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Fiesta Restaurant Group Inc (NASDAQ:FRGI)
Q4 2019 Earnings Call
Feb 26, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to Fiesta Restaurant Group Inc.'s Fourth Quarter and Full Year 2019 Earnings Conference Call. Today's conference call is being recorded. At this time, all participants are in a listen-only mode. [Operator Instructions]

I would now like to turn the call over to Raphael Gross, Manager at ICR.

Raphael Gross -- Investor Relations

Thank you, Sharri. Fiesta Restaurant Group's fourth quarter and full year 2019 earnings release was issued after the market close today. If you have not already accessed it, it could be found on the Company's website www.frgi.com, under the Investor Relations section.

Before we begin, I'd like to inform you that during the call today, the Company will make various statements that are not based on historical information. These forward-looking statements include, without limitation, statements regarding the Company's future financial position and results of operations, business strategy, budget, projected costs and plans and objectives of management for future operations. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements and the Company can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements can be found in the Company's SEC filings.

Please note that during today's conference call, certain non-GAAP financial measures will be discussed, which the Company believes can be useful in evaluating its performance. Any discussion of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP and a reconciliation to comparable GAAP measures is available in the Company's earnings release.

On the call today are President and Chief Executive Officer, Rich Stockinger and Chief Financial Officer Dirk Montgomery.

And now I will turn the call over to Rich.

Richard Stockinger -- Chief Executive Officer and President

Thank you, Ray. Before we review fourth quarter results, I want to highlight a few thoughts on the trajectory of our business and the strategic direction of the Company. As I mentioned last quarter, the key to the future of Fiesta is nurturing the existing Pollo business and positioning our lead concept to achieve its full potential while stabilizing the Taco Cabana business for return to growth. We made good progress at Pollo during the fourth quarter in a number of key areas. First and foremost Pollo's positive sales momentum at the close of the third quarter continued through the fourth quarter and now into 2020.

Fourth quarter comp store sales were up, driven by increases in both traffic and check size. Through last week we have generated five consecutive months of positive traffic growth, tough to accomplish in the challenging markets in which we operate. Comp sales for the first quarter through last week were positive. We continued to gain market share in both comp sales and traffic based on Black Box data. With sequential growth in traffic share gains in four consecutive quarters, 240 basis points traffic gain in Q2 2019 that has accelerated each quarter to a 610 basis point share -- traffic share gain in Q1 to date in 2020. This top line momentum is driven by our successful LTO promotions and the success of our value offering, combined with check accretive add-ons and new menu items.

We made great strides in terms of sales growth and building capability in off-premise in the fourth quarter with high hopes for strong growth in 2020. We are successfully eliminating the barriers for our guests to enjoy Pollo anywhere and at anytime through the channel they prefer, including dine in, delivery, catering and pickup. We more than doubled off-premise sales in the fourth quarter compared to 2018 and made significant strides in building our infrastructure to eliminate barriers for our customers to enjoy Pollo across all channels, including catering sales team addition, the launch of ezCater, online capability and significant work on a new app being developed by Bottle Rocket, a leading digital strategy design and development company. The new and improved app will be launched in the second quarter. In the first quarter we are also expanding our delivery capability with more third-party providers such as Uber Eats, Favor and other leading providers to supplement our previously exclusive partnership with DoorDash.

Regarding Taco Cabana, we noted in the third quarter that we needed to improve overall guest satisfaction through improved operations and menu simplification. We made significant progress against this goal in the fourth quarter by reducing our order cycle times to five minutes for drive-thru orders, a two-minute improvement and improved overall guest satisfaction scores which continued into the first quarter of 2020. Although sales declined and were below expectations at Taco in the fourth quarter, we have identified the issues and are making progress in three key areas. While our operations initiatives and simplified menu achieved our goal of improved guest satisfaction, the unintended consequences was a greater than expected reduction in sales.

In the first quarter of 2020 we brought certain items back to the menu and expanded day part choices on select items to increase sales and have already seen positive results. Our value promotion TC Time did not drive enough incremental transactions to offset discounted prices. We discontinued this promotion in February and are now offering unique value promotions within each of our eight marketing and promotion windows. As part of the simplification efforts we did not introduce new items in our LTO for the final window of Q4 which was negatively received by our guests. We have accelerated new item ideation in Q4 and into Q1 to identify exciting new items and we are also bringing back proven LTOs from past -- in the past that sold well. All LTOs in 2020 will include new items and special value offers.

