Mexican Restaurants, Inc Announces Sale of La Senorita

Houston, Texas (April 7, 2009)   Mexican Restaurants announced the sale today of its La Senorita concept, comprising five restaurants and one franchisee restaurant in the State of Michigan, to Hacienda Mexican Restaurants for $2.6 million in cash.

Curt Glowacki, Chief Executive Officer, stated, “We are pleased to announce the sale of Michigan-based La Senorita to Indiana-based Hacienda Mexican Restaurants, which we view as a winning combination for both companies.  For the La Senorita employees and customers, it provides them with an owner located in their trade area that can be more attuned to their needs in these difficult economic times.  For Mexican Restaurants, it 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 this sale will be applied to reducing our existing bank debt.”

Mexican Restaurants, Inc. operates and franchises 73 Mexican restaurants.  As of today, 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.

Mexican Restaurants, Inc. Announces Fiscal Year-End Results for 2008

Houston, Texas (March 24, 2009)    For the fiscal year ended December 28, 2008, Mexican Restaurants reported a net loss of $3,987,011 or ($1.22) per diluted share. This compared with net income of $348,774 or $0.10 per diluted share for fiscal year 2007.  For the fourth quarter ended December 28, 2008, the Company reported a net loss of $3,917,026 or ($1.20) per diluted share, compared with net income of $199,686 or $0.06 per diluted share for the same quarter in fiscal year 2007.  During the fourth quarter ended December 28, 2008, the Company recorded a goodwill impairment of approximately $5.1 million, and a resulting approximate $1.3 million tax benefit.  Goodwill represents the excess of costs over fair value of assets of businesses acquired.  Testing for goodwill impairment must take place at least once annually or when events dictate more frequent testing as required by SFAS No. 142, “Goodwill and Other Intangible Assets.”

The Company’s revenues of $81.9 million for the fiscal year ended December 28, 2008 were down $221,131 or 0.3% from the prior year revenues of $82.1 million.  Restaurant sales of $80.9 million for fiscal year 2008 decreased $465,227 or 0.6% compared with fiscal year 2007.  The Company lost approximately $1.15 million in restaurant sales from the impact of Hurricanes Gustav and Ike, and approximately $900,000 due to restaurant fires at two locations.  The decrease also reflected the sale of one Casa Olé restaurant in July of 2007.  Increased same-store sales and the addition of four Mission Burrito fast casual restaurants partially offset these sales decreases.  For the 52-week period ended December 28, 2008, Company-owned same-restaurant sales increased approximately 1.5%.  This excludes the lost sales from the hurricanes and fires (only stores open in both periods are included in same-store sales amounts).  Franchised-owned same-restaurant sales as reported by franchisees, and reflecting the lost hurricane sales, increased approximately 1.2% over the same 52-week period ended December 28, 2008.

Commenting on the Company’s fiscal year 2008 results, Curt Glowacki, Chief Executive Officer, stated, “Fiscal year 2008 posed many challenges for the economy, our customers and the restaurant industry.  Our Company was not immune to those challenges, or to the impact of two hurricanes and two restaurant fires.  In addition, we faced a rise in food, utility and health insurance costs.  Commodity prices rose at a faster rate than the rate we felt we could increase our menu prices and still maintain our price value to the customer.  Finally, the mandated increase in the Federal minimum wage on July 24, 2008, added approximately $2,000 per week to our payroll cost, requiring our management to make efforts to offset these labor cost increases through added labor efficiencies.  In spite of all of these factors, I am pleased that our fourth quarter same-store sales were positive 2.3%, making it the sixth consecutive quarterly increase.  Same-store sales continue to be positive in the first quarter of fiscal year 2009.”

Mr. Glowacki concluded, “We continue to be very excited about our Company’s growth plans for Mission Burrito, our fast casual entry into the high growth quick serve burrito category.  During 2008, as we continued to develop the concept, we opened four and closed one Mission Burrito restaurant.  In fiscal year 2009, we plan to open one company-owned location.  Further, we will focus on the next phase of fine-tuning the Mission Burrito concept.  We will also strengthen the Company’s core operations, support the Company’s franchisees, and improve the Company’s balance sheet.”

Mexican Restaurants, Inc. operates and franchises 79 Mexican restaurants.  As of today, the current system includes 60 Company-operated restaurants, 18 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.

