10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549 

__________________________________________________________

FORM 10-Q

__________________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-35373 

__________________________________________________________

FIESTA RESTAURANT GROUP, INC.

(Exact name of Registrant as specified in its charter)

__________________________________________________________

DE		90-0712224
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
14800 Landmark Boulevard, Suite 500		75254
Dallas	TX	(Zip Code)
(Address of principal executive office)

Registrant's telephone number, including area code: (972) 702-9300

__________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	FRGI	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-accelerated Filer	☐	Smaller Reporting Company	☒
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of May 4, 2023, Fiesta Restaurant Group, Inc. had 26,063,987 shares of its common stock, $0.01 par value, outstanding.

FIESTA RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED APRIL 2, 2023

		Page
PART I   FINANCIAL INFORMATION
Item 1	Interim Condensed Consolidated Financial Statements (Unaudited) - Fiesta Restaurant Group, Inc.:
	Condensed Consolidated Balance Sheets as of April 2, 2023 and January 1, 2023	2
	Condensed Consolidated Statements of Operations for the Three Months Ended April 2, 2023 and April 3, 2022	3
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended April 2, 2023 and April 3, 2022	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 2, 2023 and April 3, 2022	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4	Controls and Procedures	25
PART II   OTHER INFORMATION
Item 1	Legal Proceedings	25
Item 1A	Risk Factors	25
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3	Defaults Upon Senior Securities	26
Item 4	Mine Safety Disclosures	26
Item 5	Other Information	26
Item 6	Exhibits	27

1

PART I. FINANCIAL INFORMATION

ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FIESTA RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	April 2, 2023		January 1, 2023
ASSETS
Current assets:
Cash	$	30,067	$	32,167
Restricted cash	3,631		3,631
Accounts receivable	7,198		5,270
Inventories	1,898		1,962
Prepaid rent	106		109
Income tax receivable	3,892		3,871
Prepaid expenses and other current assets	7,828		5,681
Total current assets	54,620		52,691
Property and equipment, net	86,280		87,106
Operating lease right-of-use assets	146,341		146,681
Goodwill	56,307		56,307
Other assets	5,505		5,906
Total assets	$	349,053	$	348,691
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	47	$	62
Accounts payable	14,299		14,219
Accrued payroll, related taxes and benefits	6,451		6,536
Accrued real estate taxes	1,938		1,805
Other current liabilities	19,974		17,680
Total current liabilities	42,709		40,302
Long-term debt, net of current portion	360		367
Operating lease liabilities	155,382		155,355
Deferred tax liabilities	118		202
Other non-current liabilities	7,087		7,208
Total liabilities	205,656		203,434
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued	—		—
Common stock, $0.01 par value; 100,000,000 shares authorized, 29,096,014 and 28,890,688 shares issued, respectively, and 25,530,680 and 25,306,302 shares outstanding, respectively	285		282
Additional paid-in capital	189,124		188,528
Retained earnings (accumulated deficit)	(14,425)		(12,516)
Treasury stock, at cost; 3,030,413 and 2,966,639 shares, respectively	(31,587)		(31,037)
Total stockholders' equity	143,397		145,257
Total liabilities and stockholders' equity	$	349,053	$	348,691

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

FIESTA RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED APRIL 2, 2023 AND APRIL 3, 2022

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended
	April 2, 2023		April 3, 2022
Revenues:
Restaurant sales	$	103,064	$	95,200
Franchise royalty revenues and fees	307		409
Total revenues	103,371		95,609
Costs and expenses:
Cost of sales	32,612		30,747
Restaurant wages and related expenses (including stock-based compensation expense of $4 and $7, respectively)	26,390		23,574
Restaurant rent expense	6,081		6,027
Other restaurant operating expenses	17,624		16,650
Advertising expense	3,196		2,864
General and administrative (including stock-based compensation expense of $595 and $623, respectively)	13,183		12,342
Depreciation and amortization	4,392		5,114
Impairment and other lease charges (recoveries)	2,256		(702)
Closed restaurant rent expense, net of sublease income	(284)		380
Other expense (income), net	15		51
Total operating expenses	105,465		97,047
Loss from operations	(2,094)		(1,438)
Interest expense	83		85
Loss from continuing operations before taxes	(2,177)		(1,523)
Benefit from income taxes	(33)		(222)
Loss from continuing operations	(2,144)		(1,301)
Income (loss) from discontinued operations, net of tax	235		(55)
Net loss	$	(1,909)	$	(1,356)
Earnings (loss) per common share:
Continuing operations – basic	$	(0.09)	$	(0.05)
Discontinued operations – basic	0.01		—
Basic	$	(0.08)	$	(0.05)
Continuing operations – diluted	$	(0.09)	$	(0.05)
Discontinued operations – diluted	0.01		—
Diluted	$	(0.08)	$	(0.05)
Weighted average common shares outstanding:
Basic	25,420,090		24,832,541
Diluted	25,420,090		24,832,541

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

FIESTA RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

THREE MONTHS ENDED APRIL 2, 2023 AND APRIL 3, 2022

(In thousands, except share data) 

(Unaudited)

	Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Treasury Stock		Total Stockholders' Equity
	Shares	Amount
Balance at January 2, 2022	24,829,002	$	277	$	182,686	$	2,043	$	(30,135)	$	154,871
Stock-based compensation	—	—		549		—		—		549
Vesting of restricted shares	66,372	—		—		—		—		—
Purchase of treasury stock	(14,746)	—		—		—		(164)		(164)
Net loss	—	—		—		(1,356)		—		(1,356)
Balance at April 3, 2022	24,880,628	$	277	$	183,235	$	687	$	(30,299)	$	153,900
Balance at January 1, 2023	25,306,302	$	282	$	188,528	$	(12,516)	$	(31,037)	$	145,257
Stock-based compensation	—	—		599		—		—		599
Vesting of restricted shares	288,152	3		(3)		—		—		—
Purchase of treasury stock	(63,774)	—		—		—		(550)		(550)
Net loss	—	—		—		(1,909)		—		(1,909)
Balance at April 2, 2023	25,530,680	$	285	$	189,124	$	(14,425)	$	(31,587)	$	143,397

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

FIESTA RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED APRIL 2, 2023 AND APRIL 3, 2022

(In thousands)

(Unaudited)

	Three Months Ended
	April 2, 2023		April 3, 2022
Operating activities:
Net loss	$	(1,909)	$	(1,356)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation	599		549
Impairment and other lease charges (recoveries)	2,256		(702)
Depreciation and amortization	4,392		5,114
Amortization of deferred financing costs	20		20
Deferred income taxes	(84)		7
Changes in other operating assets and liabilities	(1,838)		294
Net cash provided by operating activities	3,436		3,926
Investing activities:
Capital expenditures:
Restaurant remodeling	(625)		(1,480)
Other restaurant capital expenditures	(3,473)		(1,904)
Corporate and restaurant information systems	(866)		(421)
Total capital expenditures	(4,964)		(3,805)
Proceeds from insurance recoveries	—		203
Net cash used in investing activities	(4,964)		(3,602)
Financing activities:
Principal payments on finance leases	(22)		(17)
Payments to purchase treasury stock	(550)		(164)
Net cash used in financing activities	(572)		(181)
Net change in cash and restricted cash	(2,100)		143
Cash and restricted cash, beginning of period	35,798		40,634
Cash and restricted cash, end of period	$	33,698	$	40,777

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

FIESTA RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

1. Basis of Presentation

Business Description. Fiesta Restaurant Group, Inc. ("Fiesta Restaurant Group" or "Fiesta") owns, operates and franchises Pollo Tropical restaurants through its wholly-owned subsidiaries Pollo Operations, Inc. and Pollo Franchise, Inc. (collectively "Pollo Tropical"). Unless the context otherwise requires, Fiesta and its subsidiaries are collectively referred to as the "Company." At April 2, 2023, the Company owned and operated 137 Pollo Tropical® restaurants located in Florida and franchised a total of 30 Pollo Tropical restaurants. The franchised Pollo Tropical restaurants include 17 in Puerto Rico, two in Panama, one in Guyana, one in the Bahamas, six on college campuses in Florida, and locations at one hospital and two sports and entertainment stadiums in Florida. The Company operates its business as one operating and reportable segment.

Discontinued Operations. Fiesta owned, operated and franchised Taco Cabana restaurants through its wholly-owned subsidiary Taco Cabana, Inc. and its subsidiaries (collectively "Taco Cabana") through August 15, 2021. On August 16, 2021, the Company completed the sale of Taco Cabana. See Note 2—Dispositions. Unless otherwise noted, amounts and disclosures throughout these notes to the condensed consolidated financial statements relate to the Company's continuing operations.

Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Fiscal Year. The Company uses a 52–53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended January 1, 2023 contained 52 weeks. The three months ended April 2, 2023 and April 3, 2022 each contained thirteen weeks, respectively. The fiscal year ending December 31, 2023 will contain 52 weeks.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 2, 2023 and April 3, 2022 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 2, 2023 and April 3, 2022 are not necessarily indicative of the results to be expected for the full year.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended January 1, 2023 included in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2023. The January 1, 2023 balance sheet data is derived from those audited financial statements.

Reclassification. Certain prior period balances have been reclassified to conform to the current period presentation in the accompanying notes to the condensed consolidated financial statements.

Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percentage of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services.

Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date under current market conditions. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect management's own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:

•Current Assets and Liabilities. The carrying values reported on the condensed consolidated balance sheets of cash and restricted cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.

6

FIESTA RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except per share data)

•Revolving Credit Borrowings. The fair value of outstanding revolving credit borrowings under the Company's senior credit facility, which is considered Level 2, is based on current LIBOR rates. There were no outstanding revolving credit borrowings under the Company's senior credit facility as of April 2, 2023 and January 1, 2023.

See Note 4 for discussion of the fair value measurement of non-financial assets.

Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets, including right-of-use ("ROU") lease assets, by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. See Note 4—Impairment of Long-Lived Assets and Other Lease Charges (Recoveries).

Leases. The Company assesses whether an agreement contains a lease at inception. All leases are reviewed for finance or operating classification once control is obtained. The majority of the Company's leases are operating leases. Operating leases are included within operating lease right-of-use assets, other current liabilities, and operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included within property and equipment, net, current portion of long-term debt, and long-term debt, net of current portion in the condensed consolidated balance sheets.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made in advance and is reduced by lease incentives received. As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments. Lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. The Company assumes options are reasonably certain to be exercised when such options are required to achieve a minimum 20-year lease term for new restaurant properties and when it incurs significant leasehold improvement costs near the end of a lease term. The Company uses judgment and available data to allocate consideration in a contract when it leases land and a building. The Company also uses judgment in determining its incremental borrowing rate, which includes selecting a yield curve based on a synthetic credit rating determined using a valuation model. Lease expense for lease payments is recognized on a straight-line basis over the lease term unless the related ROU asset has been adjusted for an impairment charge. The Company has real estate lease agreements with lease and non-lease components, which are accounted for as a single lease component.

Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: insurance liabilities, evaluation for impairment of goodwill and long-lived assets, lease accounting matters, and deferred income tax assets. Actual results could differ from those estimates.

2. Dispositions

On June 30, 2021, the Company's Board of Directors approved a stock purchase agreement, which was subsequently entered into by the Company on July 1, 2021, for the sale of all of the outstanding capital stock of Taco Cabana, Inc., including nearly all related assets and liabilities, for a cash purchase price of $85.0 million subject to reduction for (i) closing adjustments of approximately $4.6 million and (ii) certain other working capital adjustments as set forth in the stock purchase agreement. The transaction was completed August 16, 2021.

The Company filed an insurance claim for winter storm damages in Texas that occurred in the first quarter of 2021 and retained the right to receive the insurance claim proceeds. In the first quarter of 2023, the Company executed a final settlement on the claim and recognized $0.4 million of insurance proceeds within income (loss) from discontinued operations, net of tax, in the three months ended April 2, 2023.

All revenues, costs and expenses and income taxes attributable to Taco Cabana, together with certain costs related to the transaction, have been aggregated within income (loss) from discontinued operations, net of tax, in the condensed consolidated statements of operations for all periods presented.

The Company retained certain closed Taco Cabana restaurant leases, including the associated operating lease right-of-use assets and operating lease liabilities. The Company also retained liability for Taco Cabana's accrued worker's compensation and

7

FIESTA RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except per share data)

general liability claims for periods prior to the sale. These liabilities are recognized in other current liabilities and other non-current liabilities in the condensed consolidated balance sheets. As there are estimates and assumptions inherent in recording these insurance liabilities, including the ability to estimate the future development of incurred claims based on historical trends or the severity of the claims, differences between actual future events and prior estimates and assumptions could result in adjustments to these liabilities.

During the three months ended April 2, 2023, the Company recognized $0.4 million of income related to insurance proceeds for winter storm damages in Texas that occurred in the first quarter of 2021, and $0.2 million of expenses primarily related to workers' compensation claims within income (loss) from discontinued operations, net of tax, in the condensed consolidated statement of operations. During the three months ended April 3, 2022, the Company recognized $0.2 million of expenses primarily related to workers' compensation claims, and a reduction of stock-based compensation of $(0.1) million within loss from discontinued operations, net of tax, in the condensed consolidated statement of operations.

3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	April 2, 2023		January 1, 2023
Prepaid contract expenses	$	3,757	$	4,471
Prepaid insurance	3,190		442
Other	881		768
	$	7,828	$	5,681

4. Impairment of Long-Lived Assets and Other Lease Charges (Recoveries)

The Company reviews its long-lived assets, principally property and equipment and lease ROU assets, for impairment at the restaurant level. The Company has elected to exclude operating lease payments and liabilities from future cash flows and carrying values, respectively, in its impairment review. In addition to considering management's plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant's cash flows, exclusive of operating lease payments, for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant's assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows, exclusive of operating lease payments, over the life of the primary asset for each restaurant is compared to that long-lived asset group's carrying value, excluding operating lease liabilities. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material.

A summary of impairment of long-lived assets and other lease charges (recoveries) is as follows:

	Three Months Ended
	April 2, 2023		April 3, 2022
Impairment of long-lived assets	$	1,402	$	—
Other lease charges (recoveries)	854		(702)
	$	2,256	$	(702)

Impairment charges for the three months ended April 2, 2023 related primarily to impairment of assets from four underperforming Pollo Tropical restaurants, three of which were subsequently closed in the second quarter of 2023, for which continued performance declines resulted in a decrease in the estimated future cash flows. For the three months ended April 2, 2023, other lease charges (recoveries) consist of lease termination charges related to the reduction of the Company's corporate office space.

Other lease charges (recoveries) for the three months ended April 3, 2022 related primarily to gains from lease terminations.

8

FIESTA RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except per share data)

The Company determines the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions, the Company's history of using these assets in the operation of its business and the Company's expectation of how a market participant would value the assets. The Company also utilizes discounted future cash flows to determine the fair value of assets for certain leased restaurants with positive discounted projected future cash flows. The Company utilizes current market lease rent and discount rates to determine the fair value of right-of-use lease assets. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the three months ended April 2, 2023 totaled $1.5 million.

5. Other Liabilities

Other current liabilities consist of the following:

	April 2, 2023		January 1, 2023
Operating lease liabilities	$	10,377	$	10,496
Accrued workers' compensation and general liability claims	3,450		2,623
Sales and property taxes	1,754		981
Other	4,393		3,580
	$	19,974	$	17,680

Other non-current liabilities consist of the following:

	April 2, 2023		January 1, 2023
Accrued workers' compensation and general liability claims	$	6,000	$	6,000
Deferred compensation	223		273
Other	864		935
	$	7,087	$	7,208

6. Stockholders' Equity

Purchase of Treasury Stock

In 2018, the Company's board of directors approved a share repurchase program for up to 1,500,000 shares of the Company's common stock. In 2019, the Company's board of directors approved increases to the share repurchase program of an additional 1,500,000 shares of the Company's common stock for an aggregate approval of 3,000,000 shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 14,746 shares of common stock valued at approximately $0.2 million during the three months ended April 3, 2022. As of April 2, 2023, 137,462 shares of common stock remain available for purchase under the share repurchase program. Additionally, as a result of net share settlement to satisfy the minimum statutory tax withholding requirements in connection with the vesting of restricted stock grants for certain employees, the Company repurchased 63,774 shares of common stock valued at approximately $0.5 million during the three months ended April 2, 2023. The repurchased shares are held as treasury stock at cost.