During the fourth quarter, we made very good progress on plans to improve margins 200 basis points to 300 basis points in 2020 compared to 2019 that include the impact of efficiency initiatives, operations simplification and closure of 19 underperforming restaurants in Texas that we announced in January. With those store closures, we believe we now have a highly viable portfolio of stores going forward with few units that are not at least breakeven from a profit perspective.

On the final update on Taco today we announced Chuck Locke is no longer with Taco Cabana. This move will allow Chuck to spend more time with his family in Florida. I want to thank Chuck for his passion and leadership over the last few years and wish him the best of luck in his future endeavors.

With that, let's discuss specific details on our fourth quarter results and the status of our growth initiatives, starting with Pollo Tropical. Comparable restaurant sales increased 0.6% during Q4 which notably was its first quarter of positive comparable restaurant sales since the third quarter of 2018. The brand's comp growth consisted of 0.5% increase in comparable restaurant transactions and a 0.1% increase in average check.

As I mentioned, we gained significant share over the quarter, making this the third quarter in a row of share gains as measured by Black Box, fast casual Florida benchmark for markets in which we operate. From a marketing standpoint, we continued to see strength in unit sales of our Pollo Time value platform and continue optimizing pricing on those promotions.

During the quarter, we took a $0.50 increase -- price increase from three $3.99 to $4.49 on our quarter chicken lunch platter with no significant decrease in unit sales momentum. Our Churrasco Steak Platter LTO and GrillMaster Trio LTO also did very well at prices of $8.29 and $8.99 respectively. Those items drove both traffic and check average versus last year during their promotional windows.

We are encouraged that our sales and transaction momentum continued into the first quarter with positive comps through last week and additional share gains compared to our market benchmarks. Pollo's restaurant level margins declined for the quarter compared to the prior year largely due to accounting changes and increase in food costs, restaurant wages and other operating expenses as a percentage of sales. Dirk will provide additional color on margin trends in his financial review. On a full year basis, absent of accounting changes and estimated impact of severe storms, Pollo restaurant adjusted EBITDA margins would have improved slightly to approximately 22% compared to 21.9% in 2018.

Turning to Taco Cabana, comparable restaurant sales fell 8.1% during Q4. The grand brand's comp decline consisted of 7.1% decrease in comparable restaurant transactions and a 1% decrease in average check. Although the Texas market continues to underperform the general compared to segment performance in the rest of US, Taco's performance was below Black Box Texas benchmark for the markets in which we operate. These top line results are disappointing, but in no way reflect the level performance we think we can ultimately achieve with this brand. As noted, the Q4 challenges were focused around issues that were partially self-inflicted. We are already making progress in each of those issues in Q1.

The operations initiatives to improve guest satisfaction were critical and aimed at reducing item and daypart availability to simplify operations and improve the speed of service. Our drive-thru order cycle times were seven minutes compared to the quick-serve average of five minutes. During Q4, we eliminated all-day breakfast, cut the weekend breakfast time availability, eliminated lines in the menu that were highly -- high complexity from the operations perspective, all aimed at improving speed of service. Those changes in other operating initiatives to improve guest satisfaction are working. We have reduced the drive-thru order cycle time to five minutes and made significant improvements in guest satisfaction.

In the first quarter of 2020 we're reintroducing select items back to the menu and expanding some daypart choices to regain sales traction without sacrificing customer satisfaction gains we achieved. We are already seeing a pickup in sales on those items we added back and the dayparts we expanded. Taco's restaurant level margins in Q4 were highly challenged given the weakness in sales and higher cost of sales. For the year restaurant level adjusted margins would have only decreased by 50 basis points to approximately 11.2% absent of accounting changes and impact of named storms. Again, Dirk will provide additional details on margin performance in his financial review.

In 2020, we expect to improve margins by 200 basis points to 300 basis points versus 2019, driven by cost-saving initiatives across all food and operating expense categories.

Turning now to our plans for 2020. Our primary focus this year will be top line growth with additional focus on improving margins at Taco Cabana. We have identified three key areas of focus across both brands that I will highlight before I cover specific growth plans for each concept.

First, we are going to grow our base business at both Pollo and Taco by; one, improving our menu, marketing and promotion innovation; two, further leveraging our loyalty programs which are growing rapidly, currently 290,000 members for Pollo Tropical and 200,000 members for Taco Cabana, up significantly from the beginning of 2019; and three, by optimizing menu and promotion pricing using statistical analysis providing -- provided by a leading consulting firm that specializes in retail pricing.