Mexican Restaurants, Inc. Announces 2008 Third Quarter Operating Results

Houston, Texas (November 11, 2008)  During the third quarter ended September 28, 2008, the Company’s operating results were impacted by two hurricanes and two restaurant fires; the total impact was that 36 out of the Company’s then 59 restaurants were closed for some portion of the third quarter. 
As a result, the Company experienced significant inventory, labor and operating costs without any corresponding revenue.  The amount of recovery from insurance for these casualty losses cannot be estimated as of the Company’s filing date for its form 10-Q quarterly report.  As of October 25, 2008, all of the affected restaurants have been reopened.

For the Company’s 2008 third quarter ended September 28, 2008, the Company reported a net loss of $504,559 or ($0.15) per diluted share, compared with net income of $88,750 or $0.03 per diluted share for the third quarter of fiscal year 2007.  For the 39-week period ended September 28, 2008, the Company reported a net loss of $69,984 or ($0.02) per diluted share, compared with net income of $149,088 or $0.04 per diluted share for the 39-week period of fiscal year 2007.  The third quarter and 39-week period ended September 28, 2008 included a before tax (gain) loss on involuntary disposals from hurricane and fire damages of $140,938 and ($134,771), respectively.  The third quarter and 39-week period ended September 28, 2008 also included a before tax loss on sale of other property and equipment of $131,509 and $175,254, respectively.

The Company’s revenues for the third quarter of fiscal year 2008 decreased $929,813 or 4.5% to $20.0 million compared with $20.9 million for the same quarter in fiscal year 2007.  Restaurant sales for third quarter 2008 decreased by $1.0 million or 5.1% to $19.7 million compared with $20.7 million for the third quarter of fiscal year 2007.  The decrease in restaurant revenues primarily reflects sales lost from the impact of Hurricanes Gustav and Ike.  The Company estimates that it lost $750,000 in sales as a result of the two hurricanes.  Further, restaurant sales were impacted approximately $300,000 by fires at the Vidor and Pasadena, Texas locations.  For the third quarter ended September 28, 2008, excluding the lost hurricane and fire sales from same-store sales comparisons (only stores open in both periods are included in same-store sales amounts), Company-owned same-restaurant sales increased approximately 1.4%, the fifth straight quarter of positive same-store sales.  Same-store sales prior to the hurricane were declining at a rate of 1.1%.  Franchised-owned same-restaurant sales, as reported by franchisees, and reflecting the lost hurricane sales, decreased approximately 3.9% over the same quarter in fiscal 2007.

On a year-to-date basis, the Company’s revenue decreased $900,330 or 1.4% to $61.3 million compared with $62.2 million for the same 39-week period in fiscal 2007.  Restaurant sales for the 39-week period ended September 28, 2008 decreased $1.1 million or 1.8% to $60.6 million compared with $61.7 million for the same 39-week period of fiscal 2007.  The decrease primarily reflects lost sales from the impact of Hurricanes Gustav and Ike.  The decrease also reflects the sale of the Stafford, Texas Casa Olé restaurant in June of 2007.  Sales were also impacted approximately $800,000 by the two restaurant fires mentioned in the previous paragraph.  An increase in same-store sales partially offset the above mentioned decreases along with the addition of two Mission Burrito fast casual restaurants.  For the 39-week period ended September 28, 2008, excluding the lost hurricane and fire sales from the same-store sales comparison (only stores open in both periods are included in same-store sales amounts), Company-owned same-restaurant sales increased approximately 1.1%.  Year-to-date same-store sales prior to the hurricane were up 0.3%.  Franchised-owned same-restaurant sales, as reported by franchisees, and reflecting the lost hurricane sales, increased approximately 0.1% over the same 39-week period ended September 30, 2007.

Commenting on the Company’s third quarter results, Curt Glowacki, Chief Executive Officer, stated, “I am extremely proud of our dedicated employees, who despite dealing with much personal hardship, managed to reopen our restaurants in an amazingly short period of time, thus meeting the needs of our customers.  Our affected restaurants did not sustain significant property damage.  Most of the lost sales were due to power outages.  Due to the combined effects of Hurricanes Gustav and Ike, the Company drew down $1.0 million on its revolving line of credit.  Consequently, the Company will now focus on a slower growth rate of Mission Burrito, rebuilding the Company’s cash flow and paying down debt.  At the end of the quarter the Company was in compliance with the Company’s current debt covenants, except for the minimum rolling EBITDA requirement which was waived by Wells Fargo Bank.”

