Fiesta Restaurant Group, Inc. Updates its Outlook for 2013

  Fiesta Restaurant Group, Inc. Updates its Outlook for 2013

Business Wire

ADDISON, Texas -- March 14, 2013

Fiesta Restaurant Group, Inc. (“Fiesta” or the “Company”) (NASDAQ: FRGI), the
owner, operator, and franchisor of the Pollo Tropical® and Taco Cabana®
fast-casual restaurant brands, today updated its outlook for 2013.

For 2013, Fiesta has provided the following outlook:

  *Comparable restaurant sales growth of 3% to 5% for Pollo Tropical;
  *Comparable restaurant sales growth of 3% to 4% for Taco Cabana;
  *Cost of sales as a percent of restaurant sales will be approximately even
    with the prior year, as commodity cost inflation is expected to be offset
    by pricing and operating initiatives;
  *General and administrative expenses of $46 to $48 million, including $2
    million of equity-based compensation;
  *An effective tax rate of 32% to 34%, including the impact of the
    reinstatement of the Work Opportunity Tax Credits for 2012 and 2013;
  *14 to 17 new Company-owned restaurants; and
  *Capital expenditures of approximately $45 to $50 million.

Based on recent events affecting the restaurant industry and the environment
year to date, the Company is moderating its comparable restaurant sales growth
expectations. The Company believes this will be offset primarily by an
improved outlook for cost of sales and a lower annual estimated effective tax
rate, and anticipates delivering earnings per share growth of 20% or greater
in 2013 compared to 2012 adjusted earnings per share of $0.60.^(1) Fiesta has
also established a long-term goal of earnings per share growth in excess of

Tim Taft, President and Chief Executive Officer of Fiesta, commented, “As we
get closer to the anniversary of our first full year as a public company, we
think it is important to update our outlook for 2013 and articulate a
long-term earnings per share growth target in excess of 20% for the benefit of
our shareholders. We believe this target is achievable, driven by revenue
growth related to new restaurant development, increasing comparable restaurant
sales and franchise development, complemented by a focus on improving

About Fiesta Restaurant Group, Inc.

Fiesta Restaurant Group, Inc. owns, operates, and franchises the Pollo
Tropical® and Taco Cabana® restaurant brands with 251 company-owned and
operated restaurants and 43 franchised restaurants in the U.S., Puerto Rico,
the Bahamas, Costa Rica, Ecuador, Honduras, Panama, Trinidad & Tobago, and
Venezuela as of December 30, 2012. The brands specialize in the operation of
fast-casual, ethnic restaurants that offer distinct and unique flavors with a
broad appeal at a compelling value. Both brands feature made-from-scratch
cooking, fresh salsa bars, and drive-thru service and catering. For more
information about Fiesta Restaurant Group, Inc. visit our corporate website at

Forward-Looking Statements

Except for the historical information contained in this news release, the
matters addressed are forward-looking statements. Forward-looking statements,
written, oral or otherwise made, represent Fiesta’s expectation or belief
concerning future events. Without limiting the foregoing, these statements are
often identified by the words “may,” “might,” “believes,” “thinks,”
“anticipates,” “plans,” “expects”, “intends” or similar expressions. In
addition, expressions of Fiesta’s strategies, intentions or plans, are also
forward-looking statements. Such statements reflect management’s current views
with respect to future events and are subject to risks and uncertainties, both
known and unknown. You are cautioned not to place undue reliance on these
forward-looking statements as there are important factors that could cause
actual results to differ materially from those in forward-looking statements,
many of which are beyond Fiesta’s control. Investors are referred to the full
discussion of risks and uncertainties as included in Fiesta’s filings with the
Securities and Exchange Commission.

(1) Adjusted net income and related adjusted earnings per share are non-GAAP
financial measures. Adjusted net income is defined as net income before
impairment and other lease charges and the impact of the qualification for
sale-leaseback accounting (primarily upon the spin-off from Carrols Restaurant
Group, Inc. ("Carrols")) for certain leases previously accounted for as lease
financing obligations. Management believes that adjusted net income and
related adjusted earnings per 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.