Stock-Based Compensation

During the three months ended April 2, 2023, the Company granted certain employees and a new non-employee director a total of 214,695 non-vested restricted shares under the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan (the "Fiesta Plan"). The shares granted to employees vest and become non-forfeitable over a four-year vesting period. The shares granted to the new non-employee director vest and become non-forfeitable over a five-year vesting period. The weighted average fair value at grant date for non-vested shares issued during the three months ended April 2, 2023 and April 3, 2022 was $8.19 per share and $9.23 per share, respectively.

9

FIESTA RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except per share data)

During the three months ended April 3, 2022, the Company granted restricted stock units under the 2021 Plan subject to performance conditions. The restricted stock units vest and become non-forfeitable at the end of a three-year vesting period. The weighted average fair value at grant date for the restricted stock units granted during the three months ended April 3, 2022 was $9.02 per share.

Stock-based compensation expense from continuing operations for the three months ended April 2, 2023 and April 3, 2022 was $0.6 million and $0.6 million, respectively. Stock-based compensation expense from discontinued operations for the three months ended April 3, 2022 was $(0.1) million. At April 2, 2023, the total unrecognized stock-based compensation expense related to non-vested restricted shares and restricted stock units was approximately $3.9 million. At April 2, 2023, the remaining weighted average vesting period for non-vested restricted shares was 2.6 years and restricted stock units was 1.6 years.

A summary of all non-vested restricted shares and restricted stock units activity for the three months ended April 2, 2023 is as follows:

	Non-Vested Shares			Restricted Stock Units
	Shares	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2023	617,747	$	9.61	103,814	$	12.09
Granted	214,695	8.19		—	—
Vested and released	(288,152)	10.04		—	—
Forfeited	(9,369)	11.15		—	—
Outstanding at April 2, 2023	534,921	$	8.79	103,814	$	12.09

The fair value of non-vested restricted shares and restricted stock units granted during the three months ended April 2, 2023 is based on the closing stock price on the date of grant.

During the three months ended April 2, 2023, 288,152 non-vested restricted shares vested. A portion of these vested stock awards were net share settled. Based upon the Company's closing stock price on the vesting date, the Company withheld 63,774 shares related to previously non-vested restricted shares to settle the employees' minimum statutory obligation for the applicable income and other employment taxes upon vesting of such restricted shares. Subsequently, the Company remitted the required funds to the appropriate taxing authorities.

Total payments for the employees' tax obligations to the relevant taxing authorities were $0.5 million for the three months ended April 2, 2023 and are reflected as a financing activity within the consolidated statements of cash flows. The payments were used for tax withholdings related to the net share settlements of previously non-vested shares. The payments related to the non-vested restricted shares were treated as share repurchases and recorded as an addition to treasury stock.

7. Earnings (Loss) Per Share

Basic earnings (loss) per share ("EPS") is computed by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic EPS pursuant to the two-class method. The two-class method of computing EPS is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. EPS is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.

Diluted EPS reflects the potential dilution that could occur if the restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted EPS calculation to the extent that performance conditions have been met at the measurement date. Diluted EPS is computed by adjusting the basic weighted

10

FIESTA RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except per share data)

average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method.

All outstanding restricted stock units in the three months ended April 2, 2023 and April 3, 2022 were performance-based awards which had not yet met their performance conditions as of April 2, 2023 and April 3, 2022, respectively.

The computation of basic and diluted EPS is as follows:

	Three Months Ended
	April 2, 2023		April 3, 2022
Basic and diluted EPS:
Loss from continuing operations	$	(2,144)	$	(1,301)
Income (loss) from discontinued operations, net of tax	235		(55)
Net loss	$	(1,909)	$	(1,356)
Less: income allocated to participating securities	—		—
Net loss available to common shareholders	$	(1,909)	$	(1,356)
Weighted average common shares—basic	25,420,090		24,832,541
Restricted stock units	—		—
Weighted average common shares—diluted	25,420,090		24,832,541
Earnings (loss) from continuing operations per common share—basic	$	(0.09)	$	(0.05)
Earnings (loss) from discontinued operations per common share—basic	0.01		—
Earnings (loss) per common share—basic	$	(0.08)	$	(0.05)
Earnings (loss) from continuing operations per common share—diluted	$	(0.09)	$	(0.05)
Earnings (loss) from discontinued operations per common share—diluted	0.01		—
Earnings (loss) per common share—diluted	$	(0.08)	$	(0.05)

8. Commitments and Contingencies

Lease Assignments. In previous years, Pollo Tropical assigned two leases to third parties on properties where it no longer operates with lease terms expiring in 2033 and 2036. Although the assignees are responsible for making the payments required by the lease, the Company is a guarantor under the leases.

The maximum potential liability for future rental payments that the Company could be required to make under these leases at April 2, 2023 was $4.3 million. The Company could also be obligated to pay property taxes and other lease-related costs. The obligations under these leases will generally continue to decrease over time as the operating leases expire. The Company does not believe it is probable that it will be ultimately responsible for the obligations under these leases.

Indemnity of Lease Guarantees. As discussed in Note 2—Dispositions, Taco Cabana, Inc., a former wholly-owned subsidiary of the Company, was sold in the third quarter of 2021 to YTC Enterprises LLC ("YTC Enterprises") through a stock purchase agreement. The Company's previous owners, Carrols Restaurant Group, Inc. ("Carrols") remains a guarantor under 12 Taco Cabana restaurant property leases with lease terms expiring on various dates through 2030, all of which are still operating, as of April 2, 2023. The Company has indemnified Carrols for all obligations under the guarantees per the terms of the Separation and Distribution Agreement entered into in connection with the spin-off of Fiesta. The Company remains liable for all obligations under the terms of the leases in the event YTC Enterprises fails to pay any sums due under the lease, subject to indemnification provisions under the stock purchase agreement.

The maximum potential amount of future undiscounted rental payments the Company could be required to make under these leases at April 2, 2023 was $6.4 million. The obligations under these leases will generally continue to decrease over time as these operating leases expire, except for any execution of renewal options that exist under the original leases. No payments related to these guarantees have been made by the Company to date and none are expected to be required to be made in the future. YTC Enterprises has indemnified the Company for all such obligations and the Company does not believe it is probable it will be required to perform under any of the guarantees or direct obligations.

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FIESTA RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands, except per share data)

Legal Matters. The Company is a party to various legal proceedings incidental to the conduct of business. The Company does not believe that the outcome of any of these matters will have a material effect on its condensed consolidated financial statements. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.

9. Supplemental Cash Flow Information

The following table details supplemental cash flow disclosures of non-cash investing and financing activities from continuing operations: 

	Three Months Ended
	April 2, 2023		April 3, 2022
Supplemental cash flow disclosures:
Interest paid on long-term debt	$	47	$	63
Income tax payments, net	26		5
Supplemental cash flow disclosures of non-cash investing and financing activities:
Accruals for capital expenditures	$	2,791	$	3,846
Right-of-use assets obtained in exchange for lease liabilities:
Operating lease ROU assets	3,644		—
Right-of-use assets and lease liabilities reduced for terminated leases:
Operating lease ROU assets	714		1,820
Operating lease liabilities	714		2,666
Cash and restricted cash reconciliation:
Beginning of period
Cash	$	32,167	$	36,797
Restricted cash	3,631		3,837
Cash and restricted cash, beginning of period	$	35,798	$	40,634
End of period
Cash	$	30,067	$	37,146
Restricted cash	3,631		3,631
Cash and restricted cash, end of period	$	33,698	$	40,777

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of financial condition and results of operations ("MD&A") is written to help the reader understand our company. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the accompanying notes. Any reference to restaurants refers to Company-owned restaurants unless otherwise indicated. Throughout this MD&A, we refer to Fiesta Restaurant Group, Inc., together with its consolidated subsidiaries, as "Fiesta," "we," "our" and "us."

We use a 52–53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended January 1, 2023 contained 52 weeks. The three months ended April 2, 2023 and April 3, 2022 each contained thirteen weeks, respectively. The fiscal year ending December 31, 2023 will contain 52 weeks.

Company Overview

We own, operate and franchise the restaurant brand Pollo Tropical®, which has nearly 35 years of operating history and a loyal customer base. Our Pollo Tropical locations feature fire-grilled and crispy citrus marinated chicken and other freshly prepared menu items. We believe the brand offers a distinct and unique flavor with broad appeal at a compelling value, which differentiates it in the competitive fast-casual and quick-service restaurant segments. All but one of our restaurants offer the convenience of drive-thru windows. As of April 2, 2023, we operated 137 Pollo Tropical Company-owned restaurants, all of which are located in Florida.

We franchise our Pollo Tropical restaurants primarily in international markets, and as of April 2, 2023, we had 21 franchised Pollo Tropical restaurants located in Puerto Rico, Panama, Guyana, and the Bahamas, and nine licensed Pollo Tropical restaurants located in Florida consisting of six on college campuses and locations at a hospital and two sports and entertainment stadiums. We have agreements for the continued development of franchised Pollo Tropical restaurants in certain of our existing franchised markets.

Recent Events Affecting Our Results of Operations

Inflationary Factors

Inflationary factors have been experienced primarily in labor costs and other operating costs categories. Labor costs as a percentage of net sales increased 0.8% in the first quarter of 2023 compared to the first quarter of 2022 primarily due to staffing stabilization with increased operating hours and increased wage rates in 2023. Insurance costs as a percentage of net sales also increased to 1.8% in the first quarter of 2023 from 1.3% in the first quarter of 2022 primarily due to increases in casualty and property insurance rates in 2023.

Pricing action has been taken to offset labor, food and other operating cost increases. In order to maintain value perceptions with our customers, we implemented a phased approach to menu price increases and took lower pricing increases on items purchased by value-conscious customers including our "Pollo Time" promotional items. Price increases include a 5.0% increase in March 2022, a 1.4% increase in June 2022, a 4.0% increase in September 2022, and a 5.0% increase in March 2023. As a result of this phased approach to menu price increases, margin improvement is trailing the impact of cost increases noted above, with improved margins expected in future quarters compared to the first quarter of 2022, barring unforeseen changes in our cost structure and operating environment.

COVID-19 Pandemic

The novel coronavirus (COVID-19) pandemic has affected and may continue to affect the restaurant industry and the economy. The impacts were most severe in 2020 and improved over 2021, 2022, having a minimal impact in the first quarter of 2023. Based on current conditions, we do not expect sales trends to significantly deteriorate further as a direct result of COVID-19. However, labor shortages may negatively impact sales trends and there can be no assurance that sales trends will not deteriorate further. We have implemented measures to control costs to mitigate any negative impact from the COVID-19 pandemic and labor shortages.

Executive Summary—Consolidated Operating Performance for the Three Months Ended April 2, 2023

Our first quarter 2023 results and highlights include the following:

•We recognized a net loss of $(1.9) million, or $(0.08) per diluted share, in the first quarter of 2023 compared to net loss of $(1.4) million, or $(0.05) per diluted share, in the first quarter of 2022 due primarily to impairment charges related to four underperforming restaurants, and higher labor costs, as well as sales mix within cost of sales, partially offset by the impact of higher restaurant sales.

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•We recognized a loss from continuing operations of $(2.1) million, or $(0.09) per diluted share, in the first quarter of 2023 compared to a loss from continuing operations of $(1.3) million, or $(0.05) per diluted share, in the first quarter of 2022 primarily as a result of the foregoing.

•Total revenues increased 8.1% in the first quarter of 2023 to $103.4 million compared to $95.6 million in the first quarter of 2022, driven by an increase in comparable restaurant sales at Pollo Tropical. Comparable restaurant sales increased 9.7% for our Pollo Tropical restaurants resulting from an increase in the impact of product/channel mix and pricing of 8.7%, and an increase in comparable restaurant transactions of 1.0%.

•Consolidated Adjusted EBITDA increased $1.2 million in the first quarter of 2023 to $6.5 million compared to $5.3 million in the first quarter of 2022, driven primarily by the impact of higher restaurant sales, partially offset by higher labor costs, and insurance costs, as well as sales mix within cost of sales. Consolidated Adjusted EBITDA is a non-GAAP financial measure of performance. For a discussion of our use of Consolidated Adjusted EBITDA and a reconciliation from net income (loss) to Consolidated Adjusted EBITDA, see "Management's Use of Non-GAAP Financial Measures."

Results of Operations

Unless otherwise noted, this discussion of operating results relates to our continuing operations.

The following table summarizes the changes in the number and mix of Pollo Tropical Company-owned and franchised restaurants:

	Pollo Tropical
	Owned	Franchised	Total
January 1, 2023	137	32	169
New	—	—	—
Closed	—	(2)	(2)
April 2, 2023	137	30	167
January 2, 2022	138	31	169
New	—	1	1
Closed	—	(1)	(1)
April 3, 2022	138	31	169

Three Months Ended April 2, 2023 Compared to Three Months Ended April 3, 2022

The following table sets forth, for the three months ended April 2, 2023 and April 3, 2022, selected operating results as a percentage of restaurant sales:

	Three Months Ended
	April 2, 2023		April 3, 2022
Costs and expenses:
Cost of sales	31.6	%	32.3	%
Restaurant wages and related expenses	25.6	%	24.8	%
Restaurant rent expense	5.9	%	6.3	%
Other restaurant operating expenses	17.1	%	17.5	%
Advertising expense	3.1	%	3.0	%

Revenues. Revenues include restaurant sales and franchise royalty revenues and fees. Restaurant sales consist of food and beverage sales, net of discounts, at our restaurants. Franchise royalty revenues and fees represent ongoing royalty payments that are determined based on a percentage of franchisee sales and the amortization of initial franchise fees and area development fees associated with the opening of new franchised restaurants. Restaurant sales are influenced by new restaurant openings, closures of restaurants and changes in comparable restaurant sales.

Total revenues increased 8.1% to $103.4 million in the first quarter of 2023 from $95.6 million in the first quarter of 2022. Restaurant sales increased 8.3% to $103.1 million in the first quarter of 2023 from $95.2 million in the first quarter of 2022.

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The following table presents the primary drivers of the increase in restaurant sales for Pollo Tropical for the first quarter of 2023 compared to the first quarter of 2022 (in millions):

Increase in comparable restaurant sales	$	9.0
Decrease in sales related to closed restaurants, including temporary and partial closures	(1.1)
Total increase	$	7.9

Restaurants are included in comparable restaurant sales after they have been open for 18 months. Restaurants are excluded from comparable restaurant sales for any fiscal month in which the restaurant was closed for more than five days. Comparable restaurant sales are compared to the same period in the prior year.

Comparable restaurant sales increased 9.7% for Pollo Tropical restaurants in the first quarter of 2023 compared to the first quarter of 2022. Increases or decreases in comparable restaurant sales result primarily from an increase or decrease in comparable restaurant transactions and in average check. Changes in average check are primarily driven by menu price increases net of discounts and promotions and changes in sales channel and sales mix.

An increase in the net impact of product/channel mix and pricing of 8.7% was coupled with an increase in comparable restaurant transactions of 1.0% in the first quarter of 2023 compared to the first quarter of 2022. The increase in product/channel mix and pricing was driven primarily by menu price increases of 10.0%. Comparable restaurant sales in the first quarter of 2022 and 2023 were also negatively impacted by the net impact of remodels and refreshes that temporarily closed dine-in and counter take-out operations.

Franchise revenues decreased to $0.3 million in the first quarter of 2023 from $0.4 million in the first quarter of 2022 due primarily to decreased franchise fees from Puerto Rico.

