Carrols Restaurant Group, Inc. Reports Financial Results for the Third Quarter 2009

Carrols Restaurant Group, Inc. (Nasdaq: TAST), the parent company of Carrols Corporation, today announced financial results for the third quarter ended September 27, 2009.

Highlights for the third quarter of 2009 versus the third quarter of 2008 include:

Net income increased to $5.6 million, or $0.26 per diluted share, from net income of $3.7 million, or $0.17 per diluted share;

Total revenues were $201.2 million compared to $209.1 million;

Comparable restaurant sales decreased 0.1% at Pollo Tropical(R), decreased 4.3% at Taco Cabana(R), and decreased 6.1% at Burger King(R);

Total outstanding indebtedness was reduced $25 million year-to-date to $291.2 million.

As of September 27, 2009, the Company owned and operated 560 restaurants, including 314 Burger King, 91 Pollo Tropical and 155 Taco Cabana restaurants.

Alan Vituli, Chairman and Chief Executive Officer of Carrols Restaurant Group, Inc. commented, 'We significantly increased net income and EPS during the third quarter compared to the year-ago period, as we benefitted from cost containment actions taken across our organization, as well as more favorable commodity and utility costs. Earnings were also positively impacted by a reduction in interest expense from the steps we've taken to reduce debt, coupled with lower short-term interest rates. The combination of earnings improvements and modest capital expenditures has enabled us to reduce outstanding indebtedness by a total of $25.0 million this year through the end of the third quarter, and to significantly improve our capital ratios.'

'Under current economic conditions, building top-line momentum has been our greatest challenge, and we are working diligently to drive sales at all of our brands. We are focusing our media efforts for our Hispanic Brands, including television, radio and direct mail advertising, on our new products, limited-time offers and our value positioning to stimulate guest traffic. The Burger King system is now shifting greater emphasis to the value side of its barbell menu with the recent launch of the Quarter Pound Double Cheeseburger for $1.00, which we believe will improve customer traffic trends at our Burger King restaurants.'

Third Quarter 2009 Results

Total revenues for the third quarter of 2009 decreased 3.8% to $201.2 million from $209.1 million in the third quarter of 2008.

Revenues from the Company's Hispanic Brands were $107.0 million in the third quarter of 2009 compared to $107.5 million in the same period last year. Pollo Tropical revenues increased 1.5% to $44.0 million during the third quarter of 2009 compared to $43.4 million in the third quarter of 2008 due to the net increase of three new Pollo Tropical restaurants opened since the beginning of the same period in 2008. Pollo Tropical comparable restaurant sales decreased 0.1% in the third quarter of 2009.

Taco Cabana revenues decreased 1.7% to $63.0 million during the third quarter of 2009 compared to $64.1 million in the third quarter of 2008, including a comparable restaurant sales decrease of 4.3%. This was substantially offset by the net increase of five new Taco Cabana restaurants since the beginning of the same period in 2008. During the third quarter of 2009, the Company opened one new Taco Cabana restaurant.

Burger King revenues decreased 7.3% to $94.1 million during the third quarter of 2009 compared to $101.5 million in the third quarter of 2008. This reflected a decrease in comparable restaurant sales of 6.1% in the third quarter of 2009 and the net closing of five Burger King restaurants since the beginning of the same period in 2008.

General and administrative expenses decreased to $12.8 million in the third quarter of 2009 from $12.9 million in the third quarter of 2008.

Income from operations increased from $12.7 million in the third quarter of 2008 to $13.5 million in the third quarter of 2009, and as a percentage of total revenues, improved from 6.1% to 6.7%.

Interest expense was $4.8 million in the third quarter of 2009 and $2.0 million lower than the third quarter of 2008 due to debt reductions in 2008 and 2009, and lower interest rates on the Company's LIBOR-based borrowings. During the third quarter of 2009, the Company reduced its outstanding debt balances by $3.7 million to $291.2 million at September 27, 2009.

Net income for the third quarter of 2009 was $5.6 million, or $0.26 per diluted share, compared to net income for the third quarter of 2008 of $3.7 million, or $0.17 per diluted share.

Nine Month Results

For the nine months ended September 27, 2009, total revenues decreased 1.5% to $606.4 million from $615.5 million in the same period last year. Income from operations increased from $34.5 million to $42.8 million, and as a percentage of total revenues, improved from 5.6% to 7.1%. Net income increased to $17.7 million, or $0.81 per diluted share, from $8.4 million, or $0.39 per diluted share.

Outlook

Based upon the Company's nine month results and an expectation that current earnings trends will continue, the Company believes that it will exceed its previously issued 2009 earnings guidance. The Company provides the following updated guidance for 2009 reiterating that 2009 is a 53-week fiscal period whereas 2008 was a 52-week fiscal period:

A revenue increase of approximately 0% to 0.5% for the year;

One additional new Taco Cabana restaurant opening in the fourth quarter, bringing new Hispanic Brand restaurant openings to five for 2009, and the closing of one Burger King restaurant in the fourth quarter;

Total capital expenditures of $37 million to $39 million;

Total debt reduction of $34 million to $36 million;

An estimated annual effective tax rate of 37.0%; and

Diluted earnings per share of $1.02 to $1.06, which includes the 53rd week of the fiscal year estimated to positively impact earnings by approximately $0.07 per diluted share. The Company's previous guidance was $0.94 to $0.99 per diluted share.

In 2010, the Company currently anticipates opening five to eight new Hispanic Brand restaurants and closing approximately five Burger King restaurants.

Mr. Vituli concluded, 'We expect to exceed our previously issued earnings guidance due to our strong year-to-date earnings performance and the favorable cost trends that are positively impacting our profitability. At the same time, we remain cautious regarding the consumer spending environment and our sales outlook. While we believe that our Hispanic Brands provide us solid long-term growth potential and attractive unit-level returns, we intend to continue to improve our capital ratios through further debt reduction both in the fourth quarter of 2009 and into next year. As the economy improves we will reassess our plans for new unit growth.'

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