Fiesta to sell Taco Cabana to franchisee Jack in the Box for $ 85 million
Fiesta Restaurant Group announced Thursday that it was selling the 148-unit Taco Cabana business to franchise company Yadav Enterprises for $ 85 million.
Yadav Enterprises operates nearly 400 locations in northern California, Texas, and 16 other states. The company is the largest Jack in the Box franchisee and one of the largest Denny’s and TGI Friday’s operators. Yadav is also a significant investor in TGI Friday’s ownership group and serves as a franchisee for El Pollo Loco and Corner Bakery Cafe.
“Anil Yadav, CEO of Yadav Enterprises, has an impressive entrepreneurial background and is a highly respected restaurant operator who has a proven track record in a variety of limited and comprehensive service concepts,” said Fiesta CEO Richard Stockinger. “We are confident that he will be an effective steward of the Taco Cabana brand over the long term.”
Taco’s same-store sales fell 17.1% in the first quarter compared to 2019. The chain reported sales of $ 56.5 million, compared to $ 60.6 million in the last quarter. period of the previous year. Taco Cabana’s adjusted EBITDA was $ 700,000 in the first quarter, compared to negative $ 900,000 last year. In the first quarter, the drive-thru channel mixed 77%, while online sales accounted for 2% of sales and delivery, 7%. Of the 148 Taco stores, 142 are owned by the company in Texas and six are franchised in New Mexico.
The proceeds from the sale will be used to fully repay Fiesta’s outstanding term loans of approximately $ 74.6 million and to pay $ 4.6 million for transaction fees and a loan prepayment premium. The cash purchase price of $ 85 million is subject to a reduction for certain working capital and other closing adjustments, estimated to be between $ 7 million and $ 9 million. The transaction is expected to close in the third quarter.
Stockinger said Fiesta made the strategic decision to sell Taco Cabana to allow its management team to focus on accelerating the growth of its other brand, Pollo Tropical. Chainsaw sales fell 3.3 percent in the first quarter. In the first quarter, drive-thru represented 60% of sales, while online sales represented 3% and delivery 10% of sales.
Pollo reported first quarter revenue of $ 88.2 million, up from $ 86.1 million in 2020. The brand had Adjusted EBITDA of $ 12.2 million in the first quarter, up from $ 8. $ 8 million last year. As of April 4, there were 167 Pollo Tropical stores – 138 company-operated and 29 franchisees. A year ago, the chain had 174 points of sale.
“We believe that the sale of Taco Cabana will bring great value to our shareholders, allowing us to create a more effective, efficient and focused organization, applying the appropriate resources to accelerate the delivery of the exciting growth potential that we have in our brand. Pollo Tropical, ”Stockinger said. . “This will include our continued efforts to improve the customer experience across all service channels, continue to invest in the expansion of our growing digital platform and finalize our new targeted unit expansion plans for 2022. “
The news comes just a day after Yum! Brands and the 7-Eleven franchisee Ampex Brands have acquired the Au Bon Pain de Panera bakery-café concept. The deal includes around $ 60 million in assets, according to the the Wall Street newspaper. The operator takes over the 171 stores of Au Bon Pain and acquires the franchise rights on 131 additional stores.