Mexican Restaurants, Inc. Announces 2009 Third Quarter Operating Results

Houston, Texas (November 9, 2009)    For the 2009 third quarter of Mexican Restaurants, Inc. (the “Company”) 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.

Our 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.

Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following: national, regional or local economic and real estate conditions; growth strategy; dependence on executive officers; geographic concentration; increasing susceptibility to adverse conditions in the region; changes in consumer tastes and eating habits; demographic trends; inclement weather; traffic patterns; the type, number and location of competing restaurants; inflation; increased food, labor and benefit costs; the availability of experienced management and hourly employees; seasonality and the timing of new restaurant openings; changes in governmental regulations; dram shop exposure; and other factors not yet experienced by the Company.  The use of words such as “believes”, “anticipates”, “expects”, “intends” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  Readers are urged to carefully review and consider the various disclosures made by the Company in this release and in the Company’s most recent Annual Report and Form 10-K , that attempt to advise interested parties of the risks and factors that may affect the Company’s business.

Mission Burrito to Open Sixth Location in Sugarland

September 2, 2009 (HOUSTON, TX) – Mexican Restaurants, Inc., one of the largest Mexican-only themed restaurant companies in the United States, announced today that it will open its sixth Mission Burrito location on September 14th in Sugar Land. The new location will be at Lake Pointe Village shopping center on the corner of Highway 59 and Highway 6.

“We are excited about opening our newest Mission Burrito location in Sugar Land,” said Curt Glowacki, President and Chief Executive Officer of Mexican Restaurants, Inc. “Mission Burrito has been a landmark in the Houston area for more than twelve years. We have successfully duplicated this iconic concept by giving customers over-the-top service and allowing them to build their favorite burrito with more fresh ingredients than any other burrito concept in the country.”

Glowacki added that Mission Burrito recently rolled out its successful Value Offering in all locations to help families during the economic downturn. For a limited time, customers can enjoy their choice of a Chicken Burrito, Chicken Bowl or Taco Combo for just five dollars Monday through Wednesday.

The first Mission Burrito opened in 1997 in Houston on West Alabama and quickly gained fame for building large, “mucho” burritos prepared cafeteria-style right before the customer. Mexican Restaurants, Inc. purchased the concept in 2006 and has since added four new locations.

Sugar Land is one of the fastest growing cities in Texas and is part of Fort Bend County, one of the fastest growing counties in the country.

About Mexican Restaurants, Inc.
Mexican Restaurants, Inc., based in Houston, Texas, operates and franchises 73 Mexican restaurants. The current system includes 54 company-operated restaurants, 17 franchisee operated restaurants and two licensed restaurants. The current system includes five brands: Casa Olé, Mission Burrito, Monterey’s Little Mexico, Tortuga Mexican Kitchen and Crazy Jose’s. For more information, please visit www.mexicanrestaurantsinc.com

Mexican Restaurants, Inc. Announces 2009 Second Quarter Operating Results

Houston, Texas (August 10, 2009)  For the 2009 second quarter of Mexican Restaurants, Inc. (the “Company”) ended June 28, 2009, the Company reported a net loss of $207,937 or $0.06 per diluted share, compared with a net income of $359,059 or $0.11 per diluted share for the second quarter of fiscal year 2008.  For the 26-week period ended June 28, 2009, the Company reported a net loss of $28,083 or $0.01 per diluted share, compared with net income of $434,576 or $0.13 per diluted share for the 26-week period of fiscal year 2008.    

In the second quarter, the Company sold substantially all of its operating assets and liabilities of its La Senorita restaurant chain (consisting of five site locations) located in Michigan for an adjusted price of $2.6 million.  Proceeds from the sale on April 7, 2009 were used to pay down long-term debt.  The La Senorita sale, which resulted in a gain of $387,083 and an income tax expense of $303,558, was classified as discontinued operations and resulted in net income from discontinued operations of $43,720 for the second quarter of fiscal year 2009.  The higher effective tax rate results from permanent differences and an increase in the valuation allowance related to the La Senorita sale.

Effective June 28, 2009, the Company amended its Credit Agreement with Wells Fargo Bank, N.A., primarily to extend the maturity date from June 29, 2010 to June 29, 2012.  As of June 28, 2009, the Company was in compliance with all debt covenants and as of the date hereof expects to be in compliance with its debt covenants during the next 12 months.