Second, we will continue to accelerate our online and off-premise growth opportunities. This encompasses catering, online ordering and delivery. We made progress in off-premise in 2019 building infrastructure for future growth and achieving strong sales growth across both brands. Despite our high sales growth rate, our off-premise penetration as a percentage of sales is still low compared to our competitors at 5.6% for Pollo and 4.2% at Taco. This gives us confidence we have significant upside in 2020 and beyond in those channels.

In catering we now have an infrastructure in place combined with incremental marketing plans to drive high growth in this channel. Our direct sales force is very close to being fully staffed and we now have ezCater, B2B online ordering product up and running at both brands. We expect significant growth in this business in 2020.

I mentioned our progress in the first quarter of 2020 to add additional delivery service providers across both brands and we expect strong delivery service growth in 2020 at both brands, as we ramp up our activity with these providers. As noted online ordering is also a great opportunity for us with roughly 2% penetration in total as a percentage of sales in both brands. This penetration is very low compared to our key competitors and we believe that online sales growth will be incremental to our dine-in business. With our efforts to improve ease of access and installation of rapid pickup station at high volume stores by the end of Q1, we expect online growth to accelerate over the course of the year at both brands.

Third, we will continue to invest in technology and infrastructure to improve guest satisfaction and remove barriers that prevent our customers from accessing our brands in all channels and occasions whenever they want wherever they want. In addition to the ease of access initiatives with Bottle Rocket in 2020 we will be investing in a number of initiatives including upgrading kitchen display systems to improve order cycle times and improving our POS order entry process to reduce our processing times.

Now I'll provide more color on brand-specific growth initiatives. For Pollo Tropical we have been testing a large number of potential new items as possible LTO items to ensure a strong pipeline of ideas are available for each promotional window. We're testing new chicken fried chicken and chicken fried steak, multiple types of empanadas, picadillo and coconut shrimp as just a few examples.

Our marketing calendar this year is filled with traffic drivers and check builds for each promotional window with a balance of value, premium priced products and upsell items. We are also working on the development plans to increase traffic and sales in specific restaurants with geo targeted ads, couponing, local store marketing tactics and charity food drops. Pollo Tropical is also coming off a strong quarter in Q4 for catering with sales up 33% compared to the year ago. Still we see a big untapped opportunity to capture B2B customers and are therefore targeting accounts with the potential recurring orders and B2C customers with our parties by Pollo platform, which places greater emphasis on party platters of various sizes designed to meet the need of any informal family or social gatherings.

Our 2020 catering marketing plans include investments to build additional awareness, local store and marketing programs and B2B marketing, including partnership programs with ezCater. In 2019 we invested in infrastructure including salespeople, catering hub operation units and delivery vehicles to ensure that offerings upholds our high standards for delicious, fresh, flavorful food that we are known for within our restaurants.

As we expressed previously, we believe the current online ordering process is too cumbersome because it takes too many steps for consumers to complete. Streamlining the design and making the experience near frictionless across all platforms including our mobile app and loyalty program will improve sales. Our digital penetration currently is very low compared to our competitors and this is a big opportunity.

On the delivery front, we are in the process of launching partnerships with Uber Eats and other delivery service providers at Pollo to supplement our ongoing partnership with DoorDash this quarter to maximize exposure of Pollo in the delivery channel. Our current penetration and delivery is very low at 2.5% of sales and has the potential to be 10% or more as a percentage of sales in the future with incrementality. To increase efficiencies we have created rapid pickup for those ordering online and pickup themselves or delivery. This feature has been well received and has now been rolled out to all Pollo Tropical locations.

Across the entire Pollo Tropical footprint, we are leveraging partnerships and brand events to drive top of mind awareness, traffic and brand affinity. In fact, we just signed a multi-year deal with the Miami Heat that includes traffic building promotions, community events in the license facility in the AmericanAirlines Arena and a sharing of the loyalty programs. This partnership will include a number of store traffic activation ideas to drive store traffic throughout the year.

In terms of unit development, we plan to open four to eight units in 2020 with two stores being company owned in our core market. The remaining units will be franchised with commitments under way for non-traditional units in Florida universities, highway system rest areas, airports and two international locations in Ecuador. In summary, we expect to generate positive comparable restaurant sales for the year at Pollo and low to mid single digit total revenue growth versus 2019. We expect this growth to build sequentially over the course of 2020 as we ramp up off-premise sales opportunities and we implement improved pricing and promotional opportunities.