                (unaudited)                                    (unaudited)
                Three months ended                             Twelve months ended
                December30, 2012      January1, 2012         December30, 2012       January1, 2012
                $           EPS        $           EPS         $            EPS        $            EPS
Net income      $ 2,562     $ 0.11     $ (130  )   $ (0.01 )   $ 8,267      $ 0.35     $ 9,541      $ 0.41
Add (each net
of tax
and other         148         0.01       1,163       0.05        4,632        0.20       1,847        0.08
lease charges
for sale
leaseback        —          —         872        0.04       1,249       0.05      3,645       0.16
Adjusted net    $ 2,710     $ 0.12     $ 1,905     $ 0.08      $ 14,148     $ 0.60     $ 15,033     $ 0.65

    Impairment and other lease charges for the twelve months ended December
    30, 2012 are primarily related to the closure of five Pollo Tropical
(a) restaurants in New Jersey in the first quarter of 2012. Impairment and
    other lease charges for each period are presented net of taxes of $76,
    $565, $2,407 and $897 for the three and twelve months ended December 30,
    2012 and January 1, 2012, respectively.
    For certain of our sale-leaseback transactions, Carrols Corporation (a
    wholly-owned subsidiary of Carrols) has guaranteed the lease payments on
    an unsecured basis or is the primary lessee on the leases associated with
    certain of our sale-leaseback transactions. Prior to the spin-off from
    Carrols, these leases were classified as lease financing obligations
    because the guarantee from Carrols Corporation, a related party prior to
    the spin-off, constituted continuing involvement and caused the sale to
    not qualify for sale-leaseback accounting. Upon completion of the spin-off
(b) from Carrols, such leases qualified for sale-leaseback accounting
    treatment due to the cure or elimination of the provisions that previously
    precluded sale-leaseback accounting (and the treatment of such leases as
    operating leases), primarily the guarantees of Carrols Corporation. As a
    result of the qualification for sale-leaseback accounting treatment during
    the second quarter of 2012 due to the spin-off from Carrols, we removed
    the associated lease financing obligations, property and equipment, and
    deferred financing costs from our balance sheet, and recognized deferred
    gains on sale-leaseback transactions, which is amortized as a component of
    rent expense.

Additionally in the second quarter of 2012, we exercised purchase options
associated with the leases for five restaurant properties also previously
accounted for as lease financing obligations and purchased those properties
from the lessor. Subsequently, four of the five properties were sold prior to
December30, 2012, and qualified for sale leaseback treatment at the time of
sale. The above table does not consider the impact of the qualification of
sale-leaseback accounting for these four properties on the Company’s rent and
depreciation expense for all periods presented above.

As a result of the qualification of these leases and purchase of the five
properties, restaurant rent expense was $1.6 million and $4.4 million higher,
depreciation expense was $0.5 million and $1.4 million lower and interest
expense was $2.7 million and $7.1 million lower in the three and twelve months
ended December30, 2012, respectively, compared to the prior year periods.

The amounts reported as “qualification for sale leaseback accounting”
represent the net increase in rent expense, decrease in depreciation expense
and decrease in interest expense, that would have impacted net income had the
leases been accounted for as operating leases for all periods presented, based
on the deferred gain on sale-leaseback transactions calculated at the time of
the spin-off, and had the five properties been owned for all periods
presented. These amounts are shown net of taxes of $424, $649, and $1,771 in
the three months ended January1, 2012 and the twelve months ended
December30, 2012 and January1, 2012, respectively. These amounts are
included for comparative purposes only, and may not be indicative of what
actual results would have been had the qualification for sale-leaseback
accounting treatment of these leases (and the treatment of such leases as
operating leases) occurred on the dates described above.


Fiesta Restaurant Group, Inc.
Investor Relations Contact:
Raphael Gross, 203-682-8253
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