FRGI - Earnings call transcript Q2 2022 | Fiesta Restaurant Group, Inc.

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Fiesta Restaurant Group's Second Quarter 2022 Earnings Call.

As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. now Partner turn at would to conference I Gross, Raphael ICR. Instructions] like the to over [Operator Please go ahead.

Raphael Gross

closed Thank you, was market release quarter XXXX operator. Fiesta Restaurant issued Group's after second earnings today. the

accessed it, you the website under www.frgi.com, not If Investor section. it Company's Relations have the be found can on already

is useful be in substitute in could of or call, SEC which materially Any note its cause evaluating financial information should available the the GAAP. Company And budget, forward-looking future the differ Company's during as the inform actual forecasted limitation, And I'd such projected costs filings. These future not to the Important will with the based strategy, statements accordance and Company's in Company's historical differ release. that comparable be plans, information. call, results statements statements not will be or performance. measures the for measures and be results we begin, statements. be such to can considered objectives believes non-GAAP GAAP forward-looking in or business in Company of prove you to various are isolation prepared Before can operations. management the Company can conference today's by earnings factors statements statements that without outcomes include, forward-looking regarding materially, like that implied to for and in such discussion that found results operations, position expressed expressed give certain during Please Actual unless will no make those financial correct. a discussed, from results as may that reconciliation on forward-looking and assurance of a

And VP over me turn today Montgomery. Strategic Executive President Financial of I'd Officer Rich. the Initiatives, Senior and Officer, like Rich to call Officer, the Chief Lopez-Calleja, Dirk Patty call Stockinger; now Chief to Chief Experience and On and with are

Rich Stockinger

covering then provide Senior half XXXX. Lopez-Calleja, all thank the a Strategic status update call Vice other overview open strategic initiatives first during with of will questions. call with priorities, Dirk also a our Patty plans Chief you, thoughts before more wrap our their Again, on financial like the for Thank our on President up Experience second of topics the to today of quarter participants be of us the strategic and the business color the I'd for on results, update of Raef. we and Officer three I'll today: investors our second Initiatives, support. able our session. for and have and to are here Q&A continued we

takeaways quarter. a the First, second few from

at very We growth accelerate throughout to minus recent trends above sales importantly, results X%, by we actions traffic traffic challenged while June first now encouraged in of direct traffic are and the check. margins XXXX promotions, the the improving with raising in anticipated Like quarter. levels, or in value-oriented sequential realizing July continued aimed staffing trends. second positive year-over-year comp innovation offering as This quarter menu achieved result last Most most the quarter, traffic third points on shared with the XX%. industry, a store of improved select recovery second was over quarter have into of with from inflation news product sales quarter focused quarter, XXX headwinds the basis our our new which first markets at and our acceleration

plan will of color September. our third accelerating X%, prudent by the the margins improve our Providing measurably in X% We driven be improved and trends. menu accelerating to innovation, trends to quarter, traffic of sales our effective which value-focused expect from on pricing staffing, in our promotions, taken execution

XXXX, of restaurant comparable XXXX X%. quarter from first improved showing the X.X% second comps quarter Second growth sales quarter of were versus

have operating XXXX challenging above despite due levels generated four for staffing at to consecutive comparable lowering quarters, or results hours We now issues. sales restaurant

the The quarter the improvement their Our comparable and units. compared and Throughout sales improvement quarter quarter restaurant sales traffic restaurant markets in of with of remodeling and for of first activity in staffing XXXX basis further remodeling comps, aggregate, to impact saw also approximately we points to caused Palm disruption basis XXX QX. in second second markets points negative restaurant improving have above to in a basis for generated in sales the XXX compared operating disruption, acceleration quarter, Miami-Dade of XX been adjusting After hours to Orlando XXXX comparable levels. the points accelerated would July higher. double-digit number Beach, the comp

quick compared compared are positive those Orlando innovation, improved recap down More the Palm of during to are going our to even a to only to which trends trends sales strategies, promotion July Miami-Dade pricing points challenging traffic importantly, compared XXXX, with be markets. basis more now effective XXXX encouraging and to quarter, XXX to very and in this West X% recent recent provide proving period. trends first markets. traffic X.X% in economic comp I'm

family pricing applying As maintain our barbell high-value, meals proposition. to a taken action our approach, of we affordable items Pollo we increases like price Time value ensure by have have minimized and we