Operating Costs and Expenses. Operating costs and expenses include cost of sales, restaurant wages and related expenses, other restaurant expenses and advertising expenses. Cost of sales consists of food, paper and beverage costs including packaging costs, less rebates and purchase discounts. Cost of sales is generally influenced by changes in commodity costs, the sales mix of items sold and the effectiveness of our restaurant-level controls to manage food and paper costs. Key commodities, including chicken and beef, are generally purchased under contracts for future periods of up to one year.

Restaurant wages and related expenses include all restaurant management and hourly productive labor costs, employer payroll taxes, restaurant-level bonuses and related benefits. Payroll and related taxes and benefits are subject to inflation, including minimum wage increases and changes in costs for health insurance, workers' compensation insurance and state unemployment insurance.

Other restaurant operating expenses include all other restaurant-level operating costs, the major components of which are utilities, repairs and maintenance, general liability insurance, sanitation, supplies and credit card and delivery fees.

Advertising expense includes all promotional expenses including television, radio, billboards and other sponsorships and promotional activities and agency fees.

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The following table presents the primary drivers of the changes in the components of restaurant operating margins for Pollo Tropical for the first quarter of 2023 compared to the first quarter of 2022. All percentages are stated as a percentage of restaurant sales:

Cost of sales:
Menu price increases	(3.2)	%
Impact of higher restaurant sales on commodity costs	(0.3)	%
Lower promotions and discounts	(0.2)	%
Sales mix	2.7	%
Operating inefficiencies	0.3	%
Net decrease in cost of sales as a percentage of restaurant sales	(0.7)	%
Restaurant wages and related expenses:
Higher labor costs due to higher wage rates, partially offset by the impact of higher restaurant sales(1)	0.6	%
Higher medical benefits costs	0.2	%
Net increase in restaurant wages and related costs as a percentage of restaurant sales	0.8	%
Other operating expenses:
Impact of higher restaurant sales on utilities costs	(0.3)	%
Lower delivery fee expense and impact of higher restaurant sales	(0.3)	%
Higher insurance costs(2)	0.5	%
Other	(0.3)	%
Net decrease in other restaurant operating expenses as a percentage of restaurant sales	(0.4)	%
Advertising expense:
Increased advertising	0.1	%
Net increase in advertising expense as a percentage of restaurant sales	0.1	%

(1)    Primarily due to staff stabilization with increased operating hours and higher wage rates in 2023.

(2)    Primarily related to increases in property and casualty insurance costs.

Restaurant Rent Expense. Restaurant rent expense includes base rent, contingent rent and common area maintenance and property taxes related to our leases characterized as operating leases. Restaurant rent expense, as a percentage of total restaurant sales, decreased to 5.9% in the first quarter of 2023 from 6.3% in the first quarter of 2022 due primarily to the impact of higher restaurant sales which were partially offset by higher rental costs related to renewed leases.

General and Administrative Expenses. General and administrative expenses are comprised primarily of (1) salaries and expenses associated with the development and support of our Company and brand and the management oversight of the operation of our restaurants; and (2) legal, auditing and other professional fees, corporate system costs, and stock-based compensation expense.

General and administrative expenses were $13.2 million for the first quarter of 2023 and $12.3 million for the first quarter of 2022 and, as a percentage of total revenues, decreased to 12.8% in the first quarter of 2023 from 12.9% in the first quarter of 2022. General and administrative expenses for the first quarter of 2023 included $1.6 million in non-recurring expenses comprised of $0.7 million of restructuring costs, $0.7 million of general and administrative efficiency initiative costs, which primarily consisted of accelerated charges related to deferred implementation and service contract costs related to the prior accounting system, $0.2 million of professional fees, and $0.1 million digital platform costs. General and administrative expenses for the first quarter of 2022 included $1.3 million in non-recurring expenses comprised of $0.7 million of professional fees, $0.3 million of digital platform costs, and $0.3 million of general and administrative efficiency initiative costs.

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Consolidated Adjusted EBITDA. Consolidated Adjusted EBITDA, a non-GAAP financial measure, is the primary measure of profit or loss used by our chief operating decision maker for purposes of assessing performance and is defined as earnings before interest expense, income taxes, depreciation and amortization, impairment and other lease charges (recoveries), goodwill impairment, closed restaurant rent expense, net of sublease income, stock-based compensation expense, other expense (income), net, and certain significant items that management believes are related to strategic changes and/or are not related to the ongoing operation of our restaurants.

Consolidated Adjusted EBITDA may not necessarily be comparable to other similarly titled captions of other companies due to differences in methods of calculation. For a discussion of our use of Consolidated Adjusted EBITDA and a reconciliation from net income (loss) to Consolidated Adjusted EBITDA, see the heading titled "Management's Use of Non-GAAP Financial Measures."

Consolidated Adjusted EBITDA increased to $6.5 million, or 6.3% of total revenues, in the first quarter of 2023 from $5.3 million, or 5.5% of total revenues, in the first quarter of 2022 due primarily to the impact of higher restaurant sales, partially offset by higher labor costs and insurance costs, as well as sales mix within cost of sales.

Restaurant-level Operating Profit. We also use Restaurant-level Operating Profit (formerly Restaurant-Level Adjusted EBITDA), a non-GAAP financial measure, as a supplemental measure to evaluate the performance and profitability of our restaurants in the aggregate, which is defined as Consolidated Adjusted EBITDA excluding franchise royalty revenues and fees, pre-opening costs and general and administrative expenses (including corporate-level general and administrative expenses).

Restaurant-level Operating Profit increased to $17.2 million, or 16.7% of restaurant sales, in the first quarter of 2023 from $15.3 million, or 16.1% of restaurant sales, in the first quarter of 2022 primarily due to the foregoing. For a reconciliation from income (loss) from operations to Restaurant-level Operating Profit, see the heading titled "Management's Use of Non-GAAP Financial Measures."

Depreciation and Amortization. Depreciation and amortization expense decreased to $4.4 million in the first quarter of 2023 from $5.1 million in the first quarter of 2022 primarily as a result of decreased depreciation related to impairment of assets from underperforming and closed restaurants, partially offset by an increase in depreciation related to ongoing reinvestment and enhancements to our restaurants that have been made since the first quarter of 2022.

Impairment and Other Lease Charges (Recoveries). Impairment and other lease charges (recoveries) increased to $2.3 million in the first quarter of 2023 from $(0.7) million in the first quarter of 2022.

Impairment and other lease charges (recoveries) for the three months ended April 2, 2023 include impairment charges of $1.4 million related primarily to impairment of assets from four underperforming Pollo Tropical restaurants, three of which were subsequently closed in the second quarter of 2023, coupled with a lease termination charge of $0.9 million related to the reduction of our corporate office space.

Impairment and other lease charges (recoveries) for the three months ended April 3, 2022 consist of gains from lease terminations.

Each quarter we assess the potential impairment of any long-lived assets that have experienced a triggering event, including restaurants for which the related trailing twelve-month cash flows are below a certain threshold. We determine if there is impairment at the restaurant level by comparing undiscounted future cash flows from the related long-lived assets, exclusive of operating lease payments, to their respective carrying values, excluding operating lease liabilities. In determining future cash flows, significant estimates are made by us with respect to future operating results of each restaurant over its remaining lease term, including sales trends, labor rates, commodity costs and other operating cost assumptions. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset group's carrying amount exceeds its fair value. This process of assessing fair values requires the use of estimates and assumptions, including our ability to sell or reuse the related assets and market conditions, and for right-of-use lease assets, current market lease rent and discount rates, which are subject to a high degree of judgment. If these assumptions change in the future, we may be required to record impairment charges for these assets and these charges could be material.

For three Pollo Tropical restaurants with combined carrying values (excluding right-of-use lease assets) of $1.0 million, projected cash flows are not substantially in excess of their carrying values. If the performance of these restaurants does not improve as projected, an impairment charge could be recognized in future periods, and such charge could be material.

Closed Restaurant Rent Expense, Net of Sublease Income. Closed restaurant rent expense, net of sublease income, was $(0.3) million for the first quarter of 2023 and consisted of closed restaurant rent and ancillary lease costs of $2.0 million net of

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sublease income of $(2.3) million. Closed restaurant rent expense, net of sublease income, was $0.4 million for the first quarter of 2022 and consisted of closed restaurant rent and ancillary lease costs of $2.2 million net of sublease income of $(1.8) million.

Other Expense (Income), Net. Other expense (income), net, for the first quarter of 2023 and 2022 primarily consisted of closed restaurant related costs.

Loss from Operations. As a result of the foregoing, we had a loss from operations of $(2.1) million, or (2.0)% of restaurant sales, in the first quarter of 2023 compared to a loss from operations of $(1.4) million, or (1.5)% of restaurant sales, in the first quarter of 2022.

Interest Expense. Interest expense remained flat at $0.1 million in the first quarter of 2023 compared the first quarter of 2022.

Benefit from Income Taxes. The effective tax rate was 1.5% and 14.6% for the first quarter of 2023 and 2022, respectively. The benefit from income taxes for the first quarter of 2023 was derived using an estimated annual effective tax rate of 2.7% which includes changes in the valuation allowance as a result of originating temporary differences during the year and excludes the discrete impact of a tax deficiency from the vesting of restricted shares of $0.1 million. The benefit from income taxes for the first quarter of 2022 was derived using an estimated annual effective tax rate of 20.0% which includes changes in the valuation allowance as a result of originating temporary differences during the year and excludes the discrete impact of a tax deficiency from the vesting of restricted shares of $0.1 million.

Income (Loss) from Discontinued Operations, Net of Tax. All revenues, costs and expenses and income taxes attributable to Taco Cabana have been aggregated within income (loss) from discontinued operations, net of tax, in the condensed consolidated statement of operations for all periods presented. During the first quarter of 2023, we recognized $0.2 million of income, primarily related insurance proceeds received, partially offset by workers' compensation claims, within income (loss) from discontinued operations, net of tax, in the condensed consolidated statement of operations. During the first quarter of 2022, we recognized $0.2 million of expenses, primarily related to workers' compensation claims, and a reduction of stock-based compensation of $(0.1 million) within loss from discontinued operations, net of tax, in the condensed consolidated statement of operations.

Net Loss. As a result of the foregoing, we had a net loss of $(1.9) million, or (1.8)% of total revenue, in the first quarter of 2023 compared to a net loss of $(1.4) million, or (1.4)% of total revenue, in the first quarter of 2022.

Liquidity and Capital Resources

Unless otherwise noted, this discussion of liquidity and capital resources relates to our combined operations.

We do not have significant receivables or inventory and receive trade credit based upon negotiated terms in purchasing food products and other supplies. Although, as a result of our substantial cash balance, we did not have a working capital deficit at April 2, 2023, we have the ability to operate with a substantial working capital deficit (and we have historically operated with a working capital deficit) because:

•Restaurant operations are primarily conducted on a cash basis;

•Rapid turnover results in a limited investment in inventories; and

•Cash from sales is usually received before related liabilities for supplies and payroll become due.

Capital expenditures and payments related to our lease obligations represent significant liquidity requirements for us. We believe our cash reserves, cash generated from our operations, and availability of borrowings under our senior credit facility will provide sufficient cash availability to cover our anticipated working capital needs and capital expenditures for the next twelve months.

Operating Activities. Net cash provided by operating activities in the first three months of 2023 and 2022 was $3.4 million and $3.9 million, respectively. The decrease in net cash provided by operating activities in the three months ended April 2, 2023 was primarily driven by timing of payments to vendors and credit card receipts, partially offset by an increase in Consolidated Adjusted EBITDA.

Investing Activities. Net cash used in investing activities in the first three months of 2023 was $5.0 million compared to net cash provided by investing activities in the same period of 2022 of $3.6 million. Capital expenditures are generally the largest component of our investing activities and include: (1) new restaurant development, which may include the purchase of real estate; (2) restaurant remodeling/reimaging, which includes the renovation or rebuilding of the interior and exterior of our existing restaurants; (3) other restaurant capital expenditures, which include capital maintenance expenditures for the ongoing reinvestment and enhancement of our restaurants; and (4) corporate and restaurant information systems.

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The following table sets forth our capital expenditures from continuing operations for the periods presented (dollars in thousands):

	Pollo Tropical		Other		Continuing Operations
Three Months Ended April 2, 2023:
New restaurant development	$	—	$	—	$	—
Restaurant remodeling	625		—		625
Other restaurant capital expenditures(1)	3,473		—		3,473
Corporate and restaurant information systems	850		16		866
Total capital expenditures	$	4,948	$	16	$	4,964
Number of new restaurant openings	—				—
Three Months Ended April 3, 2022:
New restaurant development	$	—	$	—	$	—
Restaurant remodeling	1,480		—		1,480
Other restaurant capital expenditures(1)	1,904		—		1,904
Corporate and restaurant information systems	387		34		421
Total capital expenditures	$	3,771	$	34	$	3,805
Number of new restaurant openings	—				—

(1)    Excludes restaurant repair and maintenance expenses included in other restaurant operating expenses in our unaudited condensed consolidated financial statements. For the three months ended April 2, 2023 and April 3, 2022, total restaurant repair and maintenance expenses were approximately $4.1 million and $3.8 million, respectively.

Net cash used in investing activities from discontinued operations in the first three months of 2022 included proceeds from insurance recoveries of $0.2 million.

Total capital expenditures in 2023 are expected to be between $22.0 million and $28.0 million.

Financing Activities. Net cash used in financing activities in the first three months of 2023 was $0.6 million and primarily consisted of payments to repurchase our common stock in connection with the net share settlement to satisfy the minimum statutory tax withholding requirements related to the vesting of restricted stock grants for certain employees. Net cash used in financing activities in the first three months of 2022 consisted of $0.2 million in payments to repurchase our common stock under our share repurchase program.

Senior Credit Facility. On November 23, 2020, we terminated our former amended senior secured revolving credit facility and entered into a new senior secured credit facility, which is referred to as the "senior credit facility." The senior credit facility was comprised of a term loan facility (the "term loan facility") of $75.0 million and a revolving credit facility (the "revolving credit facility") of up to $10.0 million and matures on November 23, 2025. The senior credit facility also provides for potential incremental term loan borrowing increases of up to $37.5 million in the aggregate, subject to, among other items, compliance with a minimum Total Leverage Ratio and other terms specified in the senior credit facility. As required by the terms of the senior credit facility, the net proceeds from the sale of Taco Cabana were used to fully repay our outstanding term loan borrowings on August 16, 2021. The early repayment was subject to a 103% loan prepayment premium.

The senior credit facility provides that we be in compliance with the Total Leverage Ratio under the senior credit facility beginning January 3, 2022. We will be permitted to exercise equity cure rights with respect to compliance with the Total Leverage Ratio subject to certain restrictions as set forth in the senior credit facility.

Borrowings under the senior credit facility bear interest at a rate per annum, at our option, equal to either (all terms as defined in the senior credit facility):

1)    the Base Rate plus the Applicable Margin of 6.75% with a minimum Base Rate of 2.00%, or

2)    the LIBOR (or Benchmark Replacement) Rate plus the Applicable Margin of 7.75%, with a minimum LIBOR (or Benchmark Replacement) Rate of 1.00%.

In addition, the senior credit facility requires us to pay a commitment fee of 0.50% per annum on the daily amount of the unused portion of the revolving credit facility.

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The outstanding borrowings under the revolving credit facility are prepayable without penalty or premium (other than customary breakage costs). The outstanding borrowings under the term loan facility were voluntarily prepayable by us, and the term loan facility provided that each of the following required a mandatory prepayment of outstanding term loan borrowings by us as follows: (i) 100% of any cash Net Proceeds (as defined in the senior credit facility) in excess of $2.0 million individually or in the aggregate over the term of the senior credit facility in respect of any Casualty Event (as defined in the senior credit facility) affecting collateral provided that we were permitted to reinvest such Net Proceeds in accordance with the senior credit facility, (ii) 100% of any Net Proceeds of a Specified Equity Contribution (as defined in the senior credit facility), (iii) 100% of any cash Net Proceeds from the issuance of debt issued by us or our subsidiaries other than Permitted Debt (as defined in the senior credit facility), (iv) 100% of any Net Proceeds from the Disposition (as defined in the senior credit facility) of certain assets individually, or in the aggregate, in excess of $2.0 million in any fiscal year provided that we were permitted to reinvest such Net Proceeds in accordance with the senior credit facility and (v) beginning with the fiscal year ending January 2, 2022, an amount equal to the Excess Cash Flow (as defined in the senior credit facility) in accordance with the senior credit facility.

