(10,315)$(0.41)
Adjustments:
    Non-general and administrative expense adjustments:
          Income tax due to tax law change (a)— (563)563 0.02 — 2,234 (2,234)(0.09)
          Deferred tax asset valuation allowance (b)— (376)376 0.01 — (2,032)2,032 0.08 
          Impairment and other lease charges (c)(254)(63)(191)(0.01)5,628 1,404 4,224 0.17 
Closed restaurant rent expense, net of sublease income (d)1,716 428 1,288 0.05 2,381 594 1,787 0.07 
           Other expense (income), net (e)293 73 220 0.01 927 231 696 0.03 
               Total non-general and administrative expense1,755 (501)2,256 0.09 8,936 2,431 6,505 0.26 
     General and administrative expense adjustments:
         Restructuring costs and retention bonuses (f)18 4 14 — 585 146 439 0.02 
         Digital and brand repositioning costs (g)651 162 489 0.02 192 48 144 0.01 
               Total general and administrative expense669 166 503 0.02 777 194 583 0.02 
               Adjusted - Non-GAAP$6,645 $1,901 $4,744 $0.19 $(3,714)$(487)$(3,227)$(0.13)

a)    The provision for (benefit from) income taxes related to the adjustments was calculated using the Company's combined federal statutory and estimated state rate of 25.0% for the periods ending July 4, 2021 and June 28, 2020. In the three months ended April 4, 2021, we recorded an out-of-period adjustment totaling $1.5 million related to tax depreciation on certain assets placed into service several years prior to the formation of Fiesta in 2011, of which $0.6 million is attributable to a change in tax rates as a result of the Tax Cuts and Jobs Act of 2017. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act includes provisions that allow net operating losses in 2018, 2019, and 2020 to be carried back for up to five years and eliminates the 80% taxable income limitation on net operating loss deductions for 2018 through 2020. The CARES Act also includes
17

technical amendments that are retroactive to 2018 which permit certain assets to be classified as qualified improvement property and expensed immediately. These changes allowed us to record an incremental benefit of $1.8 million in the three months ended March 29, 2020, which represents the impact of carrying net operating losses from 2018 and 2019 back to years with a higher federal corporate income tax rate.
(b)    We recorded adjustments totaling $(0.3) million and $0.4 million for the three and six months ended July 4, 2021, respectively, to our valuation allowance against deferred income tax assets primarily related to changes in our deferred income tax assets and the expected timing of the reversal of these temporary differences, which included a $0.9 million increase in our valuation allowance as a result of changes in our net deferred tax liabilities related to the out-of-period adjustment in the first quarter of 2021. We recorded an additional $0.7 million and $2.0 million valuation allowance for the three and six months ended June 28, 2020, respectively, against deferred income tax assets where it was determined to be more likely than not that the deferred income tax assets will not be realized through the reversal of existing deferred tax liabilities.
(c)     Impairment and other lease charges for the three and six months ended July 4, 2021, primarily relate to gains from lease terminations.
Impairment and other lease charges for the three and six months ended June 28, 2020, consist of impairment charges of $1.1 million and $4.8 million, respectively, and other lease charges of $0.9 million. The impairment charges primarily relate to the write-down of assets held for sale to their fair value less costs to sell for the three and six months ended June 28, 2020 and assets for three underperforming Pollo Tropical restaurants, two of which we closed in the third quarter of 2020, for the six months ended June 28, 2020. The other lease charges primarily relate to lease termination charges of $0.9 million for restaurant locations we decided not to develop.
(d)     Closed restaurant rent expense, net of sublease income for the three and six months ended July 4, 2021, primarily consists of closed restaurant lease costs of $2.3 million and $4.6 million, respectively, partially offset by sublease income of $(1.3) million and $(2.9) million, respectively. Closed restaurant rent expense, net of sublease income for the three and six months ended June 28, 2020, primarily consists of closed restaurant lease costs of $2.3 million and $4.6 million, respectively, partially offset by sublease income of $(1.1) million and $(2.2) million, respectively.
(e)     Other expense (income), net for the three and six months ended July 4, 2021, primarily consists of costs for the removal, transfer, and storage of equipment from closed restaurants and other closed restaurant related costs. Other expense, net for the three and six months ended June 28, 2020, primarily consists of the write-off of site development costs of $0.6 million and costs for the removal, transfer, and storage of equipment from closed restaurants and other closure related costs.
(f)     Restructuring costs and retention bonuses for the three and six months ended June 28, 2020 include severance costs related to terminations in response to the COVID-19 pandemic.
(g)     Digital and brand repositioning costs for the three and six months ended July 4, 2021 and June 28, 2020, include consulting costs related to repositioning the digital experience for our customers.

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