Mr. Glowacki added, “We continue to be very excited about our Company’s growth plans for Mission Burrito, our fast casual entry into the high growth quick serve burrito category.  So far this fiscal year, we have opened our third, fourth and fifth Mission Burrito restaurants. Currently, we have our sixth Mission Burrito restaurant under construction.  We expect this restaurant to open late this year or early in fiscal 2009.  We have also signed a lease for our seventh Mission Burrito.”

Mexican Restaurants, Inc. operates and franchises 79 Mexican restaurants.  The current system includes 60 Company-operated restaurants, 18 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.

Mexican Restaurants, Inc releases 2nd quarter 2008 numbers

Houston, Texas (August 11, 2008)  For the Company’s 2008 second quarter ended June 29, 2008, the Company reported net income of $359,059 or $0.11 per diluted share, compared with net income of $129,882 or $0.04 per diluted share for the second quarter of fiscal year 2007. For the 26-week period ended June 29, 2008, the Company reported net income of $434,576 or $­0.13 per diluted share, compared with net income of $60,338 or $0.02 per diluted share for the 26-week period of fiscal year 2007.  The second quarter and 26-week period ended June 29, 2008 included a before tax gain on the disposition of assets from the Vidor fire of $149,338 and $275,709, respectively.

The Company’s revenues for the second quarter of fiscal year 2008 increased $116,492 or 0.6% to $21.0 million compared with $20.9 million for the same quarter in fiscal year 2007.  Restaurant sales for second quarter 2008 increased slightly by $3,710 to $20.7 million compared to the second quarter of fiscal year 2007.  The slight increase in restaurant revenue reflects an increase in same-store sales and the addition of two Mission Burrito fast casual restaurants which was mostly offset by the sale of the Casa Olé restaurant in Stafford, Texas in June 2007 and the 20 week closure in the first and second quarters of fiscal 2008 of the Casa Olé restaurant in Vidor, Texas that was extensively damaged by fire.  For the second quarter ended June 29, 2008, Company-owned same-restaurant sales increased approximately 0.3% and franchised-owned same-restaurant sales, as reported by franchisees, increased approximately 1.0% over the same quarter in fiscal 2007.

On a year-to-date basis, the Company’s revenue increased $29,483 or 0.1% to $41.4 million compared to the same 26-week period in fiscal 2007.  Restaurant sales for the 26-week period ended June 29, 2008 decreased $79,636 or 0.2% to $40.9 million compared with $41.0 million for the same 26-week period of fiscal 2007.  The decrease reflects the sale of the Casa Olé restaurant in Stafford, Texas in June 2007 and the 20 week closure in the first and second quarters of fiscal 2008 of the Vidor Casa Olé restaurant that was extensively damaged by fire, partially offset by an increase in same-store sales and the addition of two Mission Burrito fast casual restaurants.  For the 26-week period ended June 29, 2008, Company-owned same-restaurant sales increased approximately 0.7% and franchised-owned same-restaurant sales, as reported by franchisees, increased approximately 2.1% over the same quarter in period 2007.

Commenting on the Company’s second quarter results, Curt Glowacki, Chief Executive Officer, stated, “I am very pleased that same-store sales were positive for the fourth consecutive quarter.  These trends are contrary to national casual dining industry trends.”

Mr. Glowacki added, “We continue to be very excited about our Company’s growth plans for Mission Burrito, our fast casual entry into the high growth quick serve burrito category.  So far this fiscal year, we have opened our third and fourth Mission Burrito restaurants.  Currently, four additional Mission Burrito restaurants are under various stages of development, two of which we believe we can open before the end of fiscal year 2008.”

Mr. Glowacki concluded, “I am pleased with our second quarter performance in what I would describe as one of the most challenging restaurant environments that I have experienced in my over thirty years in the restaurant industry.  In spite of this environment we managed to deliver continued progress in returning the Company to acceptable results.”

Mexican Restaurants, Inc. operates and franchises 79 Mexican restaurants.  The current system includes 60 Company-operated restaurants, 18 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