Our senior credit facility contains customary default provisions, including without limitation, a cross default provision pursuant to which it is an event of default under this facility if there is a default under any of our indebtedness having an outstanding principal amount in excess of $5.0 million which results in the acceleration of such indebtedness prior to its stated maturity or is caused by a failure to pay principal when due.

The senior credit facility contains certain covenants, including, without limitation, those limiting our ability to, among other things, incur indebtedness, incur liens, sell or acquire assets or businesses, change the character of our business in any material respects, engage in transactions with related parties, make certain investments, make certain restricted payments or pay dividends.

Our obligations under the senior credit facility are secured by all of our and our subsidiaries' assets (including a pledge of all of the capital stock and equity interests of our subsidiaries).

Under the senior credit facility, the lenders may terminate their obligation to advance and may declare the unpaid balance of borrowings, or any part thereof, immediately due and payable upon the occurrence and during the continuance of customary defaults which include, without limitation, payment default, covenant defaults, bankruptcy type defaults, defaults on other indebtedness, certain judgments or upon the occurrence of a change of control (as specified in the senior credit facility).

As of April 2, 2023, we were in compliance with the financial covenants under our senior credit facility. At April 2, 2023, $10.0 million was available for borrowing under the revolving credit facility.

Off-Balance Sheet Arrangements and Cash Requirements

We have no off-balance sheet arrangements.

There have been no significant changes outside the ordinary course of business to our cash requirements since January 1, 2023. Information regarding our cash requirements is included under "Cash Requirements" in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended January 1, 2023.

Inflation

The inflationary factors that have historically affected our results of operations include increases in food and paper costs, labor and other operating expenses and energy costs. Labor costs in our restaurants are impacted by a number of factors such as labor supply and changing market conditions, as well as changes in the federal and state hourly minimum wage rates as well as changes in payroll related taxes, including federal and state unemployment taxes. Labor supply across other industries also negatively impacts the costs of supplies, commodities, logistics, and utilities. We typically attempt to offset the effect of inflation, at least in part, through periodic menu price increases and various cost reduction programs. However, no assurance can be given that we will be able to fully offset such inflationary cost increases in the future.

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Critical Accounting Estimates

Our unaudited interim condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by the application of our accounting policies. Our significant accounting policies are described in the "Basis of Presentation" footnote in the notes to our consolidated financial statements for the year ended January 1, 2023 included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2023. Critical accounting estimates are those that require application of management's most difficult, subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. These estimates involve a significant level of estimation uncertainty and are reasonably likely to have a material impact on the financial condition or results of operations. There have been no material changes affecting our critical accounting policies for the three months ended April 2, 2023.

Management's Use of Non-GAAP Financial Measures

Consolidated Adjusted EBITDA is a non-GAAP financial measure. We use Consolidated Adjusted EBITDA in addition to net income (loss) and income (loss) from operations to assess our performance, and we believe it is important for investors to be able to evaluate us using the same measures used by management. We believe this measure is an important indicator of our operational strength and the performance of our business and it provides a view of operations absent non-cash activity and items that are not related to the ongoing operation of our restaurants or affect comparability period over period. Consolidated Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization, impairment and other lease charges (recoveries), goodwill impairment, closed restaurant rent expense, net of sublease income, stock-based compensation expense, other expense (income), net, and certain significant items that management believes are related to strategic changes and/or are not related to the ongoing operation of our restaurants as set forth in the reconciliation table below. Consolidated Adjusted EBITDA as calculated by us is not necessarily comparable to similarly titled measures reported by other companies, and should not be considered as an alternative to net income (loss), earnings (loss) per share, cash flows from operating activities or other financial information determined under GAAP.

We also use Restaurant-level Operating Profit (previously presented as Restaurant-level Adjusted EBITDA) as a supplemental measure to evaluate the performance and profitability of our restaurants in the aggregate, which is defined as Consolidated Adjusted EBITDA excluding franchise royalty revenues and fees, pre-opening costs, and general and administrative expenses (including corporate-level general and administrative expenses). Restaurant-level Operating Profit margin is derived by dividing Restaurant-level Operating Profit by restaurant sales. Restaurant-level Operating Profit is also a non-GAAP financial measure.

Management believes that Consolidated Adjusted EBITDA and Restaurant-level Operating Profit, when viewed with our results of operations calculated in accordance with GAAP and our reconciliation of net income (loss) to Consolidated Adjusted EBITDA and reconciliation of income (loss) from operations to Restaurant-level Operating Profit (i) provide useful information about our operating performance and period-over-period changes, (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 cash flow from operating activities as indicators of operating performance or liquidity. Also these measures may not be comparable to similarly titled captions of other companies.

All such financial measures have important limitations as analytical tools. These limitations include the following:

•Such financial information does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments to purchase capital equipment;

•Such financial information does not reflect interest expense or the cash requirements necessary to service payments on our debt;

•Although depreciation and amortization are non-cash charges, the assets that we currently depreciate and amortize will likely have to be replaced in the future, and such financial information does not reflect the cash required to fund such replacements; and

•Such financial information does not reflect the effect of earnings or charges resulting from matters that our management does not consider to be indicative of our ongoing operations. However, some of these charges and gains (such as impairment and other lease charges (recoveries), closed restaurant rent expense, net of sublease income, other income and expense and stock-based compensation expense) have recurred and may recur.

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A reconciliation from consolidated net income (loss) to Consolidated Adjusted EBITDA follows (in thousands).

	Three Months Ended
	April 2, 2023			April 3, 2022
Net loss	$	(1,909)		$	(1,356)
Loss (income) from discontinued operations, net of tax	(235)			55
Benefit from income taxes	(33)			(222)
Loss from continuing operations before taxes	(2,177)			(1,523)
Add:
Non-general and administrative adjustments:
Depreciation and amortization	4,392			5,114
Impairment and other lease charges (recoveries)	2,256			(702)
Interest expense	83			85
Closed restaurant rent expense, net of sublease income	(284)			380
Other expense (income), net	15			51
Stock-based compensation expense	4			7
Total non-general and administrative adjustments	6,466			4,935
General and administrative adjustments:
Stock-based compensation expense	595			623
Non-recurring professional fees(1)	165			705
G&A efficiency initiatives(2)	669			261
Restructuring costs(3)	717			—
Digital costs(4)	91			291
Total general and administrative adjustments	2,237			1,880
Consolidated Adjusted EBITDA	$	6,526		$	5,292
Total revenues	$	103,371		$	95,609
Net loss as a percentage of total revenues	(1.8)		%	(1.4)		%
Consolidated Adjusted EBITDA as a percentage of total revenues	6.3		%	5.5		%

(1)    Non-recurring professional fees consist of costs related to growth initiatives.

(2)    G&A efficiency initiatives consist of non-recurring retention bonus costs and costs related to the acceleration and write-off of costs related to accounting system implementation.

(3)     Restructuring costs for the three months ended April 2, 2023 include severance costs related to the departure of a former executive, CEO search firm fees, and eliminated positions related to the accounting outsourcing.

(4)    Digital costs for the three months ended April 2, 2023 and April 3, 2022 include costs related to enhancing the digital experience for our customers.

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A reconciliation from income (loss) from operations to Restaurant-level Operating Profit follows (in thousands):

	Three Months Ended
	April 2, 2023			April 3, 2022
Loss from operations	$	(2,094)		$	(1,438)
Add:
Non-general and administrative adjustments:
Depreciation and amortization	4,392			5,114
Impairment and other lease charges (recoveries)	2,256			(702)
Closed restaurant rent expense, net of sublease income	(284)			380
Other expense (income), net	15			51
Stock-based compensation expense	4			7
Total non-general and administrative adjustments	6,383			4,850
General and administrative adjustments:
Stock-based compensation expense	595			623
Non-recurring professional fees(1)	165			705
G&A efficiency initiatives(2)	669			261
Restructuring costs(3)	717			—
Digital costs(4)	91			291
Total general and administrative adjustments	2,237			1,880
Consolidated Adjusted EBITDA	$	6,526		$	5,292
Restaurant-level adjustments:
Add: Other general and administrative expense(5)	10,946			10,462
Less: Franchise royalty revenue and fees	307			409
Restaurant-level Operating Profit	$	17,165		$	15,345
Restaurant sales	$	103,064		$	95,200
Loss from operations as a percentage of restaurant sales	(2.0)		%	(1.5)		%
Restaurant-level Operating Profit as a percentage of restaurant sales	16.7		%	16.1		%

(1)    Non-recurring professional fees consist of costs related to growth initiatives.

(2)    G&A efficiency initiatives consist of non-recurring retention bonus costs and costs related to the acceleration and write-off of costs related to accounting system implementation.

(3)     Restructuring costs for the three months ended April 2, 2023 include severance costs related to the departure of a former executive, CEO search firm fees, and eliminated positions related to the accounting outsourcing.

(4)    Digital costs for the three months ended April 2, 2023 and April 3, 2022 include costs related to enhancing the digital experience for our customers.

(5)    Excludes general and administrative adjustments included in Consolidated Adjusted EBITDA.

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Forward Looking Statements

Matters discussed in this report and in our public disclosures, whether written or oral, relating to future events or our future performance, including any discussion, express or implied, regarding our anticipated growth, operating results, future earnings per share, plans, objectives, the impact of our other business initiatives, the impact of our initiatives designed to strengthen our liquidity and cash position, including those related to working capital efficiency initiatives and sales of real property and the impact of the COVID-19 pandemic and our initiatives designed to respond to the COVID-19 pandemic on future sales, margins, earnings and liquidity, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). These statements are often identified by the words "believe," "positioned," "estimate," "project," "plan," "goal," "target," "assumption," "continue," "intend," "expect," "future," "anticipate," and other similar expressions, whether in the negative or the affirmative, that are not statements of historical fact. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict, and you should not place undue reliance on our forward-looking statements. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under "Risk Factors" and elsewhere in this report and in our other public filings with the United States Securities and Exchange Commission ("SEC"). All forward-looking statements and the internal projections and beliefs upon which we base our expectations included in this report or other periodic reports represent our estimates as of the date made and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we expressly disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

We purchase certain products which are affected by commodity prices and are, therefore, subject to price volatility caused by weather, market conditions and other factors which are not considered predictable or within our control. Although many of the products purchased are subject to changes in commodity prices, certain purchasing contracts or pricing arrangements have been negotiated in advance to minimize price volatility. Where possible, we use these types of purchasing techniques to control costs as an alternative to using financial instruments to hedge commodity prices. Additionally, shortages in key ingredients may impact commodity prices. In many cases, we believe we will be able to address commodity cost increases that are significant and appear to be long-term in nature by adjusting our menu pricing. However, long-term increases in commodity prices may result in lower restaurant-level operating margins.

There were no material changes from the information presented in Item 7A included in our Annual Report on Form 10-K for the year ended January 1, 2023 with respect to our market risk sensitive instruments.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. Our senior management is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures. We have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report, with the participation of our Chief Executive Officer and Acting Chief Financial Officer, as well as other key members of our management. Based on this evaluation, our Chief Executive Officer and Acting Chief Financial Officer concluded that our disclosure controls and procedures were effective as of April 2, 2023.

Changes in Internal Control over Financial Reporting. As of February 2023, we have outsourced certain accounting processes to a third-party firm, including utilizing that firm's accounting platform. As a result, we modified and removed certain existing controls as well as implemented new controls and procedures impacted by the transition. Although certain key controls related to the processing and recording of transactions are now controlled by the third-party firm, management retains ultimate responsibility, including oversight and monitoring, of the internal controls, including those related to outsourced processes, over financial reporting for the Company. With the exception of those controls modified, removed, implemented or transitioned to the third-party firm, no other changes occurred in our internal control over financial reporting during the first quarter of 2023 that materially affected, or is reasonably likely to affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are a party to various litigation matters incidental to the conduct of business. We do not believe that the outcome of any of these matters will have a material adverse effect on our business, results of operations or financial condition.

ITEM 1A. RISK FACTORS

Part 1—Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 1, 2023, describes important factors that could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Form 10-Q or presented elsewhere by management from time-to-time. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended January 1, 2023.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the years ended December 30, 2018, and December 29, 2019, our board of directors authorized the repurchase of an aggregate 3.0 million shares of our common stock through the following actions:

•1.5 million shares of common stock were authorized for repurchase on February 26, 2018;

•an additional 0.5 million shares of common stock were authorized for repurchase on August 7, 2019; and

•an additional 1.0 million shares of common stock were authorized for repurchase on November 5, 2019.

Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, general market and economic conditions, and other corporate considerations. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by our board of directors.

The following table sets forth information with respect to the Company's repurchases of common stock during the quarter ended April 2, 2023:

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 2, 2023 to February 5, 2023	54,857	$	8.64	—	137,462
February 6, 2023 to March 5, 2023	6,396	8.50		—	137,462
March 6, 2023 to April 2, 2023	2,521	8.49		—	137,462
Total	63,774	$	8.62	—

(1) Shares purchased in order to meet participants' tax withholding liability through net share settlement related to vesting of restricted stock awards.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(a) The following exhibits are filed as part of this report.

Exhibit No.
10.1	Offer letter dated April 12, 2023 between Fiesta Restaurant Group, Inc. and Dirk Montgomery#+
10.2	Second Amendment to Agreement dated as of April 12, 2023 between Fiesta Restaurant Group, Inc. and Dirk Montgomery#+
19.1	Fiesta Restaurant Group, Inc. Policy on Insider Trading#
19.2	Fiesta Restaurant Group, Inc. Policy on Trading Procedures for Covered Individuals#
31.1	Chief Executive Officer's Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
31.2	Chief Financial Officer's Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
32.1	Chief Executive Officer's Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
32.2	Chief Financial Officer's Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
101.INS	XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
# Filed herewith.
+ Compensatory plan or arrangement.