Turning now Taco Cabana. We intend to stabilize sales in 2020 by continuing to optimize key daypart choices, improving our value promotions and increasing our focus and resources on new product innovation. In addition, off-premise growth will be key to our revenue growth plans. We believe that the value offering promotion strategy compliant with attractive LTOs and check building add-ons is a proven formula for success in our segment and we need to continue to perfect our tactics of those areas at Taco. It became clear to us over the course of Q4 that TC Time value promotion was not driving targeted transaction growth and negatively impacting checkout. This contrasts the Pollo Tropical where the everyday platform has performed as intended.

We therefore eliminated TC Time promotion earlier this month and are planning to offer targeted value offerings within each promotion window over the course of 2020. Moreover, we believe our new product and LTO innovation needs improvement and therefore filling the pipeline of 15 to 20 potential new items that have been or are being qualified, including in-store tests in advance of the launch. We are evaluating new, creative items that fit our operating platform and leverage popular and innovative recipes from the past including such items as Tampico shrimp, [Indecipherable] brand sausage. We are also reevaluating our marketing, creative and promotions strategies and our PR firm's support.

Finally, we need -- we have the needed infrastructure to support in place to drive significant growth in Taco Cabana's off-premise sales in 2020 and are implementing marketing plans to build awareness and trial in those channels, including a heavy focus on catering and delivery market.

To summarize, we are optimistic about our momentum at Pollo Tropical. The key to the future of Fiesta is nurturing the existing Pollo business and positioning our lead concept to achieve its full potential. We believe we're making progress at Taco and the issues that impacted Q4 sales and have also significant off-premise growth opportunities that we will capitalize on over 2020. We are targeting comp store sales to stabilize in the second half of the year as we implement the growth initiatives noted and we lap over softer 2018 comps.

Lastly, I am proud of our industry-leading executive team. With Dirk, Hope, Lou, Tony, Patty and Willie, I feel confident of the bright future of Fiesta as this team hits its stride in working together.

With that let me turn the call over to Dirk to go over our financials in greater detail.

Dirk Montgomery -- Chief Financial Officer

Thank you, Rich, and good afternoon everyone. Total fourth quarter revenues decreased 4.9% from the prior-year period to $159.5 million due primarily to the comparable restaurant sales decline at Taco Cabana. We continued to make progress in off-premise sales during the quarter, consisting of online catering and delivery. Off-premise sales more than doubled compared to last year in the fourth quarter and as Rich mentioned, we believe our penetration is still well below what it should be compared to our competitors.

The consolidated net loss was $21.1 million, or $0.82 per diluted share including a $0.77 per diluted share negative impact from several unusual items including establishing a $13.5 million tax valuation allowance, $8.4 million in impairment charges and $0.7 million in closed restaurant rent charges compared to a net loss of $7.9 million or $0.30 per diluted share including the $0.38 negative impact primarily from $14.6 million in impairments and other lease charges in the fourth quarter of 2018. On an adjusted basis, the net loss was $1.1 million or $0.04 per diluted share and would have been $0.02 higher absent lease accounting changes. This compared to adjusted net income of $2.2 million or $0.08 per diluted share in the fourth quarter of 2018. Please see the non-GAAP reconciliation table in our earnings release for more details.

With that let us go through some of the significant accounting entries in the fourth quarter. The new lease accounting standard continued to impact our results of operations due to $18.6 million in deferred sale leaseback gains from which we no longer receive a benefit to rent expense. Prior to adopting the new lease accounting standard, we amortized deferred sale leaseback gains as a reduction to rent expense. Amortization of deferred gains from sale-leaseback transactions for the three months ended December 30, 2018 totaled approximately $0.4 million and $0.5 million for Pollo Tropical and Taco Cabana respectively. Similar to the last quarter, we've a number of closed restaurants from which we had previous reserves and would not have recognized current period expense under the previous accounting standard. This reserve was recorded as an adjustment to the right of use asset when we adopted the new lease accounting standard and rent expense related to the closed restaurants is now recognized each period. Closed restaurant expense net of sublease income for the three months ended December 29, 2019 totaled $0.5 million and $0.2 million for Pollo Tropical and Taco Cabana, respectively.

Lastly, we recorded a $8.4 million non-cash impairment charge primarily related to Taco Cabana restaurants that were subsequently closed in January 2020, which had an unfavorable impact on net income of $6.4 million or $0.25 per diluted share in the fourth quarter of 2019.