Churrasco menu items thus impact platform unit us tiered approach allowed mitigating with has restaurants create to specific in We've Personica, Trio. our targeted worked with coupled including GrillMaster a and traffic. have taking Steak consultant pricing a with and by pricing the check higher-priced, promotions price the through items for of building to on innovation highly-appealing proteins pricing pricing closely value very menu strategy analytics and menu and We which lower sensitivity,

new evidenced an research Our quality following: are perceptions a by value the consumers in leading as strong revenue gains positive strong purchasing guests and measured proving firm. to consumer Pollo's effective, strategies optimization by very external as among pattern net are very

fast on prior net growth year guests with brand three in casual the gain a and As increased XXXX, customers over gain of regular both March This benchmarks Pollo realized traffic with in based trends quarter among traffic the positive share the trends in guest casual Florida Value highest to above users. net visits provided the gaining in brand Pollo Pollo NavTrac fast line QSR Pollo data quick second service perceptions second significantly for in were for June. is Qualtrics. years. Pollo quarter, XX% traffic new local NPS continues by with be

quarter, revenue line coordinated in momentum pricing, but back we we and We sales to July to our are brand efforts balance it's were win only the our traffic, To further consumers. that activity, also by and helping summarize, relevance increasing is that second as of shared a and compared quarter clearly seeing innovation, top accelerated last our menu acceleration result promotional analytics-based encouraged build to our performance, not our second quarter. actions with

the recovery measurably momentum quarter. positive results by to improve margin margins headwinds as plans these of Our even the have will as build we third we continue increased. deliver And actions end believe

continue each And XXXX. four level as for agenda we for We made EBITDA will discussed areas progress of growth as leverage in labor. provide We to of sales in we continue part target those to optimize second additional restaurant to Dirk strategic quarter Pollo, XX% of on details focusing growth second again, previously areas our the comments. our margins of and strong opportunity. capturing quarter prepared results at his the XX% regarding

in channels experience activity First, non-dining channels concentrate consumers enjoy we on all our across the our dine-in enable to to growth and accelerating continue and whenever improving access guest brands choose. wherever including customers and and to better they

drive-through ordering of curbside our guests use, experience, customization, enabled counter for ease to Kiosk Hand for digital by our and in make platform the digital continue payment and of including enhance our service in of improvements we geo-fencing drive-thru well Next, enhanced technology system. guests, and for introduction as digital technology, off-premise and new as an speed QR pickup

developing brand area The third is unit and contemporary our and proposition with expansion. structure. efficient increased investments focus focus against on refined field execute as restaurant placing continue through focus guiding our major more intense and assertively field and on unit new design, we investments to lastly, our relevant, teams refurbishments management as Tropical a And in are of well our Pollo a talent

growth across comparable drive of with all quarter the quarter Regarding versus of XXXX. in XX.X% to second channels, year-over-year second channel XXXX delivery we growth the the drive our sales of growth in reference restaurant continue to

levels, addition, staffing and dine-in sales growth we second In counter quarter takeout XXXX. and restaurant comparable as with takeout sales improve dine-in showing of versus strong are in XX.X% growth the XXXX counter of

rollout technology. ongoing August front, great platform the On will drive-thru Five by to be digital in year-end. end of we completed of with the by digital units XX and our enhancing strides X the this made units

results sales the to at X% targeting growth for rate following units X% those drive-through thru digital each run drive We above within installation. a to date revenue expectations. unit's And are on first year digital are or open basis in

XXXX, adequate comparable code to online encouraging maintain to platform short plan this sales, In in Results current growth lines customers come our competitive to addition, orders second in and capability have transactions this now very underpin support service and early results check commenced strong opportunity. feature X% digital in with rooms bypass online showing behind allow belief XX.X% programs significant versus QR initial a in for past based the drive online upside busier to enhancements. from channel the quarter above even restaurant curbside and to like second and in sales continue to that our check in staff results dine-in to to dining curbside the growth of in technology company digital average. we locations on allow Marketing restaurants. the and average, Company staffing. more And recently just average. quarter order sales investments greater for and the marketing benchmarks, access were growth than and are Growth above delivery were Kiosk there's Curbside Hand has

improved greater and progress priority good output, our our third very the refurbishment that kitchen on made labor and designs also multiple efficiency. include new for times Refining driving increased We quarter. lowering unit second delivering ideas wait productivity, during

before is productivity continuing traffic, remodels generated market. to to after XX a Most date expectations. refresh lift our the ideas. refreshes approximately sales unit to and controlled to of from Pollo XX sales units when focus our sales the a to local positive to Our the each comparing to refreshes refine year exceed X% levels, to other complete trend refresh in initial scope group each early achieved positive refurbishments continues importantly, unit The lift kitchen to this completed units' of execute have and grow of and varying while X%