+ Compensatory plan or arrangement

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIESTA RESTAURANT GROUP, INC.
Date: May 10, 2023	/s/ DIRK MONTGOMERY
	(Signature)
	Dirk Montgomery Chief Executive Officer
Date: May 10, 2023	/s/ TYLER YOESTING
	(Signature)
	Tyler Yoesting Acting Chief Financial Officer, Vice President, Corporate Controller and Chief Accounting Officer
	(Principal Financial Officer)

28

EX-10.1

12 Exhibit 10.1

EX-10.2

Exhibit 10.2

EX-19.1

FIESTA RESTAURANT GROUP, INC. Dallas, Texas Subject: POLICY ON INSIDER TRADING Effective Date: May 7, 2012 Revised: October 29, 2019 Affects: All Employees (Including Temporary Employees, Independent Consultants, and Contractors) and Members of the Board of Directors Introduction During the course of your employment with Fiesta Restaurant Group, Inc. and its subsidiaries, Pollo Tropical and Taco Cabana (collectively, the “Company”), or service on the Company’s Board of Directors, you may learn confidential and sensitive information concerning the Company, its vendors, suppliers, distributors, or other companies with which the Company has business or contractual relationships. Some of this information has the potential for affecting the market price of the stock of the Company or the other companies involved. The federal securities laws impose considerable civil and criminal penalties on anyone who improperly obtains or uses material, non-public information in connection with a purchase or sale of stock or securities. In addition to civil damages of up to three times the profit gained, an individual may be subject to criminal sanctions, including imprisonment of up to 20 years and a criminal fine of up to $5,000,000, for any violation. The United States Securities and Exchange Commission (“SEC”) and courts have significant power to impose penalties for violations of the insider trading laws. The SEC, together with the U.S. Department of Justice, pursue insider trading violations vigorously, both from a criminal and civil perspective, against both individuals and companies. With this in mind, you are asked to carefully read this Policy on Insider Trading. You are encouraged to contact the General Counsel if you have any questions regarding, or do not understand any aspect of, this Policy. In addition to serving as a resource regarding compliance with the insider trading laws, the General Counsel is responsible for monitoring compliance with this Policy and is accountable to the Company’s Board of Directors. Failure to observe and comply with all of the provisions contained in this Policy may subject you to disciplinary action by the Company, including discharge from employment or service. Explanation of the Law The Company’s common stock is publicly traded on The Nasdaq Global Select Market (“Nasdaq”). Federal securities laws and regulations generally make it illegal to buy or sell shares of stock (or other securities) of a company while you are aware of material non-public information concerning that company. It is also illegal to share material, non-public information with a third party (commonly called “tipping”) so that the third party can buy or sell the stock. These prohibitions apply to the common stock of our Company and any other securities, including debt securities, of the Company. What is “material, non-public information”? Exhibit 19.1

“Material” information is any information that (a) a reasonable person likely would consider important in deciding whether to buy, sell or retain a security or (b) could be expected to affect the market price of a company’s stock, whether positive or negative. The following list are examples of information that will generally be regarded as material. These are examples only, and not intended as a complete list of what could be considered material inside information: • matters involving significant new restaurant openings or expansion plans, or new products; • information about significant increases or decreases in the Company’s sales or financial performance; • matters relating to a new financing; • gain or loss of a significant vendor, distributor, or supplier; • earnings-related information, including preliminary financial results, either positive or negative; • new internally developed financial projections; • a pending or proposed merger, acquisition, joint venture, tender offer or exchange offer; • a pending or proposed sale or disposition of significant assets; • changes in dividend policies, the declaration of a stock split or the offering of additional securities; • impending bankruptcy or financial liquidity problems; • changes in senior management; • changes in auditors or notification that an audit report can no longer be relied upon; • a material failure, interruption, or security breach in the Company’s information technology systems; • changes in credit ratings; or • significant litigation or notifications from regulatory agencies (such as the SEC or the Federal Trade Commission) or from an exchange or market on which Company securities are listed. It is not possible to define all categories of material information, as the ultimate determination of materiality by enforcement authorities will be based on an assessment of all the facts and circumstances. Information that is material at one point and time may cease to be material at another, and vice versa. Determinations regarding the “materiality” of information are inherently judgment based; the General Counsel is always available to assist you if you are unsure about what is or is not material information. Please remember that the public, media, and authorities may use hindsight in judging what information is material. “Non-public” information is any information that has not been disclosed broadly to the marketplace and that the investing public has not yet had time to absorb and evaluate. Information is considered to be available to the public only when it has been publicly released or announced (for example, by means of a press release or a filing with the SEC) and enough time has passed to permit the market to learn about and evaluate the information. This normally will occur at the close of the first full trading day after the date on which the public release or announcement has

occurred. The Company’s Policy 1. No Trading On Material, Non-Public Information. If you are aware of material, non-public information about the Company, you may not (i) buy or sell stock or other securities issued by the Company or engage in any other action or conduct to take personal advantage of that information, either directly or indirectly, or (ii) pass along the information to others outside the Company, including family members or friends (so-called “tipping”). It is important that you understand the breadth of activities that constitute illegal insider trading and the consequences, which can be severe. Both the SEC and the Nasdaq investigate and are very effective at detecting insider trading. Cases have been successfully prosecuted against individuals as a result of trading by employee through foreign accounts, trading by family members and friends, and trading involving only a small number of shares. It does not matter if a transaction may be necessary or justifiable for independent reasons (such as a need to raise money for an emergency), and there are no exceptions for small or “immaterial” transactions. Use of material inside information is never permitted. In general, the Company recommends that you do not recommend or suggest that someone buy, sell or retain the Company’s stock. This will minimize the chance that you could be subject to liability for tipping. You should never make recommendations or express opinions about trading in Company securities on the basis of material non-public information to any person. You also should not: • Disclose material non-public information to individuals (i) within the Company whose jobs do not require them to have that information or (ii) outside the Company, including to family members, friends, business associates, and investors, unless such disclosure is authorized by the Company; or • Respond to any requests for information (particularly financial results and/or projections), including to affirm or deny information about the Company, from anyone outside the Company, such as a stock analyst. If you receive any such requests, please contact the General Counsel. To allow for adequate public dissemination and evaluation of material information after public disclosure, you should allow a reasonable period of time to elapse (at least one full trading days after the date of the public disclosure or announcement) before trading. For example, if the Company makes an announcement on a Monday (prior to the opening of the market), you should not trade in Company securities until Tuesday. 2. Transactions by Family Members. The restrictions on trading Company securities imposed by this Policy also apply to (i) the members of your immediate family who reside with you (i.e., any spouse, parents, children (including children away at college), grandchildren, grandparents, in-laws and siblings) and any other persons living in your household and (ii) any family members who do not live with you but whose transactions in Company securities are directed by, or subject to, your influence or

control. Accordingly, you are responsible for informing any such persons of this Policy and ensuring that they conform their actions to the requirements of this Policy. 3. Company Plans. The restrictions on trading also apply to certain transactions under Company plans, as follows. • Stock Options. Although the restrictions in this Policy do not apply to the exercise of stock options granted to you by the Company, they do apply to the sale of the stock by you after you have exercised those options. The restrictions would also apply to broker-assisted cashless exercises of your options, or any other market sale where you are simultaneously selling some of the shares of your stock in order to pay the exercise price of options. • Restricted Stock. This Policy does not apply to the vesting and settlement of restricted stock, or the withholding or sale of stock back to the Company to satisfy tax withholding obligations upon the vesting of any restricted stock. The Policy does apply, however, to any market sale of stock after vesting. 4. Transactions in Other Public Company Securities. If you are working on a matter involving another publicly-held company, including a supplier, distributor, vendor, customer, partner, or company with which the Company has entered into or is negotiating a business or contractual relationship or transaction, you ’may not trade in the securities of such company on the basis of material non-public information, including information that you have obtained in the course of your employment with the Company. Additionally, if you are aware of material non-public information about any such company, you must not recommend or suggest that anyone buy, sell or retain securities of that company. Examples of material non-public information affecting another company include information about a major contract or potential merger. Note that even if information is immaterial to the Company, it may nevertheless be material to the other entity. Regardless of whether you are working on a matter involving any of the foregoing types of suppliers, distributors, vendors, etc., you must notify the Company’s General Counsel before taking a “material position” in the securities, or becoming a member of the Board of Directors, of such a company. For these purposes, “taking a material position” means acquiring beneficial ownership of greater than 5% of such outstanding securities or investing 10% or more of your net worth in such securities. 5. Other Trading Restrictions. In addition to the trading restrictions described above, you are specifically prohibited from: • Short selling Company securities (i.e., selling securities that you do not own at the time of sale); and • Purchasing securities or other financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s securities or diminish the full

ownership risks and rewards of your direct or indirect Company stock holdings. Examples of hedging transactions include “costless collars,” forward sale contracts, equity swaps, and exchange funds. 6. Post-Termination Transactions. This Policy applies even after termination of your employment or service with the Company. If your service as an employee of the Company terminates while you are aware of material non-public information regarding the Company, you will continue to be subject to this Policy, and specifically to the ongoing prohibition against trading, until the information has become public or is no longer material. 7. Stop-Transfer Instructions. The Company may, in its discretion, provide stop-transfer instructions to its transfer agent in order to enforce trading restrictions imposed by this Policy, including, without limitation, restrictions relating to post-termination transactions. 8. Violations. As mentioned in the Introduction to this Policy, any person who violates the federal securities laws has committed a crime and may be subject to imprisonment and a criminal fine of up to $5,000,000 and imprisonment for up to 20 years. A violator may also be personally liable in civil lawsuits for up to three times the profit gained for the harm caused by illegal trading by the violator or by third parties trading on material, non-public information provided by or through the violator. The Company will cooperate with any state or federal law enforcement agency investigating or prosecuting individuals for allegedly trading on or transmitting material, non-public information. If you have any questions about this Policy on Insider Trading, or if you have any concerns regarding a proposed transaction involving the Company’s stock, you are encouraged to contact our General Counsel. You should note, however, that as a matter of law and corporate policy, you are ultimately responsible for conforming your actions to the requirements of the insider trading laws and the Company’s Policy on Insider Trading. Regardless of any advice or information you receive, you will bear the consequences of any legal or policy violations. Furthermore, the General Counsel’s failure to raise an objection to a transaction will not constitute a recommendation by the Company or any of its directors, officers or employees that you engage in that transaction. Failure to observe and comply with all of the provisions contained in this policy may subject you to disciplinary action by the Company, including discharge. The Company reserves the right to amend this Policy on Insider Trading at any time, but intends to provide reasonable written notification of any such revision.

EX-19.2

FIESTA RESTAURANT GROUP, INC. Dallas, Texas Subject: POLICY ON TRADING PROCEDURES FOR COVERED INDIVIDUALS Effective Date: May 7, 2012 Revised: October 29, 2019 Affects: Members of the Board of Directors, Executive Officers and Designated Individuals 1. Covered Individuals. In addition to the policies and procedures that apply to all employees generally under the Fiesta Restaurant Group, Inc. Policy on Insider Trading, the policies and procedures contained in this Policy on Trading Procedures for Covered Individuals (combined with the Company’s Policy on Insider Trading, the “Policy”) apply to the following persons (collectively, the “Covered Individuals”). • All members of the Board of Directors and all Executive Officers who are required to file reports under Section 16 of the Securities Exchange Act of 1934, as amended (“Section 16”); and • Any other persons designated from time to time by the Audit Committee and/or the General Counsel. For clarity, a current list of Covered Individuals (by title) is attached to this Policy as Exhibit A. 2. Overview. The Policy establishes procedures and guidelines for buying or selling securities issued by the Company. • The Policy provides that, if you are aware of information regarding the Company that is material and is not generally known to the public, you may not buy, sell, or otherwise transact in the Company’s securities, and you may not share that information with others. • The Policy provides for “blackout periods” during which Covered Individuals are prohibited from buying or selling Company securities. • The Policy requires that all Covered Individuals obtain clearance from our General Counsel before buying or selling any Company securities, including during periods when the Company is not in a blackout. These prohibitions apply to any security of the Company and its subsidiaries, including debt securities, and derivative securities, such as stock options – not just common stock of the Company that you may hold outright. You should review this Policy in detail and contact the Company’s General Counsel if you have any questions. You should note, however, that as a matter of law and corporate policy, you are ultimately responsible for conforming your actions to the requirements of the insider Exhibit 19.2

trading laws, this Policy. Regardless of any advice or information you receive, you will bear the consequences of any legal violations or violations of this Policy. Furthermore, the General Counsel’s failure to raise an objection to a transaction will not constitute a recommendation by the Company or any of its directors, officers or employees that you engage in that transaction. Once you have carefully reviewed this Policy, please sign the attached Management Insider Trading Policy Compliance Statement and return it to our General Counsel. Violating the insider trading laws can result in significant criminal and civil liabilities, including imprisonment of up to 20 years and fines of up to $5,000,000. Furthermore, failure to observe and comply with all of the provisions contained in this Policy may subject you to disciplinary action by the Company, including discharge from employment or service. 3. Blackout Periods. Throughout the year, there are certain periods during which Covered Individuals are more likely be in possession of material non-public information regarding the Company, including the Company’s results of operations, cash flows and financial condition. As a result, Covered Individuals may not trade in the Company’s securities during a “blackout period” beginning on the fifteenth (15th) day of the third month of each fiscal quarter and continuing through the first full trading day after the Company publicly releases its earnings for that fiscal quarter (or the fiscal year in the case of the fourth fiscal quarter). In other words, the only period during which you may be permitted to trade in the Company’s securities (referred to as a “trading window”) begins on the second trading day following the Company’s public release of earnings for the prior fiscal quarter (or fiscal year, as applicable), which trading window continues through the fourteenth (14th) day of the third month of the then- current quarter. However, please remember that you remain subject to the insider trading laws at all times and, accordingly, you are prohibited from engaging in transactions even during this trading window if you are aware of any material, non-public information about the Company. To illustrate the “blackout period” and “trading window” concepts: • For the quarter ended June 30, the blackout period runs from the opening of the market on June 15th through the end of the first full trading day after the Company releases earnings for that quarter (which typically would be expected in early August). No trading is allowed during that blackout period. • The trading window re-opens in early August, on the second trading day after earnings are released. The trading window then remains open through September 14th, and the next blackout period begins on September 15th. In addition, there may be other circumstances where the Company will impose a temporary blackout period on the Covered Individuals and/or other employees if the General Counsel or the Company’s Board of Directors determines that circumstances warrant a halt in trading by Covered Individuals, such as when the Company is involved in a material transaction which could have an impact on the market price of the Company’s securities. The General Counsel will notify Covered Individuals of the existence of any temporary blackout period. Covered Individuals may not trade in the Company’s securities until the temporary blackout period expires or is terminated, and they

are prohibited from disclosing the existence of the temporary blackout period to any other persons. Transactions that comply with pre-arranged written plans pursuant to SEC Rule 10b5-1 are permissible during blackout periods, subject to the conditions described below. 4. Pre-Clearance on Trading. To minimize the risk of an inadvertent violation of the securities laws, all Covered Individuals must receive the permission of the General Counsel (“pre-clearance”) before engaging in any transaction (purchase, sale, gift or other transfer, option exercise, etc.) in Company securities, even during a permitted trading window. A request for pre-clearance should be submitted, via e-mail, to the General Counsel at least one business day in advance of the proposed transaction. When requesting pre-clearance, you should confirm in the request that you (i) have reviewed this Policy and (ii) are not aware of any material non-public information about the Company. The General Counsel is under no obligation to approve any trade. Written permission via e-mail will be given for a specified period, but the Covered Individual will continue to be subject to the prohibition on trading while aware of material, non-public information. If the proposed transaction receives pre-clearance, you have two business days from receiving the pre-clearance to submit your transaction order to your broker. If you do not submit the order within that time frame, you must again request pre-clearance. As previously indicated, the General Counsel’s clearance for a transaction will not constitute a recommendation by the Company or any of its directors, officers or employees that you engage in that transaction and you bear the ultimate responsibility for confirming your actions to the requirements of the insider trading laws. All Covered Individuals must use their own judgment in determining whether it is appropriate under the Policy to enter into a particular transaction. 5. Transactions by Family Members. The restrictions on trading Company securities imposed by this Policy, including the “blackout period” trading prohibitions and pre-clearance requirements set forth in Sections 3 and 4 above, also apply to (a) the members of your immediate family who reside with you (i.e., any spouse, parents, children (including children away at college), grandchildren, grandparents, in-laws and siblings), any other persons living in your household and (b) any family members who do not live with you but whose transactions in Company securities are directed by, or subject to, your influence or control. Accordingly, you are responsible for informing any such persons of this Policy and ensuring that they conform their actions to the requirements of this Policy. 6. Company Plans. The restrictions imposed by this Policy also apply to your acquisition of Company stock through Company plans, as follows: • Stock Option Exercises. While the restrictions in this Policy do not apply to the exercise of stock options granted to you by the Company, they do apply to sales of securities acquired through the exercise of those options (including any sale as part of a broker- assisted cashless exercise of stock options). • Restricted Stock and Restricted Stock Units (Including Performance Units). The Policy does not apply to the vesting and settlement of restricted stock and restricted stock units (including performance units), or the withholding or sale of stock back to the Company to satisfy tax withholding obligations upon the vesting of any restricted stock or restricted stock units. The Policy does apply, however, to any market sale of stock after vesting.