Now turning to our individual brands. At Pollo Tropical comparable restaurant sales increased 0.6% compared to a 1.9% decrease in the fourth quarter of last year. This year's improvement consisted of a 0.5% increase in comparable restaurant transactions or traffic and 0.1% increase in average check, inclusive of approximately 0.2% in pricing. As Rich mentioned earlier, Pollo Tropical continues to gain market share, as evidenced by the outperformance compared to Black Box in both the comparable sales and a transaction basis. We also experienced an estimated 60 basis point impact during the fourth quarter from new store cannibalization within our core South Florida market. However, we do new development as a positive for the brand overall since it allows us to enhance the guest experience while growing our total share in the market.

Turning to the brand's profitability for the fourth quarter, restaurant level adjusted EBITDA, a non-GAAP measure as defined in our SEC filings, decreased at Pollo by $1.9 million to $17.2 million or 19.2% of restaurant sales from $19.1 million or 21% of restaurant sales in 2018. There was a $0.4 million negative impact associated with adopting the new lease accounting standard. Pollo's full year restaurant level adjusted EBITDA margin rate, as detailed in the press release, was slightly last year and included the full year negative impact of lease accounting of $1.5 million and the estimated impact of named summer storms of $0.6 million, both items being non-comparable to the prior year. Absent those non-comparable items, the Pollo restaurant level adjusted EBITDA margin rate would have been up slightly to 22% compared to 21.9% in 2018.

As a percent of restaurant sales in the fourth quarter Pollo Tropical experienced higher cost of sales due to increases in LTO food costs, restaurant wages and related expenses due to higher medical and workers' compensation expenses, rent expense due to the new lease accounting standard and other operating expenses. The other operating expense increases included higher third party delivery fees, contracted cleaning services and repair and maintenance costs more than offset by the impact of the reclassification of real estate taxes from operating expenses to rent. These were partially offset by the positive impact from higher comparable restaurant sales. A significant portion of the year-over-year increase in contracted cleaning services and repairs and maintenance costs were considered nonrecurring.

Adjusted EBITDA, a non-GAAP measure, as defined in our SEC filings, decreased by $1.8 million to $10.6 million for Pollo Tropical in the fourth quarter of 2019 and would have been $0.4 million higher, absent the accounting changes resulting from adoption of the new lease accounting standard. In addition to the lower restaurant level adjusted EBITDA referenced a moment ago, we also experienced a higher G&A expense due to the timing of incentive compensation accrual adjustments and investments in off-premise support.

At Taco Cabana comparable restaurant sales decreased 8.1% compared to a 5.1% increase in the fourth quarter last year. This year's decline consisted of a 7.1% decrease in comparable restaurant transactions and a 1% decrease in average check.

Turning to the brands' fourth quarter profitability. Restaurant level adjusted EBITDA, a non-GAAP measure as defined in our SEC filings, decreased at Taco Cabana by $3.4 million to $5.5 million or 8% of restaurant sales from $8.9 million or 11.8% of restaurant sales in 2018. There was a $0.5 million negative impact associated with adopting the new lease accounting standard.

Taco's full year restaurant level adjusted EBITDA margin rate, as detailed in the press release, was below last year, including the full year negative impact of the lease accounting standard of $1.9 million and the impact of named summer storms of $0.1 million, both items being non-comparable to prior year. Absent those non-comparable items, the Taco restaurant level adjusted EBITDA margin rate would have been down only 50 basis points to 11.2% compared to the 11.7% in 2018.

The impact of closing underperforming stores and efficiency initiatives are expected to significantly improve Taco restaurant margins in 2020. As a percent of restaurant sales in the fourth quarter, Taco Cabana incurred a higher cost of sales due to increased discounting and promotional activity and higher commodity costs, advertising expense, other operating expenses, including higher repairs and maintenance costs and delivery fees and higher rent due to the new accounting standard in addition to the negative impact of lower comparable restaurant sales. A significant portion of the year-over-year increase in repairs and maintenance costs were considered nonrecurring.

Adjusted EBITDA, a non-GAAP measure as defined in our SEC filings decreased at Taco Cabana by $3.7 million to negative 0.3 million in the fourth quarter of 2019, but would have been $0.5 million higher absent accounting changes resulting from adoption of the new lease accounting standard. In addition, we also experienced higher G&A expenses due to the timing of incentive compensation accrual adjustments and investments in off-premise support. During the quarter, we also recorded $8.3 million of impairment charges primarily related to the 19 underperforming Taco Cabana restaurants that were closed at the beginning of the year.

