Fiesta Restaurant Group Inc (FRGI) Is A Potential Success Story

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Even as the Federal Reserve’s Chairwoman, Janet Yellen speaks cautiously about overstretched small sized companies, CNBC’s Jim Cramer finds himself enticed to the story of Fiesta Restaurant Group Inc (NASDAQ:FRGI), $1.5 billion worth quick serve restaurant chain. Cramer is keeping high hopes that the company is full of potential to raise its bar from being a regional player to a national one.

Fiesta Restaurant Group

Further, Cramer detailed out that Fiesta Restaurant Group Inc (NASDAQ:FRGI) spun off in May, 2012 from Carrols Restaurant Group, Inc. (NASDAQ:TAST), after which it was listed at a price of $11.2 and since then, the company had little turned back, as it delivered four times growth till it peaked out at $52 in January. As of Wednesday, the share price of the company was sitting at $44.33, and Cramer thinks that the stock is off its lows as well.

Fiesta Restaurant Group Inc (NASDAQ:FRGI) offers two different fast food concepts, one being ‘Pollo Tropical’ and the other one, ‘Taco Cabana.’ Cramer said that the company is eyeing to open 25 and 28 net new stores for Pollo tropical chain starting this year to 2015, 17% annual growth based on a total of 145 stores, which is decent as against its competitors. Cramer highlighted that the company is willing to expand outside its base Florida to Texas, where it is planning ten locations. Moreover, Fiesta Restaurant Group Inc (NASDAQ:FRGI)’s Taco Cabana large presence in Texas should help it drive the pollo tropical brand there, according to Cramer.

Alongside this, Cramer said: “Fiesta is testing a more upscale version of its concept called “Cabana Grill,” which is expected to come to Florida in few years.

In all, Cramer considers the company is on a rapid expansion, though he cautions that the stock is not cheap as it is 29 times the next year’s earnings estimates. He went on to say that while Pollo Tropical is a strong unit with 33% comps on a four year basis, Taco Cabana is not that impressive with same store sales growth of just 0.8% in the first quarter. Fiesta Restaurant Group Inc (NASDAQ:FRGI) is trying to remodel nearly 23-30 Taco Cabana chains this year in its bid to revive the chain. Other than this, Cramer outlined that the balance sheet of the company is strong with just $65 million in debt and is supported by a robust management profile. He concluded that it the party has just started for Fiesta and it could be another success story.

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