7. 10b5-1 Plans SEC Rule 10b5-1 provides a defense from insider trading liability. To be eligible to rely on this defense, you must enter into a “10b5-1 plan” for trading in Company securities that meets the requirements of Rule 10b5-1. Company securities may then be purchased or sold pursuant to a 10b5-1 plan without regard to certain insider trading restrictions. In general, a 10b5-1 plan must be entered into at a time when (i) you are not aware of material nonpublic information and (ii) a blackout period is not in effect. Once the plan is adopted, you may not exercise any influence over the amount of Company securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party. Any Covered Individual who wishes to enter into a 10b5-1 plan must submit the trading plan to the General Counsel for prior written approval at least five business days prior to the entry into the plan. No trades may be made within 30 days of the date that the 10b5-1 plan is established. Subsequent modifications to any 10b5-1 plan must also be pre-approved by the General Counsel. Whether or not pre-approval will be granted will depend on all the facts and circumstances at the time. 8. Transactions in Other Public Company Securities. If you are working or advising on a matter involving another publicly-held company, including a supplier, distributor, vendor, customer, partner, or company with which the Company has entered into or is negotiating a business or contractual relationship or transaction, you may not trade in the securities of such company on the basis of material non-public information. Additionally, if you are aware of material non-public information about any such company, you must not recommend or suggest that anyone buy, sell or retain securities of that company. Regardless of whether you are working on a matter involving any of the foregoing types of suppliers, vendors, etc., you must notify the Company’s General Counsel before taking a “material position” in the securities, or becoming a member of the Board of Directors, of such a company. For these purposes, “taking a material position” means acquiring beneficial ownership of greater than 5% of such outstanding securities or investing 10% or more of your net worth in such securities. 9. Other Trading Restrictions. Covered Individuals should have long-term financial interests that are fully aligned with the interests of the Company’s stockholders. For this reason, in addition to the trading restrictions described above, you are specifically prohibited from engaging in any of the following activities with respect to the Company’s securities: (a) Short selling Company securities (i.e., selling securities you do not own at the time of sale);

(b) Buying or selling “uncovered” put options, call options or other derivative securities relating to the Company on a securities exchange or in any other organized securities market; (c) Purchasing securities or other financial instruments, or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s securities or diminish the full ownership risks and rewards of your direct or indirect Company stock holdings. Examples of such prohibited transactions include “costless collars,” forward sale contracts, equity swaps, and exchange funds; (d) Purchasing Company securities on margin; (e) Borrowing against Company securities in a margin account; or (f) Pledging Company securities (such as putting the stock up as collateral for a mortgage or other type of loan). Furthermore, the Company strongly discourages you from actively trading in the Company’s stock. To mitigate the risk of violating the SEC’s “short-swing” rules, you should expect to hold any shares of Company stock that you acquire for at least six months before you sell them, unless the stock is subject to a forced sale or was originally received upon exercise of a stock option. 10. Post-Termination Transactions. This Policy applies even after termination of your employment or service with the Company. If your service as a director, officer or employee of the Company terminates during a blackout period applicable to you or otherwise while you are aware of material non-public information regarding the Company, you will continue to be subject to this Policy, and specifically to the ongoing prohibition against trading, until such blackout period ends or otherwise until the information has become public or is no longer material. 11. Stop-Transfer Instructions. The Company may, in its discretion, provide stop transfer instructions to its transfer agent in order to enforce trading restrictions imposed by the Policy, including, without limitation, restrictions relating to blackout periods or post-termination transactions. If you have any questions concerning the propriety of a proposed transaction, or a question about this Policy generally, you are encouraged to contact our Company’s General Counsel. Failure to observe and comply with all of the provisions contained in this Policy may subject you to disciplinary action by the Company, including discharge. The Company reserves the right to amend this Policy at any time, but intends to provide reasonable written notification of any such revision.

Exhibit A Covered Persons as of October 2019 1. All members of the Board of Directors 2. Chief Executive Officer 3. Senior Vice President, Chief Financial Officer and Treasurer 4. Chief Marketing Officer 5. President of Taco Cabana 6. Chief Procurement Officer 7. Senior Vice President of Human Resources 8. Chief Information Officer 9. Senior Vice President, General Counsel and Secretary 10. Vice President, Corporate Controller and Chief Accounting Officer 11. All other Vice Presidents of the Company and its Affiliates

Insider Trading Policy Compliance Statement TO: Fiesta Restaurant Group, Inc. (the “Company”) RE: Policy on Insider Trading for Covered Individuals ______________________________________________________________________________ I have carefully reviewed each of the Policy on Trading Procedures for Covered Individuals, revised October 29, 2019, and the Company’s Policy on Insider Trading applicable to all directors, officers and employees (together, the “Policy”) and understand all of its provisions. I certify that, to the best of my knowledge, I have complied with the Policy and the applicable procedures since such date (or during my term of employment, directorship, or provision of services, if after such date) and that I will continue to adhere to the Policy and the applicable procedures in the future. Without limiting the preceding paragraph, I understand that the General Counsel will be required, and will have the discretion to, exercise judgment in determining whether to (a) approve particular transactions by me or my affiliates in Company securities or my establishment of any plans or arrangements for trading in Company securities (including a “10b5-1 plan”) or (b) subject me or my affiliates to any temporary “blackout periods.” I recognize that the General Counsel will be required to analyze and assess any request I may make to engage in a particular transaction or to establish any plan or arrangement relating to trading in the Company’s securities, based on verifiable information available to the General Counsel at the time of the request and in the context of the Company’s intent to preserve its reputation for maintaining the highest legal, business and ethical standards, as well as the Company’s obligation to comply with all laws and regulations pertaining to insider trading. I acknowledge and affirm that the General Counsel’s determination with regard to any particular transaction, plan or arrangement or blackout period will be made solely on behalf of, and for the benefit of, the Company and further acknowledge and affirm the General Counsel’s right to make that determination in the General Counsel’s sole discretion. I hereby agree to be bound by, and to accept without objection, any determination of the General Counsel not to permit any such transaction, plan or arrangement or to subject me to any such blackout period. I realize that failure to observe and comply with all of the provisions contained in this Policy and the General Policy may subject me to disciplinary action by the Company, including discharge. Acknowledged by: Signature: ___________________________________ Date: ___________________ Print Name: _________________________________ Title: ______________________________________

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Dirk Montgomery, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended April 2, 2023 of Fiesta Restaurant Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 10, 2023	/s/ DIRK MONTGOMERY
	Dirk Montgomery Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Tyler Yoesting, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended April 2, 2023 of Fiesta Restaurant Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 10, 2023	/s/ TYLER YOESTING
	Tyler Yoesting Acting Chief Financial Officer, Vice President, Corporate Controller and Chief Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Dirk Montgomery, Chief Executive Officer of Fiesta Restaurant Group, Inc. (the "Company"), hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Company's Quarterly Report on Form 10-Q for the period ended April 2, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DIRK MONTGOMERY

Dirk Montgomery

Chief Executive Officer

May 10, 2023

EX-32.2

Exhibit 32.2

CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Tyler Yoesting, Acting Chief Financial Officer of Fiesta Restaurant Group, Inc. (the "Company"), hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Company's Quarterly Report on Form 10-Q for the period ended April 2, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ TYLER YOESTING

Tyler Yoesting

Acting Chief Financial Officer, Vice President, Corporate Controller and Chief Accounting Officer

May 10, 2023

XML

Cover - shares	3 Months Ended
	Apr. 02, 2023	May 04, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 02, 2023
Document Transition Report	false
Entity File Number	001-35373
Entity Registrant Name	FIESTA RESTAURANT GROUP, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	90-0712224
Entity Address, Address Line One	14800 Landmark Boulevard, Suite 500
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75254
City Area Code	972
Local Phone Number	702-9300
Title of 12(b) Security	Common Stock, par value $0.01 per share
Entity Trading Symbol	FRGI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001534992
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false
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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 02, 2023	Jan. 01, 2023
Current assets:
Cash	$ 30,067	$ 32,167
Restricted cash	3,631	3,631
Accounts receivable	7,198	5,270
Inventories	1,898	1,962
Prepaid rent	106	109
Income tax receivable	3,892	3,871
Prepaid expenses and other current assets	7,828	5,681
Total current assets	54,620	52,691
Property and equipment, net	86,280	87,106
Operating lease right-of-use assets	146,341	146,681
Goodwill	56,307	56,307
Other assets	5,505	5,906
Total assets	349,053	348,691
Current liabilities:
Current portion of long-term debt	47	62
Accounts payable	14,299	14,219
Accrued payroll, related taxes and benefits	6,451	6,536
Accrued real estate taxes	1,938	1,805
Other current liabilities	19,974	17,680
Total current liabilities	42,709	40,302
Long-term debt, net of current portion	360	367
Operating lease liabilities	155,382	155,355
Deferred tax liabilities	118	202
Other non-current liabilities	7,087	7,208
Total liabilities	205,656	203,434
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued	0	0
Common stock, $0.01 par value; 100,000,000 shares authorized, 29,096,014 and 28,890,688 shares issued, respectively, and 25,530,680 and 25,306,302 shares outstanding, respectively	285	282
Additional paid-in capital	189,124	188,528
Retained earnings (accumulated deficit)	(14,425)	(12,516)
Treasury stock, at cost; 3,030,413 and 2,966,639 shares, respectively	(31,587)	(31,037)
Total stockholders' equity	143,397	145,257
Total liabilities and stockholders' equity	$ 349,053	$ 348,691

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Apr. 02, 2023	Jan. 01, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	29,096,014	28,890,688
Common stock, shares outstanding	25,530,680	25,306,302
Treasury Stock, Common, Shares	3,030,413	2,966,639

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Costs and expenses:
Impairment and other lease charges (recoveries)	$ 2,256	$ (702)
Loss from continuing operations before taxes	(2,177)	(1,523)
Benefit from income taxes	(33)	(222)
Loss from continuing operations	(2,144)	(1,301)
Income (loss) from discontinued operations, net of tax	235	(55)
Net loss	$ (1,909)	$ (1,356)
Earnings (loss) per common share:
Continuing operations - basic (usd per share)	$ (0.09)	$ (0.05)
Discontinued operations - basic (usd per share)	0.01	0
Basic (usd per share)	(0.08)	(0.05)
Continuing operations - diluted (usd per share)	(0.09)	(0.05)
Discontinued operations - diluted (usd per share)	0.01	0
Diluted (usd per share)	$ (0.08)	$ (0.05)
Weighted average common shares outstanding:
Basic (in shares)	25,420,090	24,832,541
Diluted (in shares)	25,420,090	24,832,541
Continuing Operations
Revenues:
Revenues	$ 103,371	$ 95,609
Costs and expenses:
Cost of sales	32,612	30,747
Restaurant wages and related expenses (including stock-based compensation expense of $4 and $7, respectively)	26,390	23,574
Restaurant rent expense	6,081	6,027
Other restaurant operating expenses	17,624	16,650
Advertising expense	3,196	2,864
General and administrative (including stock-based compensation expense of $595 and $623, respectively)	13,183	12,342
Depreciation and amortization	4,392	5,114
Impairment and other lease charges (recoveries)	2,256	(702)
Closed restaurant rent expense, net of sublease income	(284)	380
Other expense (income), net	15	51
Total operating expenses	105,465	97,047
Loss from operations	(2,094)	(1,438)
Interest expense	83	85
Restaurant sales | Continuing Operations
Revenues:
Revenues	103,064	95,200
Franchise royalty revenues and fees | Continuing Operations
Revenues:
Revenues	$ 307	$ 409

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - Continuing Operations - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Stock-based compensation	$ 600	$ 600
Restaurant Wages And Related Expenses
Stock-based compensation	4	7
General and Administrative Expense
Stock-based compensation	$ 595	$ 623

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Treasury Stock
Beginning shares at Jan. 02, 2022		24,829,002
Beginning balance at Jan. 02, 2022	$ 154,871	$ 277	$ 182,686	$ 2,043	$ (30,135)
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	549		549
Vesting of restricted shares (in shares)		66,372
Vesting of restricted shares	0	$ 0	0
Purchase of treasury stock (in shares)		(14,746)
Purchase of treasury stock	(164)				(164)
Net loss	(1,356)			(1,356)
Ending shares at Apr. 03, 2022		24,880,628
Ending balance at Apr. 03, 2022	$ 153,900	$ 277	183,235	687	(30,299)
Beginning shares at Jan. 01, 2023	25,306,302	25,306,302
Beginning balance at Jan. 01, 2023	$ 145,257	$ 282	188,528	(12,516)	(31,037)
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	599		599
Vesting of restricted shares (in shares)		288,152
Vesting of restricted shares	0	$ 3	(3)
Purchase of treasury stock (in shares)		(63,774)
Purchase of treasury stock	(550)				(550)
Net loss	$ (1,909)			(1,909)
Ending shares at Apr. 02, 2023	25,530,680	25,530,680
Ending balance at Apr. 02, 2023	$ 143,397	$ 285	$ 189,124	$ (14,425)	$ (31,587)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Operating activities:
Net loss	$ (1,909)	$ (1,356)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation	599	549
Impairment and other lease charges (recoveries)	2,256	(702)
Depreciation and amortization	4,392	5,114
Amortization of deferred financing costs	20	20
Deferred income taxes	(84)	7
Changes in other operating assets and liabilities	(1,838)	294
Net cash provided by operating activities	3,436	3,926
Capital expenditures:
Restaurant remodeling	(625)	(1,480)
Other restaurant capital expenditures	(3,473)	(1,904)
Corporate and restaurant information systems	(866)	(421)
Total capital expenditures	(4,964)	(3,805)
Proceeds from insurance recoveries	0	203
Net cash used in investing activities	(4,964)	(3,602)
Financing activities:
Principal payments on finance leases	(22)	(17)
Payments to purchase treasury stock	(550)	(164)
Net cash used in financing activities	(572)	(181)
Net change in cash and restricted cash	(2,100)	143
Cash and restricted cash, beginning of period	35,798	40,634
Cash and restricted cash, end of period	$ 33,698	$ 40,777

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Basis of Presentation

3 Months Ended

Apr. 02, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Business Description. Fiesta Restaurant Group, Inc. ("Fiesta Restaurant Group" or "Fiesta") owns, operates and franchises Pollo Tropical restaurants through its wholly-owned subsidiaries Pollo Operations, Inc. and Pollo Franchise, Inc. (collectively "Pollo Tropical"). Unless the context otherwise requires, Fiesta and its subsidiaries are collectively referred to as the "Company." At April 2, 2023, the Company owned and operated 137 Pollo Tropical® restaurants located in Florida and franchised a total of 30 Pollo Tropical restaurants. The franchised Pollo Tropical restaurants include 17 in Puerto Rico, two in Panama, one in Guyana, one in the Bahamas, six on college campuses in Florida, and locations at one hospital and two sports and entertainment stadiums in Florida. The Company operates its business as one operating and reportable segment.

Discontinued Operations. Fiesta owned, operated and franchised Taco Cabana restaurants through its wholly-owned subsidiary Taco Cabana, Inc. and its subsidiaries (collectively "Taco Cabana") through August 15, 2021. On August 16, 2021, the Company completed the sale of Taco Cabana. See Note 2—Dispositions. Unless otherwise noted, amounts and disclosures throughout these notes to the condensed consolidated financial statements relate to the Company's continuing operations.

Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Fiscal Year. The Company uses a 52–53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended January 1, 2023 contained 52 weeks. The three months ended April 2, 2023 and April 3, 2022 each contained thirteen weeks, respectively. The fiscal year ending December 31, 2023 will contain 52 weeks.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 2, 2023 and April 3, 2022 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 2, 2023 and April 3, 2022 are not necessarily indicative of the results to be expected for the full year.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended January 1, 2023 included in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2023. The January 1, 2023 balance sheet data is derived from those audited financial statements.

Reclassification. Certain prior period balances have been reclassified to conform to the current period presentation in the accompanying notes to the condensed consolidated financial statements.

Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percentage of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services.

Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date under current market conditions. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect management's own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:

•Current Assets and Liabilities. The carrying values reported on the condensed consolidated balance sheets of cash and restricted cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.

•Revolving Credit Borrowings. The fair value of outstanding revolving credit borrowings under the Company's senior credit facility, which is considered Level 2, is based on current LIBOR rates. There were no outstanding revolving credit borrowings under the Company's senior credit facility as of April 2, 2023 and January 1, 2023.

See Note 4 for discussion of the fair value measurement of non-financial assets.

Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets, including right-of-use ("ROU") lease assets, by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. See Note 4—Impairment of Long-Lived Assets and Other Lease Charges (Recoveries).