Turning now to a few additional financial items. Under our current share repurchase program, we repurchased 23 million shares during the fourth quarter. In total, we repurchased approximately 1.4 million of common stock in 2019. Please note that the number of shares repurchased and the timing of repurchases will depend on a number of factors and that the program also has no time limit. It may also be modified, suspended, superseded or terminated at any time by the Board of Directors. That being said, we continue to see share repurchases at current price levels as a good investment and we'll also look to repay debt with any excess cash flow.

Total capital expenditures in 2019 were $41.2 million, which you may recall was at the low end of our original guidance. Our expenditures consisted of $19.3 million for maintenance, $11.4 million for new company-owned restaurant development, $7.9 million for technology and corporate and $2.6 million for restaurant remodeling. From a liquidity perspective, we have more than adequate borrowing capacity at $71.3 million available on our line of credit as of year-end. Our simple leverage ratio defined as our revolver balance divided by adjusted EBITDA as defined in our loan agreement is 1.4 times and we intend to maintain our conservative balance sheet.

Turning now to our 2020 plans. Please note that this is a 53-week fiscal period with the 53rd week being in our last reporting period of the year. I'll briefly recap our financial goals for 2020 that include the following. Driven in part by strong off-premise sales growth we expect to return Pollo Tropical to positive comparable restaurant sales in 2020 with sequential growth in comps over the course of the year as we ramp up off-premise sales and delivery catering and online. We're working to stabilize sales at Taco Cabana and expect to achieve sequential comp sales improvement over the course of the year although trends during the first half of the year are likely to be negative.

Food costs are projected to remain stable for 2020 versus the prior year based on current supply commitments we already have in place across key commodity categories. With respect to restaurant level adjusted EBITDA margins, we expect to maintain margins at Pollo and improve margins by 200 basis points to 300 basis points compared to prior year at Taco driven by the recent store closures and efficiency and operations simplification initiatives. We plan to open 48 Pollo units in 2020 with two stores being company owned in our core geographies. As Rich mentioned, the remainder of the openings are franchise units.

We are currently planning for one closure this year at a location that is in a challenging trade area and has a lease expiration. Taco Cabana is expected to open one new unit in the first quarter. We currently expect one to two additional closures in the remainder of the year due to opportunities to exit locations that are in challenging trade areas.

2020 capital expenditures are expected to be at or below the 2019 level of approximately $41 million. And finally, if we achieve our growth plans, we should generate excess cash flow after operating and capex, which can be used for share purchases or debt repayment. In closing, we expect 2020 to be a year of improvement which are results of build momentum over the course of the year. We expect to finish the year with Pollo Tropical demonstrating sustainable top line momentum and Taco Cabana sales stabilized with much higher restaurant margins.

Thank you for listening and we will now open up the call to questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question is from Joshua Long with Piper Sandler. Please proceed.

Joshua Long -- Piper Sandler -- Analyst

Great. Thank you for taking the question. I wanted to see if we might be able to dig into the quarter-to-date trends that you've mentioned at both brands in the context of the full-year guidance. It sounds like Pollo comps are positive with an opportunity to build over the course of the year given some of the initiatives that you outlined there. Could you provide some more color there in terms of if that's accelerated sequentially here in the first quarter? And then as we think about Taco Cabana being negative and the ability to stabilize, does that suggest that trends have further faded from where we ended the quarter? And then how do you think about the timing of that in terms of that stabilization and then that returned to positive or at least improvement in the second half of the year?

Dirk Montgomery -- Chief Financial Officer

Sure. Yeah, thanks for the question. So with Pollo Tropical, we -- trends are positive quarter-to-date and they are sequentially improved over the fourth quarter. Just to give color on the quarter-to-quarter improvement over the year, the reason that we're expecting sequential improvement over the course of the year is due to the fact that we're just now launching the additional delivery service providers on the delivery side and doing a number of other things that will build in their momentum over the course of the year. So, certainly in the back half of the year, we expect higher comps in the first half of the year.

On Taco Cabana, we are seeing the trend stabilized. We are still down, but the trend is better. We also continue to see customer satisfaction scores better than they were in the fourth quarter. So what we're seeing is what we had hoped for is stabilization of sales, even though they're still down, but also an improvement in ongoing customer satisfaction.

Joshua Long -- Piper Sandler -- Analyst

Great. Thanks for that. And then one last one on the Taco Cabana piece, the stabilization is helpful and I appreciate the color there and called out that we expect the first half to still be negative. Does that still kind of anticipate an opportunity for positive trends in the back half of the year, is that more of an exiting 2020 run rate into 2021? Any color there would be helpful.