The Company’s revenues for the second quarter of fiscal year 2009 decreased $636,048 or 3.4% to $18.3 million compared with $19.0 million for the same quarter in fiscal year 2008.  Restaurant sales for second quarter 2009 decreased by $609,296 or 3.3% to $18.1 million compared with $18.7 million for the second quarter of 2008.  The decrease in restaurant revenues primarily reflects a decrease in same-store sales, partially offset by new restaurants revenues.  For the second quarter ended June 28, 2009, Company-owned same-restaurant sales decreased approximately 6.6%.  Franchised-owned same-restaurant sales, as reported by franchisees, decreased approximately 1.2% over the same quarter in fiscal 2008.

On a year-to-date basis, the Company’s revenue decreased $16,850 to $37.5 million compared with the same 26-week period in fiscal 2008.  Restaurant sales for the 26-week period ended June 28, 2009 increased $6,703 to $37.1 million compared with the same 26-week period in fiscal 2008.  The flat sales primarily reflects a decline in same-store sales mostly offset by the re-opening of one restaurant that was closed last year due to fire damage and one new Mission Burrito restaurant.  For the 26-week period ended June 28, 2009, Company-owned same-restaurant sales decreased approximately 2.8% and franchised-owned same-restaurant sales, as reported by franchisees, increased approximately 0.2% over the same period in fiscal 2008.

Commenting on the Company’s second quarter results, Curt Glowacki, Chief Executive Officer, stated, “Sales and profit  performance during the second quarter of 2009 was certainly disappointing but not surprising given the impact of the troubled economic environment and of the swine flu on consumers’ discretionary spending habits.  For the near term, we continue to remain cautious regarding the economy and consumer spending.  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 financially and operationally.”

Mexican Restaurants, Inc. Announces 2009 First Quarter Operating Results

Houston, Texas (May 11, 2009)    For the Company’s 2009 first quarter ended March 29, 2009, the Company reported net income of $179,853 or $0.05 per diluted share, compared with a net income of $75,517 or $0.02 per diluted share for the first quarter of fiscal year 2008.  The first quarter ended March 29, 2009 included a net loss from discontinued operations of $93,230 compared with net income from discontinued operations of $77,946 for the first quarter of fiscal year 2008.

The Company’s revenues for the first quarter of fiscal year 2009 increased $619,201 or 3.3% to $19.2 million compared with $18.5 million for the same quarter in fiscal year 2008.  Restaurant sales for first quarter 2009 increased by $616,001 or 3.3% to $19.0 million compared with $18.4 million for the first quarter of fiscal year 2008.  The increase in restaurant revenues primarily reflects an increase in same-store sales and the opening of new restaurants.  For the first quarter ended March 29, 2009, Company-owned same-restaurant sales increased approximately 0.6%, the seventh straight quarter of positive same-store sales.  Franchised-owned same-restaurant sales, as reported by franchisees, increased approximately 2.3% over the same quarter in fiscal 2008.

Commenting on the Company’s first quarter results, Curt Glowacki, Chief Executive Officer, stated, “We are pleased with our first quarter results, but remain cautious about the economy and consumer spending.  We will continue to focus on the fundamentals of running great restaurants that offer delicious food at very affordable prices.”

Mr. Glowacki continued, “We are pleased to have sold our Michigan-based La Senorita brand on April 7, 2009 for $2.6 million.  The sale will help us focus on our strategies of building Mission Burrito and enhancing our core concepts in our Southwestern-based trade area.  The proceeds of the sale were used to reduce our existing bank debt.”   

Mexican Restaurants, Inc. operates and franchises 73 Mexican restaurants.  The current system includes 55 Company-operated restaurants, 17 franchisee operated restaurants and one licensed restaurant.

Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following: growth strategy; dependence on executive officers; geographic concentration; increasing susceptibility to adverse conditions in the region; changes in consumer tastes and eating habits; national, regional or local economic and real estate conditions; demographic trends; inclement weather; traffic patterns; the type, number and location of competing restaurants; inflation; increased food, labor and benefit costs; the availability of experienced management and hourly employees; seasonality and the timing of new restaurant openings; changes in governmental regulations; dram shop exposure; and other factors not yet experienced by the Company.  The use of words such as “believes”, “anticipates”, “expects”, “intends” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  Readers are urged to carefully review and consider the various disclosures made by the Company in this release and in the Company’s most recent Annual Report and Form 10-K , that attempt to advise interested parties of the risks and factors that may affect the Company’s business.