Fiesta Restaurant Group, Inc.

Q1 2023 revenue was $103.4 million, up 8.1% from $95.6 million in Q1 2022. Comparable restaurant sales increased 9.7%, driven by a 1% increase in comparable transactions and a 10% menu price increase. Net loss was $1.9 million, or $0.08 per diluted share, versus a net loss of $1.4 million, or $0.05 per diluted share, a year ago. Adjusted net income from continuing operations was $0.6 million, or $0.02 per diluted share, versus adjusted net loss of $0.6 million, or $0.02 per diluted share, last year. Adjusted EBITDA was $6.5 million, or 6.3% of revenue, versus $5.3 million, or 5.5%, in Q1 2022. Restaurant-level operating profit margin was 16.7% versus 16.1% last year; cost of sales was 31.6% versus 32.3%, wages were 25.6% versus 24.8%, and G&A was $13.2 million versus $12.3 million. Cash was $33.7 million, including $3.6 million of restricted cash, down $2.1 million from year-end, and capex was $5 million. For the balance of 2023, management expects stable food and labor costs, margins to improve above Q1 levels, restaurant-level operating profit margin to reach an 18% run rate, G&A to decline versus 2022 toward 8.5% to 9% of restaurant sales, and full-year capex of $22 million to $28 million.

Dirk Montgomery framed the quarter as evidence that the company’s turnaround work is gaining traction, emphasizing four consecutive months of positive year-over-year traffic through April and stronger guest satisfaction and speed of service. He highlighted four strategic pillars: operations excellence, guest experience, brand enhancement, and team development, and said the company is narrowing its focus to a shorter list of high-impact growth opportunities. His tone was upbeat and confident, saying the team feels “extremely confident” about unlocking the brand’s potential.

Tyler Yoesting focused on the improving financial profile: revenue up 8.1% to $103.4 million, adjusted EBITDA up to $6.5 million, and restaurant-level operating margin up to 16.7%. He pointed to the 5% March price increase, stable commodity outlook, and completed hourly wage increases as reasons margin should continue improving through the year. He also noted $33.7 million of cash, no debt, $10 million of undrawn revolver capacity, expected insurance proceeds from a $1 million winter storm claim settlement, and full-year capex guidance of $22 million to $28 million.

Analysts asked about the timing of G&A reduction, and management said Q2 should see improvement with the benefits of outsourcing and office-space reductions completed in February, with further progress through the rest of the year. On capital allocation, Dirk Montgomery said capex will mainly go to refreshes, remodels, maintenance, and technology, while the board continues to review shareholder-value ideas, including the remaining share repurchase authorization and potential new unit openings in Florida in 2024 and 2025. He also addressed menu activity, saying coconut shrimp performed well as an LTO and was check-accretive, but it will be rotated out in coming weeks.