Dirk Montgomery -- Chief Financial Officer

Sure. I mean it's difficult for us to project the absolute pace of the improvement but our goals for the year in the back half of the year for Taco to have basically stable and trending toward flat traffic in the back half of the year. So if you combine that with the growth in the off-premise categories channels, that should point us toward certainly be in a position for comps to be flat to positive as we head from the second half of the year in 2020 into 2021.

Joshua Long -- Piper Sandler -- Analyst

Great. Thank you for that. And as we think about the off-premise opportunity, is there anything inherent to the brands that has proven to be a challenge? Should we think about this as just maybe a little bit late to the game because just as users -- as a user of the brand, it seems like both would lend themselves to off-premise pretty well. But I'm just trying to contextualize why both brands currently have such an opportunity or said differently, why the current off-premise mix is so low? And any help there would be great. And then if you could also comment on the pricing study that you're working with the third-party and kind of any sort of general high-level timelines around how we should be thinking about that as being a either driver or being able to influence 2020 pricing decisions.

Richard Stockinger -- Chief Executive Officer and President

Yeah, Joshua, it's Rich. I think if you remember over the last several years we had to do a lot of work on the foundation for the off-premise and delivery. That's more of a system issue and a software issue when we had to bring in people like [Indecipherable] etc. So we were building the infrastructure from the ground floor. It took us longer than we anticipated, which we had mentioned last year. So we're late in the game. I agree with you. Both these concepts lend themselves to be extremely successful in delivery and online ordering. Again we are in the midst of developing the new app.

With Bottle Rocket and Pollo, we expect to be at the end of the second quarter up and live and then shortly thereafter the next quarter we will have tacos up and running. So again, we're just late in the game and that was more from an infrastructure perspective. We just started with Uber Eats this past week and we're pretty excited just to see what the results we've had within three, four days. We're just really excited about what we'd be able to get not just from them, but the other providers that we are now signed on with.

Dirk Montgomery -- Chief Financial Officer

Yeah, and just to speak on the pricing works that we're doing. The initial work was focused on Pollo Tropical. You may recall that we haven't had really a significant price increase at Pollo Tropical in basically two years. And so one of the encouraging findings from the work that we've done to date is that we found that the value perceptions of our customers actually are higher now than they certainly were a couple of years ago, which gives us some comfort that we have some room to take pricing.

We are planning to take a conservative pricing based on that work at a very kind of targeted level, store by store. That should kick in in the second quarter and it's going to be a combination of absolute price increases at a store level and then also continuing to refine our promotion prices. As Rich said, we made a small change in the Pollo Time, a quarter chicken offer, in the fourth quarter where we're going to make some additional small changes in that promotion platform that had tested successfully in first quarter.

Form an overall process perspective, this is very much an approach where we're going to be conservative testing and enroll the changes so that we don't diminish traffic. On the Taco side, we're going to be doing the same work but that work is going to be started in the second quarter and won't be considered until the back half of the year. Obviously, given the traffic trends of that brand, we want to be extremely careful in making any price moves but we do anticipate that the research that we're doing will point us to some opportunities where we're going to be very conservative on when we take those at Taco.

Joshua Long -- Piper Sandler -- Analyst

Great. Thank you.

Richard Stockinger -- Chief Executive Officer and President

Thank you, Joshua.

Operator

Our next question is from Brian Vaccaro with Raymond James. Please proceed.

Brian Vaccaro -- Raymond James -- Analyst

Thanks and good evening. It's certainly encouraging to hear the resumption of share gains at Pollo Tropical and obviously the growth in off-premise and delivery is helping there. But it seems that value or the new product intros may be gaining some incremental traction and breaking through a little better at that brand. Is that right? And can you quantify any of the underlying dynamics behind that?

Richard Stockinger -- Chief Executive Officer and President

Brian, it's Rich. We were pleasantly surprised with the impact of our -- we had a special that we put out at $8.29 and pleasantly surprised to see the barbell effect. And we actually saw people trading up from Pollo Time to the $8.29 special. That opened up our eyes significantly that people -- and again it was in fourth quarter December that they were willing to trade up, it's more food, it's different items. But that special has basically stayed on the menu and continued to do well. So we were surprised. We took a little chance there. We weren't sure exactly how well something at $8.29 was going to do at the same time you're offering $8.49 lunch special. But that has been successful, not only in core but throughout the entire chain.

