Mexican Restaurants, Inc. Announces 2009 Third Quarter Operating Results

For the 2009 third quarter of Mexican Restaurants, Inc. (the 'Company') (NASDAQ: CASA) ended September 27, 2009, the Company reported a net loss of $232,614 or $0.07 per diluted share, compared with a net loss of $504,559 or $0.15 per diluted share for the third quarter of fiscal year 2008. For the 39-week period ended September 27, 2009, the Company reported a net loss of $260,697 or $0.08 per diluted share, compared with a net loss of $69,983 or $0.02 per diluted share for the 39-week period of fiscal year 2008.

Revenues for the third quarter of fiscal year 2009 decreased $381,636 or 2.2% to $17.3 million compared with $17.7 million for the same quarter in fiscal year 2008. Restaurant sales for third quarter 2009 decreased by $354,895 or 2.0% to $17.1 million compared with $17.4 million for the third quarter of 2008. Franchised-owned restaurant sales, as reported by franchisees, decreased approximately 3.4% over the same quarter in fiscal 2008. The decrease in restaurant revenues primarily reflects a decrease in same-store sales, partially offset by new restaurant revenues and revenues of restaurants that were temporarily closed last year due to Hurricanes Gustav and Ike. For the third quarter ended September 27, 2009, Company-owned same-restaurant sales decreased approximately 11.4%, caused by a weakened economy.

On a year-to-date basis, the Company's revenue decreased $398,486 to $54.8 million compared to $55.2 million for the same 39-week period in fiscal 2008. Restaurant sales for the 39-week period ended September 27, 2009 decreased $348,192 to $54.2 million compared to $54.6 million for the same 39-week period in fiscal 2008. Franchised-owned restaurant sales, as reported by franchisees, decreased approximately 2.9% over the same 39-week period in fiscal 2008. The decrease in restaurant revenues primarily reflects a decrease in same-store sales, partially offset by new restaurant revenues and revenues of restaurants that were temporarily closed last year due to Hurricanes Gustav and Ike. For the 39-week period ended September 27, 2009, Company-owned same-restaurant sales decreased approximately 5.6%.

On October 6, 2009, planned expense reductions were implemented to reduce costs related to general and administrative expenses to achieve a level of expense that management believes is sustainable through fiscal year 2010. In implementing the cost savings, severance pay of approximately $190,000 was incurred in the fourth quarter of fiscal year 2009 related to staff reductions at the corporate office. Total cost savings of approximately $1.1 million through fiscal year 2010 is expected from planned general and administrative expense reductions related to the decrease in corporate payroll costs as well as reduced marketing and other general and administrative costs.

Commenting on the Company's third quarter results, Curt Glowacki, Chief Executive Officer, stated, 'The troubled economic environment continues to exert downward pressure on our sales and profits. Consequently, I made one of the toughest decisions any executive must make by cutting back general and administrative positions. As of the end of the third quarter, we were in compliance with all debt covenants and as of the date hereof we expect to be in compliance with our debt covenants; however, for the near term, we continue to remain cautious regarding the economy and consumer spending. As I have stated before, we will continue to focus on the fundamentals of running great restaurants that offer delicious food at very affordable prices while positioning the Company to exit the recession stronger both financially and operationally.'

Mexican Restaurants, Inc. operates and franchises 74 Mexican restaurants. The current system includes 55 Company-operated restaurants, 17 franchisee operated restaurants and two licensed restaurants.

Logos, product and company names mentioned are the property of their respective owners.

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