Leases. The Company assesses whether an agreement contains a lease at inception. All leases are reviewed for finance or operating classification once control is obtained. The majority of the Company's leases are operating leases. Operating leases are included within operating lease right-of-use assets, other current liabilities, and operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included within property and equipment, net, current portion of long-term debt, and long-term debt, net of current portion in the condensed consolidated balance sheets.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made in advance and is reduced by lease incentives received. As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments. Lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. The Company assumes options are reasonably certain to be exercised when such options are required to achieve a minimum 20-year lease term for new restaurant properties and when it incurs significant leasehold improvement costs near the end of a lease term. The Company uses judgment and available data to allocate consideration in a contract when it leases land and a building. The Company also uses judgment in determining its incremental borrowing rate, which includes selecting a yield curve based on a synthetic credit rating determined using a valuation model. Lease expense for lease payments is recognized on a straight-line basis over the lease term unless the related ROU asset has been adjusted for an impairment charge. The Company has real estate lease agreements with lease and non-lease components, which are accounted for as a single lease component.

Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: insurance liabilities, evaluation for impairment of goodwill and long-lived assets, lease accounting matters, and deferred income tax assets. Actual results could differ from those estimates.

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Dispositions

3 Months Ended

Apr. 02, 2023

Discontinued Operations and Disposal Groups [Abstract]

Dispositions

Dispositions

On June 30, 2021, the Company's Board of Directors approved a stock purchase agreement, which was subsequently entered into by the Company on July 1, 2021, for the sale of all of the outstanding capital stock of Taco Cabana, Inc., including nearly all related assets and liabilities, for a cash purchase price of $85.0 million subject to reduction for (i) closing adjustments of approximately $4.6 million and (ii) certain other working capital adjustments as set forth in the stock purchase agreement. The transaction was completed August 16, 2021.

The Company filed an insurance claim for winter storm damages in Texas that occurred in the first quarter of 2021 and retained the right to receive the insurance claim proceeds. In the first quarter of 2023, the Company executed a final settlement on the claim and recognized $0.4 million of insurance proceeds within income (loss) from discontinued operations, net of tax, in the three months ended April 2, 2023.

All revenues, costs and expenses and income taxes attributable to Taco Cabana, together with certain costs related to the transaction, have been aggregated within income (loss) from discontinued operations, net of tax, in the condensed consolidated statements of operations for all periods presented.

The Company retained certain closed Taco Cabana restaurant leases, including the associated operating lease right-of-use assets and operating lease liabilities. The Company also retained liability for Taco Cabana's accrued worker's compensation and

general liability claims for periods prior to the sale. These liabilities are recognized in other current liabilities and other non-current liabilities in the condensed consolidated balance sheets. As there are estimates and assumptions inherent in recording these insurance liabilities, including the ability to estimate the future development of incurred claims based on historical trends or the severity of the claims, differences between actual future events and prior estimates and assumptions could result in adjustments to these liabilities.

During the three months ended April 2, 2023, the Company recognized $0.4 million of income related to insurance proceeds for winter storm damages in Texas that occurred in the first quarter of 2021, and $0.2 million of expenses primarily related to workers' compensation claims within income (loss) from discontinued operations, net of tax, in the condensed consolidated statement of operations. During the three months ended April 3, 2022, the Company recognized $0.2 million of expenses primarily related to workers' compensation claims, and a reduction of stock-based compensation of $(0.1) million within loss from discontinued operations, net of tax, in the condensed consolidated statement of operations.

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Prepaid Expenses and Other Current Assets

3 Months Ended

Apr. 02, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	April 2, 2023		January 1, 2023
Prepaid contract expenses	$	3,757	$	4,471
Prepaid insurance	3,190		442
Other	881		768
	$	7,828	$	5,681

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Impairment of Long-Lived Assets and Other Lease Charges

3 Months Ended

Apr. 02, 2023

Property, Plant and Equipment [Abstract]

Impairment of Long-Lived Assets and Other Lease Charges

Impairment of Long-Lived Assets and Other Lease Charges (Recoveries)

The Company reviews its long-lived assets, principally property and equipment and lease ROU assets, for impairment at the restaurant level. The Company has elected to exclude operating lease payments and liabilities from future cash flows and carrying values, respectively, in its impairment review. In addition to considering management's plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant's cash flows, exclusive of operating lease payments, for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant's assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows, exclusive of operating lease payments, over the life of the primary asset for each restaurant is compared to that long-lived asset group's carrying value, excluding operating lease liabilities. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material.

A summary of impairment of long-lived assets and other lease charges (recoveries) is as follows:

	Three Months Ended
	April 2, 2023		April 3, 2022
Impairment of long-lived assets	$	1,402	$	—
Other lease charges (recoveries)	854		(702)
	$	2,256	$	(702)

Impairment charges for the three months ended April 2, 2023 related primarily to impairment of assets from four underperforming Pollo Tropical restaurants, three of which were subsequently closed in the second quarter of 2023, for which continued performance declines resulted in a decrease in the estimated future cash flows. For the three months ended April 2, 2023, other lease charges (recoveries) consist of lease termination charges related to the reduction of the Company's corporate office space.

Other lease charges (recoveries) for the three months ended April 3, 2022 related primarily to gains from lease terminations.

The Company determines the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions, the Company's history of using these assets in the operation of its business and the Company's expectation of how a market participant would value the assets. The Company also utilizes discounted future cash flows to determine the fair value of assets for certain leased restaurants with positive discounted projected future cash flows. The Company utilizes current market lease rent and discount rates to determine the fair value of right-of-use lease assets. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the three months ended April 2, 2023 totaled $1.5 million.

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Other Liabilities

3 Months Ended

Apr. 02, 2023

Other Liabilities Disclosure [Abstract]

Other Liabilities

Other Liabilities

Other current liabilities consist of the following:

	April 2, 2023		January 1, 2023
Operating lease liabilities	$	10,377	$	10,496
Accrued workers' compensation and general liability claims	3,450		2,623
Sales and property taxes	1,754		981
Other	4,393		3,580
	$	19,974	$	17,680

Other non-current liabilities consist of the following:

	April 2, 2023		January 1, 2023
Accrued workers' compensation and general liability claims	$	6,000	$	6,000
Deferred compensation	223		273
Other	864		935
	$	7,087	$	7,208

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Stockholders' Equity

3 Months Ended

Apr. 02, 2023

Equity [Abstract]

Stockholders' Equity

Stockholders' Equity

Purchase of Treasury Stock

In 2018, the Company's board of directors approved a share repurchase program for up to 1,500,000 shares of the Company's common stock. In 2019, the Company's board of directors approved increases to the share repurchase program of an additional 1,500,000 shares of the Company's common stock for an aggregate approval of 3,000,000 shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 14,746 shares of common stock valued at approximately $0.2 million during the three months ended April 3, 2022. As of April 2, 2023, 137,462 shares of common stock remain available for purchase under the share repurchase program. Additionally, as a result of net share settlement to satisfy the minimum statutory tax withholding requirements in connection with the vesting of restricted stock grants for certain employees, the Company repurchased 63,774 shares of common stock valued at approximately $0.5 million during the three months ended April 2, 2023. The repurchased shares are held as treasury stock at cost.

Stock-Based Compensation

During the three months ended April 2, 2023, the Company granted certain employees and a new non-employee director a total of 214,695 non-vested restricted shares under the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan (the "Fiesta Plan"). The shares granted to employees vest and become non-forfeitable over a four-year vesting period. The shares granted to the new non-employee director vest and become non-forfeitable over a five-year vesting period. The weighted average fair value at grant date for non-vested shares issued during the three months ended April 2, 2023 and April 3, 2022 was $8.19 per share and $9.23 per share, respectively.

During the three months ended April 3, 2022, the Company granted restricted stock units under the 2021 Plan subject to performance conditions. The restricted stock units vest and become non-forfeitable at the end of a three-year vesting period. The weighted average fair value at grant date for the restricted stock units granted during the three months ended April 3, 2022 was $9.02 per share.

Stock-based compensation expense from continuing operations for the three months ended April 2, 2023 and April 3, 2022 was $0.6 million and $0.6 million, respectively. Stock-based compensation expense from discontinued operations for the three months ended April 3, 2022 was $(0.1) million. At April 2, 2023, the total unrecognized stock-based compensation expense related to non-vested restricted shares and restricted stock units was approximately $3.9 million. At April 2, 2023, the remaining weighted average vesting period for non-vested restricted shares was 2.6 years and restricted stock units was 1.6 years.

A summary of all non-vested restricted shares and restricted stock units activity for the three months ended April 2, 2023 is as follows:

	Non-Vested Shares			Restricted Stock Units
	Shares	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2023	617,747	$	9.61	103,814	$	12.09
Granted	214,695	8.19		—	—
Vested and released	(288,152)	10.04		—	—
Forfeited	(9,369)	11.15		—	—
Outstanding at April 2, 2023	534,921	$	8.79	103,814	$	12.09

The fair value of non-vested restricted shares and restricted stock units granted during the three months ended April 2, 2023 is based on the closing stock price on the date of grant.

During the three months ended April 2, 2023, 288,152 non-vested restricted shares vested. A portion of these vested stock awards were net share settled. Based upon the Company's closing stock price on the vesting date, the Company withheld 63,774 shares related to previously non-vested restricted shares to settle the employees' minimum statutory obligation for the applicable income and other employment taxes upon vesting of such restricted shares. Subsequently, the Company remitted the required funds to the appropriate taxing authorities.

Total payments for the employees' tax obligations to the relevant taxing authorities were $0.5 million for the three months ended April 2, 2023 and are reflected as a financing activity within the consolidated statements of cash flows. The payments were used for tax withholdings related to the net share settlements of previously non-vested shares. The payments related to the non-vested restricted shares were treated as share repurchases and recorded as an addition to treasury stock.

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Earnings (Loss) Per Share

3 Months Ended

Apr. 02, 2023

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Earnings (Loss) Per Share

Basic earnings (loss) per share ("EPS") is computed by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic EPS pursuant to the two-class method. The two-class method of computing EPS is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. EPS is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.

Diluted EPS reflects the potential dilution that could occur if the restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted EPS calculation to the extent that performance conditions have been met at the measurement date. Diluted EPS is computed by adjusting the basic weighted

average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method.

All outstanding restricted stock units in the three months ended April 2, 2023 and April 3, 2022 were performance-based awards which had not yet met their performance conditions as of April 2, 2023 and April 3, 2022, respectively.

The computation of basic and diluted EPS is as follows:

	Three Months Ended
	April 2, 2023		April 3, 2022
Basic and diluted EPS:
Loss from continuing operations	$	(2,144)	$	(1,301)
Income (loss) from discontinued operations, net of tax	235		(55)
Net loss	$	(1,909)	$	(1,356)
Less: income allocated to participating securities	—		—
Net loss available to common shareholders	$	(1,909)	$	(1,356)
Weighted average common shares—basic	25,420,090		24,832,541
Restricted stock units	—		—
Weighted average common shares—diluted	25,420,090		24,832,541
Earnings (loss) from continuing operations per common share—basic	$	(0.09)	$	(0.05)
Earnings (loss) from discontinued operations per common share—basic	0.01		—
Earnings (loss) per common share—basic	$	(0.08)	$	(0.05)
Earnings (loss) from continuing operations per common share—diluted	$	(0.09)	$	(0.05)
Earnings (loss) from discontinued operations per common share—diluted	0.01		—
Earnings (loss) per common share—diluted	$	(0.08)	$	(0.05)

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Commitments and Contingencies

3 Months Ended

Apr. 02, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lease Assignments. In previous years, Pollo Tropical assigned two leases to third parties on properties where it no longer operates with lease terms expiring in 2033 and 2036. Although the assignees are responsible for making the payments required by the lease, the Company is a guarantor under the leases.

The maximum potential liability for future rental payments that the Company could be required to make under these leases at April 2, 2023 was $4.3 million. The Company could also be obligated to pay property taxes and other lease-related costs. The obligations under these leases will generally continue to decrease over time as the operating leases expire. The Company does not believe it is probable that it will be ultimately responsible for the obligations under these leases.

Indemnity of Lease Guarantees. As discussed in Note 2—Dispositions, Taco Cabana, Inc., a former wholly-owned subsidiary of the Company, was sold in the third quarter of 2021 to YTC Enterprises LLC ("YTC Enterprises") through a stock purchase agreement. The Company's previous owners, Carrols Restaurant Group, Inc. ("Carrols") remains a guarantor under 12 Taco Cabana restaurant property leases with lease terms expiring on various dates through 2030, all of which are still operating, as of April 2, 2023. The Company has indemnified Carrols for all obligations under the guarantees per the terms of the Separation and Distribution Agreement entered into in connection with the spin-off of Fiesta. The Company remains liable for all obligations under the terms of the leases in the event YTC Enterprises fails to pay any sums due under the lease, subject to indemnification provisions under the stock purchase agreement.

The maximum potential amount of future undiscounted rental payments the Company could be required to make under these leases at April 2, 2023 was $6.4 million. The obligations under these leases will generally continue to decrease over time as these operating leases expire, except for any execution of renewal options that exist under the original leases. No payments related to these guarantees have been made by the Company to date and none are expected to be required to be made in the future. YTC Enterprises has indemnified the Company for all such obligations and the Company does not believe it is probable it will be required to perform under any of the guarantees or direct obligations.

Legal Matters. The Company is a party to various legal proceedings incidental to the conduct of business. The Company does not believe that the outcome of any of these matters will have a material effect on its condensed consolidated financial statements. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.

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Supplemental Cash Flow Information

3 Months Ended

Apr. 02, 2023

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

The following table details supplemental cash flow disclosures of non-cash investing and financing activities from continuing operations: 

	Three Months Ended
	April 2, 2023		April 3, 2022
Supplemental cash flow disclosures:
Interest paid on long-term debt	$	47	$	63
Income tax payments, net	26		5
Supplemental cash flow disclosures of non-cash investing and financing activities:
Accruals for capital expenditures	$	2,791	$	3,846
Right-of-use assets obtained in exchange for lease liabilities:
Operating lease ROU assets	3,644		—
Right-of-use assets and lease liabilities reduced for terminated leases:
Operating lease ROU assets	714		1,820
Operating lease liabilities	714		2,666
Cash and restricted cash reconciliation:
Beginning of period
Cash	$	32,167	$	36,797
Restricted cash	3,631		3,837
Cash and restricted cash, beginning of period	$	35,798	$	40,634
End of period
Cash	$	30,067	$	37,146
Restricted cash	3,631		3,631
Cash and restricted cash, end of period	$	33,698	$	40,777

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Basis of Presentation (Policies)

3 Months Ended

Apr. 02, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Consolidation

Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Fiscal Year

Fiscal Year. The Company uses a 52–53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended January 1, 2023 contained 52 weeks. The three months ended April 2, 2023 and April 3, 2022 each contained thirteen weeks, respectively. The fiscal year ending December 31, 2023 will contain 52 weeks.

Basis of Presentation

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 2, 2023 and April 3, 2022 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 2, 2023 and April 3, 2022 are not necessarily indicative of the results to be expected for the full year.These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended January 1, 2023 included in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2023. The January 1, 2023 balance sheet data is derived from those audited financial statements.

Reclassification

Reclassification. Certain prior period balances have been reclassified to conform to the current period presentation in the accompanying notes to the condensed consolidated financial statements.

Revenue Recognition

Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percentage of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services.

Fair Value of Financial Instruments

Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date under current market conditions. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect management's own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:

•Current Assets and Liabilities. The carrying values reported on the condensed consolidated balance sheets of cash and restricted cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.

•Revolving Credit Borrowings. The fair value of outstanding revolving credit borrowings under the Company's senior credit facility, which is considered Level 2, is based on current LIBOR rates.

Long-Lived Assets

Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets, including right-of-use ("ROU") lease assets, by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable.