Brian Vaccaro -- Raymond James -- Analyst

All right. That's helpful. And speaking about the Pollo comps, can you provide some more color on just what you saw regionally in the core South Florida and then some of the non-core markets in the fourth quarter?

Richard Stockinger -- Chief Executive Officer and President

Yeah, Brian, that's a great question. We continue to be strong in core. We're actually stronger in other markets outside of core, not only stronger in terms of comps being higher, but also the market share improvements are higher outside of core than inside of core and especially led by -- which has led the Company all throughout 2019 was in the Orlando market. So we've seen core continue to be strong, but the market share improvement is significantly higher outside of core led by Orlando.

Dirk Montgomery -- Chief Financial Officer

And we did see market share gains in every single market that we operate in.

Brian Vaccaro -- Raymond James -- Analyst

All right. That's great. And then shifting gears to Taco, I know you're targeting 200 bps to 300 bps the store margin improvement I think in '20 you said. And I think a little more than half of that is achieved by the 19 closures that you completed in -- earlier in the year. Can you confirm that's right?

And then second, can you provide more details on the efficiencies that you've baked into that outlook at Taco? They seem to be fairly significant since you're assuming negative comps in 2020. So just maybe some more detail on quantification of some of the efficiencies you've baked in.

Dirk Montgomery -- Chief Financial Officer

Yeah, sure. So on the store closures that's directionally correct, 150 basis points to 180 basis points on the closures. The rest of the assumed 320 basis points improvement is really through efficiency initiatives in both -- well in three categories, food costs, operation services and repairs and maintenance. And we have had very good success over the fourth quarter and into the first quarter implementing those programs. It's a combination of efficiency initiatives including renegotiating contracts and suppliers, finding ways to take cost out of the product without compromising quality, including things like changing pack sizes, but all of the food-related activities are being done in a way that does not compromise our quality advantage we think that we have against the competitive set and it's being tested against consumers to make sure that we don't see any surprises before we roll those changes out.

The efficiencies in repairs and maintenance and operation services are a combination of renegotiating contracts and also just being more efficient in employing best practices on the repairs and maintenance side. An example of that is that we've now insourced the maintenance for the tortilla machines which are very customized. And so that lends itself to a dedicated team of techs that really know the machines inside and out and can also do other things in addition to working on that. At a general level over 70% of the total efficiency improvement initiatives have already been implemented and are in place. So we feel really good about our capability to achieve those -- that level of margin improvement that we guided.

Brian Vaccaro -- Raymond James -- Analyst

All right. It sounds like you've taken quite a deep dive at the store level there. And I guess, can you talk about any studies or initiatives in place to drive efficiencies at the G&A level? Do you feel like this is the current -- a reasonable infrastructure that's necessary to run the business in its current state or do you think there might be some opportunities and would you be willing to share what you've embedded in your 2020 guidance for G&A?

Dirk Montgomery -- Chief Financial Officer

Sure. So to answer the second part first, we feel that the infrastructure that we put into place at the end of 2019 is what we need to drive growth in the business over the next couple of years. In terms of evaluating efficiencies that are -- efficiency opportunities in G&A and we're really just getting started on evaluating what our opportunities are across our three locations. We've assumed in our plans for the 2020 year that we pretty much hold the line on the infrastructure investments that we made at the tail end of 2019. So not -- no significant increases in G&A. There is a little bit of wraparound impact from staff that we added late in '19 that wasn't there full year like myself, but also catering sales force, things of that nature that really are going to drive top line. But our focus on any G&A increases has been to really make investments only in top line driving resources and hold the line on kind of corporate level staff.

Brian Vaccaro -- Raymond James -- Analyst

All right, I'll pass it along. Thank you.

Richard Stockinger -- Chief Executive Officer and President

Thanks, Brian.

Operator

We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Richard Stockinger -- Chief Executive Officer and President

Again I just want to thank everybody. I want to most importantly thank the teams. This has been a tough year but the future is bright as far as we're concerned for both concepts, for Pollo -- led by Pollo as well as Taco. Thank you everyone. Good night.

Operator

[Operator Closing Remarks]

Duration: 51 minutes

Call participants:

Raphael Gross -- Investor Relations

Richard Stockinger -- Chief Executive Officer and President

Dirk Montgomery -- Chief Financial Officer

Joshua Long -- Piper Sandler -- Analyst

Brian Vaccaro -- Raymond James -- Analyst

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