One of the most highly visible Tex-Mex fast-casual restaurants in Texas is undergoing a major shake up. Taco Cabana is closing 19 of its Texas locations immediately, according to a release today from the restaurant’s parent company, Addison-based Fiesta Restaurant Group, Inc.
The location at 8620 Burnet Road is the only one of the 24 Greater Austin Area locations that was affected, with the majority of the 19 closures coming from the Houston and the Dallas-Fort Worth areas. Austin had already seen the departure of two Taco Cabana locations in recent years, with the closures of the locations on South Lamar, which briefly became a Pollo Tropical, also owned by Fiesta, and the location on MLK Blvd., which briefly became a Taco Ranch and will soon become a P. Terry’s.
The move to shutter the 19 locations was a financial one. Richard Stockinger, president and chief executive officer of the publicly traded company, said in the release that the closures will eliminate all stores with significant losses.
"During the fourth quarter, our Taco Cabana team began implementation of a margin improvement plan that we expect to improve restaurant-level Adjusted EBITDA margins by approximately 200 to 300 basis points in 2020 vs. 2019," Stockinger said. "The margin improvement plan includes efficiency initiatives in operations across food and operating expense categories and the closure of 19 underperforming restaurants in Texas."
The release states that the "19 Taco Cabana restaurants contributed approximately $24.5 million in restaurant sales and an estimated $4.2 million in restaurant level pre-tax operating losses, including $2.0 million in depreciation expense, for the twelve months ended December 29, 2019."
Update: This post has been updated to reflect the one Austin closure.