Leases

Leases. The Company assesses whether an agreement contains a lease at inception. All leases are reviewed for finance or operating classification once control is obtained. The majority of the Company's leases are operating leases. Operating leases are included within operating lease right-of-use assets, other current liabilities, and operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included within property and equipment, net, current portion of long-term debt, and long-term debt, net of current portion in the condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made in advance and is reduced by lease incentives received. As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments. Lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. The Company assumes options are reasonably certain to be exercised when such options are required to achieve a minimum 20-year lease term for new restaurant properties and when it incurs significant leasehold improvement costs near the end of a lease term. The Company uses judgment and available data to allocate consideration in a contract when it leases land and a building. The Company also uses judgment in determining its incremental borrowing rate, which includes selecting a yield curve based on a synthetic credit rating determined using a valuation model. Lease expense for lease payments is recognized on a straight-line basis over the lease term unless the related ROU asset has been adjusted for an impairment charge. The Company has real estate lease agreements with lease and non-lease components, which are accounted for as a single lease component.

Use of Estimates

Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: insurance liabilities, evaluation for impairment of goodwill and long-lived assets, lease accounting matters, and deferred income tax assets. Actual results could differ from those estimates.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, principally property and equipment and lease ROU assets, for impairment at the restaurant level. The Company has elected to exclude operating lease payments and liabilities from future cash flows and carrying values, respectively, in its impairment review. In addition to considering management's plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant's cash flows, exclusive of operating lease payments, for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant's assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows, exclusive of operating lease payments, over the life of the primary asset for each restaurant is compared to that long-lived asset group's carrying value, excluding operating lease liabilities. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material.

Purchase of Treasury Stock

Purchase of Treasury StockIn 2018, the Company's board of directors approved a share repurchase program for up to 1,500,000 shares of the Company's common stock. In 2019, the Company's board of directors approved increases to the share repurchase program of an additional 1,500,000 shares of the Company's common stock for an aggregate approval of 3,000,000 shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 14,746 shares of common stock valued at approximately $0.2 million during the three months ended April 3, 2022. As of April 2, 2023, 137,462 shares of common stock remain available for purchase under the share repurchase program. Additionally, as a result of net share settlement to satisfy the minimum statutory tax withholding requirements in connection with the vesting of restricted stock grants for certain employees, the Company repurchased 63,774 shares of common stock valued at approximately $0.5 million during the three months ended April 2, 2023. The repurchased shares are held as treasury stock at cost.

Earnings per Share

Basic earnings (loss) per share ("EPS") is computed by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic EPS pursuant to the two-class method. The two-class method of computing EPS is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. EPS is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.

Diluted EPS reflects the potential dilution that could occur if the restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted EPS calculation to the extent that performance conditions have been met at the measurement date. Diluted EPS is computed by adjusting the basic weighted

average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method.

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Prepaid Expenses and Other Current Assets (Tables)

3 Months Ended

Apr. 02, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

	April 2, 2023		January 1, 2023
Prepaid contract expenses	$	3,757	$	4,471
Prepaid insurance	3,190		442
Other	881		768
	$	7,828	$	5,681

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Impairment of Long-Lived Assets and Other Lease Charges (Tables)

3 Months Ended

Apr. 02, 2023

Property, Plant and Equipment [Abstract]

Summary of Impairment on Long-Lived Assets

A summary of impairment of long-lived assets and other lease charges (recoveries) is as follows:

	Three Months Ended
	April 2, 2023		April 3, 2022
Impairment of long-lived assets	$	1,402	$	—
Other lease charges (recoveries)	854		(702)
	$	2,256	$	(702)

Other Lease Charges (Recoveries)

A summary of impairment of long-lived assets and other lease charges (recoveries) is as follows:

	Three Months Ended
	April 2, 2023		April 3, 2022
Impairment of long-lived assets	$	1,402	$	—
Other lease charges (recoveries)	854		(702)
	$	2,256	$	(702)

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Other Liabilities (Tables)

3 Months Ended

Apr. 02, 2023

Other Liabilities Disclosure [Abstract]

Other Liabilities, Current

Other current liabilities consist of the following:

	April 2, 2023		January 1, 2023
Operating lease liabilities	$	10,377	$	10,496
Accrued workers' compensation and general liability claims	3,450		2,623
Sales and property taxes	1,754		981
Other	4,393		3,580
	$	19,974	$	17,680

Other Liabilities, Non-current

Other non-current liabilities consist of the following:

	April 2, 2023		January 1, 2023
Accrued workers' compensation and general liability claims	$	6,000	$	6,000
Deferred compensation	223		273
Other	864		935
	$	7,087	$	7,208

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Stockholders' Equity (Tables)

3 Months Ended

Apr. 02, 2023

Equity [Abstract]

Schedule of Non-vested Restricted Shares and Restricted Stock Units Activity

A summary of all non-vested restricted shares and restricted stock units activity for the three months ended April 2, 2023 is as follows:

	Non-Vested Shares			Restricted Stock Units
	Shares	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2023	617,747	$	9.61	103,814	$	12.09
Granted	214,695	8.19		—	—
Vested and released	(288,152)	10.04		—	—
Forfeited	(9,369)	11.15		—	—
Outstanding at April 2, 2023	534,921	$	8.79	103,814	$	12.09

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Apr. 02, 2023

Earnings Per Share [Abstract]

Computation of Basic and Diluted EPS

The computation of basic and diluted EPS is as follows:

	Three Months Ended
	April 2, 2023		April 3, 2022
Basic and diluted EPS:
Loss from continuing operations	$	(2,144)	$	(1,301)
Income (loss) from discontinued operations, net of tax	235		(55)
Net loss	$	(1,909)	$	(1,356)
Less: income allocated to participating securities	—		—
Net loss available to common shareholders	$	(1,909)	$	(1,356)
Weighted average common shares—basic	25,420,090		24,832,541
Restricted stock units	—		—
Weighted average common shares—diluted	25,420,090		24,832,541
Earnings (loss) from continuing operations per common share—basic	$	(0.09)	$	(0.05)
Earnings (loss) from discontinued operations per common share—basic	0.01		—
Earnings (loss) per common share—basic	$	(0.08)	$	(0.05)
Earnings (loss) from continuing operations per common share—diluted	$	(0.09)	$	(0.05)
Earnings (loss) from discontinued operations per common share—diluted	0.01		—
Earnings (loss) per common share—diluted	$	(0.08)	$	(0.05)

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Supplemental Cash Flow Information (Tables)

3 Months Ended

Apr. 02, 2023

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Disclosures of Non-Cash Investing and Financing Activities

The following table details supplemental cash flow disclosures of non-cash investing and financing activities from continuing operations: 

	Three Months Ended
	April 2, 2023		April 3, 2022
Supplemental cash flow disclosures:
Interest paid on long-term debt	$	47	$	63
Income tax payments, net	26		5
Supplemental cash flow disclosures of non-cash investing and financing activities:
Accruals for capital expenditures	$	2,791	$	3,846
Right-of-use assets obtained in exchange for lease liabilities:
Operating lease ROU assets	3,644		—
Right-of-use assets and lease liabilities reduced for terminated leases:
Operating lease ROU assets	714		1,820
Operating lease liabilities	714		2,666
Cash and restricted cash reconciliation:
Beginning of period
Cash	$	32,167	$	36,797
Restricted cash	3,631		3,837
Cash and restricted cash, beginning of period	$	35,798	$	40,634
End of period
Cash	$	30,067	$	37,146
Restricted cash	3,631		3,631
Cash and restricted cash, end of period	$	33,698	$	40,777

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Basis of Presentation - Narrative (Details)	Apr. 02, 2023 restaurant
Entity Information [Line Items]
Number of restaurants	4
Minimum
Entity Information [Line Items]
Lease term	20 years
Entity Operated Units | Pollo Tropical
Entity Information [Line Items]
Number of restaurants	137
Franchised Units | Pollo Tropical
Entity Information [Line Items]
Number of restaurants	30
Franchised Units | Pollo Tropical | Puerto Rico
Entity Information [Line Items]
Number of restaurants	17
Franchised Units | Pollo Tropical | Panama
Entity Information [Line Items]
Number of restaurants	2
Franchised Units | Pollo Tropical | Guyana
Entity Information [Line Items]
Number of restaurants	1
Franchised Units | Pollo Tropical | Bahamas
Entity Information [Line Items]
Number of restaurants	1
Franchised Units | Pollo Tropical | Florida | College Campus
Entity Information [Line Items]
Number of restaurants	6
Franchised Units | Pollo Tropical | Florida | Hospital
Entity Information [Line Items]
Number of restaurants	1
Franchised Units | Pollo Tropical | Florida | Stadium
Entity Information [Line Items]
Number of restaurants	2

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Dispositions - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022	Aug. 16, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Description and timing of disposal	On June 30, 2021, the Company's Board of Directors approved a stock purchase agreement, which was subsequently entered into by the Company on July 1, 2021, for the sale of all of the outstanding capital stock of Taco Cabana, Inc., including nearly all related assets and liabilities, for a cash purchase price of $85.0 million subject to reduction for (i) closing adjustments of approximately $4.6 million and (ii) certain other working capital adjustments as set forth in the stock purchase agreement. The transaction was completed August 16, 2021.
Cash purchase price of disposition			$ 85.0
Closing adjustments			$ 4.6
Insurance proceeds recognized	$ 0.4
Other income	0.4
Restaurant wages and related expenses	$ 0.2	$ 0.2
Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Stock-based compensation expense		(0.1)
Discontinued Operations | General and Administrative Expense
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Stock-based compensation expense		$ (0.1)

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Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Apr. 02, 2023	Jan. 01, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid contract expenses	$ 3,757	$ 4,471
Prepaid insurance	3,190	442
Other	881	768
Prepaid expenses and other current assets	$ 7,828	$ 5,681

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Impairment of Long-Lived Assets and Other Lease Charges - Summary (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Impairment and Other Lease Charges [Line Items]
Impairment and other lease charges (recoveries)	$ 2,256	$ (702)
Continuing Operations
Impairment and Other Lease Charges [Line Items]
Impairment of long-lived assets	1,402	0
Other lease charges (recoveries)	854	(702)
Impairment and other lease charges (recoveries)	$ 2,256	$ (702)

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Impairment of Long-Lived Assets and Other Lease Charges - Narrative (Details) $ in Millions	Apr. 02, 2023 USD ($) restaurant
Impairment and Other Lease Charges [Line Items]
Number of restaurants	4
Number of closed restaurants	3
Assets measured at fair value associated with impairment charges | $	$ 1.5

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Other Liabilities - Current (Details) - USD ($) $ in Thousands	Apr. 02, 2023	Jan. 01, 2023
Other Liabilities Disclosure [Abstract]
Operating lease liabilities	$ 10,377	$ 10,496
Accrued workers' compensation and general liability claims	3,450	2,623
Sales and property taxes	1,754	981
Other	4,393	3,580
Other current liabilities	$ 19,974	$ 17,680

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Other Liabilities - Non-current (Details) - USD ($) $ in Thousands	Apr. 02, 2023	Jan. 01, 2023
Other Liabilities Disclosure [Abstract]
Accrued workers' compensation and general liability claims	$ 6,000	$ 6,000
Deferred compensation	223	273
Other	864	935
Other non-current liabilities	$ 7,087	$ 7,208

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Stockholders' Equity - Purchase of Treasury Stock (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022	Dec. 29, 2019	Feb. 26, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to be repurchased	3,000,000
Treasury stock purchases	$ 550	$ 164
Remaining number of shares authorized to be repurchased	137,462
Share Repurchase Program 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to be repurchased				1,500,000
Share Repurchase Program 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to be repurchased			1,500,000
Share Repurchase Program
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Treasury stock purchases (in shares)		14,746
Treasury stock purchases		$ 200
Net Share Settlement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Treasury stock purchases (in shares)	63,774
Treasury stock purchases	$ 500

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Stockholders' Equity - Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation expense	$ 3.9
Continuing Operations
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 0.6	$ 0.6
Discontinued Operations
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation		$ (0.1)
Nonvested Restricted Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted in period	214,695
Weighted average grant date fair value, grants in period (usd per share)	$ 8.19	$ 9.23
Share-based compensation cost not yet recognized, period for recognition	2 years 7 months 6 days
Nonvested Restricted Shares | March | Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Nonvested Restricted Shares | Out Of Cycle Grant | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	5 years
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted in period	0
Vesting period		3 years
Weighted average grant date fair value, grants in period (usd per share)	$ 0	$ 9.02
Share-based compensation cost not yet recognized, period for recognition	1 year 7 months 6 days

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Stockholders' Equity - Non-vested Restricted Shares and Restricted Stock Units Activity (Details) - $ / shares	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Non-Vested Shares
Non-vested Restricted Shares and Restricted Stock Units
Outstanding at beginning of period (in shares)	617,747
Granted (in shares)	214,695
Vested and released (in shares)	(288,152)
Forfeited (in shares)	(9,369)
Outstanding at end of period (in shares)	534,921
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (usd per share)	$ 9.61
Granted (usd per share)	8.19	$ 9.23
Vested and released (usd per share)	10.04
Forfeited (usd per share)	11.15
Outstanding at end of period (usd per share)	$ 8.79
Restricted Stock Units
Non-vested Restricted Shares and Restricted Stock Units
Outstanding at beginning of period (in shares)	103,814
Granted (in shares)	0
Vested and released (in shares)	0
Forfeited (in shares)	0
Outstanding at end of period (in shares)	103,814
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (usd per share)	$ 12.09
Granted (usd per share)	0	$ 9.02
Vested and released (usd per share)	0
Forfeited (usd per share)	0
Outstanding at end of period (usd per share)	$ 12.09

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Earnings (Loss) Per Share - Narrative (Details)	Apr. 02, 2023
Earnings Per Share [Abstract]
Nonvested restricted shares right to receive dividends, per share ratio to common shares	1

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Earnings (Loss) Per Share - Computation of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Basic and diluted EPS:
Loss from continuing operations	$ (2,144)	$ (1,301)
Income (loss) from discontinued operations, net of tax	235	(55)
Net loss	(1,909)	(1,356)
Less: income allocated to participating securities	0	0
Net loss available to common shareholders	$ (1,909)	$ (1,356)
Weighted average common shares—basic	25,420,090	24,832,541
Restricted stock units (in shares)	0	0
Weighted average common shares—diluted	25,420,090	24,832,541
Earnings (loss) from continuing operations per common share—basic (usd per share)	$ (0.09)	$ (0.05)
Earnings (loss) from discontinued operations per common share—basic (usd per share)	0.01	0
Earnings (loss) per common share—basic (usd per share)	(0.08)	(0.05)
Earnings (loss) from continuing operations per common share—diluted (usd per share)	(0.09)	(0.05)
Earnings (loss) from discontinued operations per common share—diluted (usd per share)	0.01	0
Earnings (loss) per common share—diluted (usd per share)	$ (0.08)	$ (0.05)

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Commitments and Contingencies - Lease Assignments (Details) $ in Millions	Apr. 02, 2023 USD ($) restaurant
Loss Contingencies [Line Items]
Number of restaurants	4
Pollo Tropical
Loss Contingencies [Line Items]
Number of leases assigned	2
Pollo Tropical | Payment Guarantee
Loss Contingencies [Line Items]
Maximum potential liability for future rental payments | $	$ 4.3
Corporate Segment | Payment Guarantee
Loss Contingencies [Line Items]
Number of restaurants	12
Maximum potential liability for future rental payments | $	$ 6.4

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022	Jan. 01, 2023	Jan. 02, 2022
Cash and restricted cash reconciliation:
Cash	$ 30,067	$ 37,146	$ 32,167	$ 36,797
Restricted cash	3,631	3,631	3,631	3,837
Cash and restricted cash	33,698	40,777	$ 35,798	$ 40,634
Continuing Operations
Supplemental cash flow disclosures:
Interest paid on long-term debt	47	63
Income tax payments, net	26	5
Supplemental cash flow disclosures of non-cash investing and financing activities:
Accruals for capital expenditures	2,791	3,846
Right-of-use assets obtained in exchange for lease liabilities:
Operating lease ROU assets	3,644	0
Right-of-use assets and lease liabilities reduced for terminated leases:
Operating lease ROU assets	714	1,820
Operating lease liabilities	$ 714	$ 2,666