for with In per targeted remodels and levels. the been investment unit has refreshes average in addition, line

sales in The per opening, process from includes remodel and we sales The market in to make unit, can closing has this week. more line in additional additional recently of and this to an productivity and pre-remodel on grown model tested will comparison both retrofit peak labor results The -- are improve digital incorporated meaningful of be further of both of remodel unlock in kitchen on engineering orders. second kitchen and approximately enhance pre-remodel the this Based focus scheduling we the existing drive the with kitchen high for year, times, and used transactions results, enhancements growth per peak improved of to are to a the TPA initiative. its match drive-thru accurately for thru early firm that sales units we week expect trends units. with half first schedules a scheduling accommodate Early trends these $XX,XXX and our routines. was based and efficiency completed at improve $XXX,XXX from productivity to recent very kitchen encouraging, To post-remodel online double-digit high-volume to trends. demand that prep line average and and with identifying positive productivity with improvement sales are weekly above and model refresh on the productivity a working ideas unmet delivery improvement

pace, remodel with year. second of for our and and track quarter have the completed through remodels refresh goals our we on five the XXXX, Regarding XX refreshes

majority refreshes refreshes. or are For of lower with we investment to the XXXX, additional of remodels the these the X projects being targeting XX remainder

strategic deliver talent target development to increased improve fourth priority retention, customer our and Finally, and is investment satisfaction. in our to execution restaurant ability, improved field team increase

profits. foremost our we previously, then team have we guests operating and noted by leadership and and people, to process, members, first As reprioritized focus followed on operations

system We for rollout the of development members our comprehensive restaurant resources our management XXXX. and end and and enhanced are training by on track of complete team the field human talent to leadership XXX% of leadership,

success fourth operations result these to and platform we momentum, people on and our enhanced performance. for In progress have managers and the accelerating to of lowest for are investments that balance of each our communication. Based addition, initiative our the the on from training of and made measurable on focuses to development increased on ongoing in set have direct emphasis expanding manager recent leadership the investments the which number expect XXXX. this skills talent satisfaction we the our execution, quarter. down we open in sales the of we program, track financial the Due initiatives assistant significantly training the turnover the as second include on with are increasing and we can all goals growth improved clearly all quarter, General launched talent, all see management, with redefined in see guest is with quarter role levels improving talent strategic field team initiatives. in achieve at we positions retention, We years. levels To combined recap, general to four which of and Manager that of are leads prior seen to a in we that year In we development

In overall and improving business efficiency initiatives, focus on top also priority. the our a strategic of remains addition to our productivity

implementing G&A to XXXX, and year half targeted We a restaurant momentum second which expense this continue by we reduction G&A be in a taking and all store to highly reduction far across summary, levels rate driving sustainable In are encouraged focused sales of intensely sales of margins. in the said strong as basis. in plans, on in reduction run should we a to channels, at result X.X% are measurable continued in range X% on to of ultimate I expense traffic growth thus actions the while start, very also our improve targeted

across field our to platform, kitchen unmet refresh continuing to capacity across service improved management and and execute of most capabilities productivity. enhancements to channels, profit our unlocking will provide our develop by restaurant all remodel business of digital to teams, now through a update. Finally importantly, proposition growth through through financial experience we drive to designs, and and brand and continue demand Dirk continue further revenue upgrades implementation our customer our

Dirk Montgomery

by pleased quarter the Thank continued completed very XXXX. results restaurant sales on reviewing accelerated Rich, quarter an you, improvement good higher versus quarter comp X.X% afternoon, see our and with outlook sales XXXX. over the remainder growth second financial quarter second with and July the early of news start We gained sales sales and XX% and to Overall, second trends, or everyone. in we comparable in update the trend encouraging our you provide which our I'll excited clearly were momentum with most our then in quarter we're The comp results with on as in strong for of August. for our improve the is of we further second to July. June acceleration traffic and

we quarter, weeks, point select our in shared items menu traffic trends value-oriented improvement focus trends. with seen compared are and improving first recent positive year-over-year staffing, offering now last to promotions, over momentum. a the line traffic commented, action realizing we quarter, The three last top the including Rich have building on and basis working ongoing innovation markets As XXX

increase. quarter second sales the in the to from total XXXX restaurant in X% $XX.X Regarding comparable million of second the of quarter $XX.X by driven performance, million increased revenues XXXX, sales

of compared the restaurant quarter of X.X%. mix and to comparable and XX.X% pricing, improvement increase decrease Second in a and in a channel from impact product net XXXX resulted transactions

such Protein of as mix items menu The Trio offerings, higher addition impact continued building, well including the slices. items avocado Packages, add-on driven check Family of success Churrasco GrillMaster by the as positive and Bundle as ticket second was quarter XXXX the

$X.X net The second operations. quarter share consolidated $X.X from XXXX per $X.XX and loss diluted approximately includes was million or discontinued of income million

quarter The negative $XX,XXX diluted $X.XX in diluted share, the second of share. including $X.XX of operations per $X.X loss operations. This impact from share was XXXX from million continuing quarter an net $X.XX per consolidated XXXX discontinued second loss or per to compares diluted of or

quarter of second XXXX in see total was XXXX. and million operations XXXX $X.X or continuing XXXX. income release the reconciliation million Consolidated of the per non-GAAP Please $X.XX net diluted was $X.X loss million continuing adjusted XXXX in per revenue of adjusted to $X.XX adjusted second compared million in share to $X.XX or compared net non-GAAP share. in share earnings or diluted On EBITDA, our X.X% operations more a net details. and from was million an measure, per quarter $X.X quarter $X.X consolidated of total income table XX% revenue basis, Second from $X.X for diluted financial

insurance, to Turning margins labor, by and in XXXX. partially XXXX cost the during of higher EBITDA and financial within non-GAAP XXXX, results. compared measure, to compared restaurant commodity second Restaurant-level sales due offset to quarter EBITDA maintenance, margin, primarily in to costs, and a repair was in restaurant utilities, XX.X% higher adjusted level the mix the quarter. Restaurant-level XX.X% sales of impact declined sales,

building also pressures, August. levels those and In levels to in in increased during labor addition results that [Audio to those we staffing improve hours investments inflation staffing improve Gap] July quarter. second But [Audio were early only momentum to the invested to sales versus partially the contributed in Gap] proactively expanded realized

adversely impacted chicken by related caused supplier. supply July early use supplier points to and restaurant EBITDA capacity. quarter disruption full back is restaurant the primarily EBITDA a margins our Gap] May supply a required XXX to expenses, [Audio The Second damage from disruption of adjusted backup short-term level to level non-recurring primary plant which by basis to supplier adjusted operating

sales due phased our offset of costs, to higher of cost XX.X% sales XXXX as compared commodity partially to in the categories, trends by increases. XXXX to Regarding in menu of expense a price restaurant quarter increased XX.X% second second quarter in key percentage

staffing expenses fees, impact fees, General As higher million utility as higher were digital million XX.X% administrative in $X.X commodity quarter $XX.X and costs, expenses XX.X% primarily as sales. of $X.X efficiency platform percentage $XX.X fee XXXX, noted, pay to driven and XXXX platform million labor $X.X for and delivery quarter additional General to partially delivery and a quarter by to overtime million of second higher costs non-recurring more initiative a of training of to and expenses and expenses quarter costs in second digital for drive due included second $X.X enabling second of and second costs. higher to costs. the support higher due restaurant costs. the the increased and backup million quarter million the for offset Restaurant the as sales. increased primarily us supplier. will of General approximately million XXXX expect million a $X.X in of $X.X repair administrative from administrative result professional Other XXXX insurance in maintenance costs XXXX second expenses chicken by to other sales higher of In included increased higher in the restaurant higher for and growth. general costs, the all administrative were comprised professional employee to we rates, in costs, XXXX primarily to of the non-recurring of channel due wages XXXX, the of expenses related and quarter improved, channels costs higher to sales quarter, compared increased utilizing which of due sales restaurant impact partially the further of net second percent consistently open costs, operating levels due wage sales

grew of the of $X.X in cash our cash comments. of cash XXXX. to XXXX, million. $X.X were million second from million, now was the including quarter flow-related quarter In of first expenditures second $X.X the quarter XXXX Turning Capital restricted million and balance total $XX.X

addition, continue we $XX part of no have additional agreement sheet in in In our capacity as loan of executed balance an we as liquidity to undrawn XXXX. million debt on and the revolver source

I'll previously, finalize of outlook with close we claim continuing fully to noted XXXX. a on comments once a the for settled. insurance represents efforts which storm cash is inflow settlements potential remainder the our are few We on winter future claim that

very XXXX accelerate far We so are August. continued in momentum our encouraged into to early by sales July in that and

our labor wage of by through rates our initiatives. our we achieving which We a that continue the realize to at focused updated perspective, are are very at we based key a on confirmed objectives will are level growth recently build growth above we those are and as or wage four on full comfortable rates unit feel our current rate track, From momentum rate competitive expect market. on initiatives, current benchmarking role impact that

action take We staffing, expect traffic third the improve we in margins menu prudent pricing effective to trends X% in promotions, quarter, that improved driven our and innovation to measurably plan from by value-focused X% September. accelerating to of

and of margins As to while Rich that recover promotion effective strategies pricing with have us evidence mentioned, will are we traffic continue proving allow action multiple points minimizing our and any value to risk. additional pricing

of optimization restaurant-level financial EBITDA growth initiatives unforeseen G&A our operating barring momentum, and cost environment. labor structure changes margins, targeting a our expense adjusted gain in are non-GAAP as reduction XX%, measure, increasingly XX% We and of sales implemented, the to an being restaurant the which in to expect in range second and are will sales. result reduction in X.X% of this a reduction year of to expense G&A we in X% targeted half ultimate levels plans

year you we of we million XXXX full the very importantly, channels, momentum we increase Regarding on closing, $X and in channels. key refreshes which expect focused Most of be primarily across infrastructure. spending million highly In and for our to we in growth now $X the $XX million. for expect targeted by we also be will across -- platform to invest margins. our initiatives million questions. the open $XX XXXX, million implementation by improve and are enhance drive in digital service technology experience further driving encouraged continue capital our store call Operator? Thank restaurant sales to and far while from intensely investments is in to $X to traffic continued listening, to thus action remodels by experience to XXXX to for range million, capital taking all strong all the will of we technology range sustainable to $XX customer The growth expenditures, expenditures and largely driven continue customer

Operator

Thank you.

Edward the question-and-answer of begin now go Instructions] Please first will EF session. Reily from ahead. Our comes Hutton. [Operator We question

Edward Reily

in One previous issues. been key quarters has theme staffing

Given that you're number be open at say years, challenges to have dissipated? the safe it of would largely the recent lowest that staffing in positions

Rich Stockinger

for and I would it's -- say I'll would everybody else. I not say open Rich, up yet.

We're We are the improving. though, We but that, we as to still have But percentage work us as some especially what's some got issues do. with the still to weekends. -- and the by staffing yet. on because seen increase call-outs. increase gaining ground we've transactions hopefully need we've done turnover well we're helping got and That by that's No, sales. reducing happens retention, you've still some not

Edward Reily

in Okay. new Great. I the isn't norm. And growth then was it looks what's like really customers? wondering, advertising of spend driving the out

Rich Stockinger

-- base can the think from they're that get see down our than is during I That what spend at is new And also higher and we we're X.X% of now, we're that customer at less a a seen But a us. below customers of I COVID, of of some we bit charging which from the about research, compared was lot if where to you competitors rice and customer look for lunch what some up had base to part coming we've Time, quick back for us. quick Pollo advertising than service. that even the it's starting service, $X, The to for we're -- it's to gaining from coming casual, quarter-chicken believe beans taking sales.

the the the we're a that we've on I been positive impact social, we're much factors" right in is and our so marketing, TV, not everything doing even "recessionary having doing But it's business So done going believe through past. now we're the though the transactions. that

Edward Reily

sorry... And you. -- Got

Dirk Montgomery

our proposition going was being strategy just that in very value actually of add, promotions, is effective to with our terms we our I value-focused retaining pricing and think barbell in Eddie, customers.

sides actually causing matriculation some of quality. But that's Rich of casual quick matriculation the serve, think of got us the we underscored value retain the of value-conscious and get both So what's spectrum. from the and evidence kind We've to that, also from and because customers the from that. of

Rich Stockinger

hours advertise most We're night most back regular staffing open the important, long. all channels, because staff Eddie, all that and we the That important having important, execute now not But up have you opening through the to market before if up channels. and team all most you COVID. to is can the don't is in opening were But the trade going the to work. the it's

increase So which Palm we in significant with and sales, traffic. the where seeing County Orlando, like staffing, of including a Beach positive especially concern see staffing, is positive less we're

Operator

and conference session question-and-answer the concludes This call. today's

Thank You have may disconnect your lines. you for and participating, a pleasant day.

Raphael Gross	Managing Director, ICR
Rich Stockinger	President & Chief Executive Officer
Patty Lopez-Calleja	Senior Vice President of Strategic Initiatives
Dirk Montgomery	Chief Financial Officer
Edward Reily	EF Hutton

Fiesta Restaurant (FRGI) 12 Aug 222022 Q2 Earnings call transcript