Mexican Restaurants, Inc. Announces 2010 First Quarter Operating Results

For the Company’s 2010 first quarter ended April 4, 2010, Mexican Restaurants (NASDAQ:CASA) reported a net loss of $399,147 or $0.12 per diluted share, compared with net income of $179,853 or $0.05 per diluted share for the first quarter of fiscal year 2009. The first quarter ended April 4, 2010 included a net loss from discontinued operations of $103,716 compared with a net loss from discontinued operations of $93,230 for the first quarter of fiscal year 2009.

The Company’s restaurant revenues for the first quarter of fiscal year 2010 decreased $2.2 million or 11.4% to $17.0 million compared with $19.2 million for the same quarter in fiscal year 2009. The decrease in restaurant revenues primarily reflects a decrease in same-store sales. For the first quarter ended April 4, 2010, Company-owned same-restaurant sales decreased approximately 11.7% and franchised-owned restaurant sales, as reported by franchisees, decreased approximately 11.0% over the same quarter in fiscal 2009.

Commenting on the Company’s first quarter results, Curt Glowacki, Chief Executive Officer, stated, “Declining same-store sales continues to be our biggest obstacle to returning to profitability, as cost leverage is lost when same-store sales decline. We believe such decreases are a result of the continued weakness in the economy and its impact on consumers’ dining habits. Based on our current economic outlook, we plan to focus our energies on improving existing restaurant same-store sales, growing cash flow, and paying down existing debt. Although we do not plan to open new Mission Burrito or other brand restaurants in fiscal year 2010, we will continue to work on refining our concepts for future growth. The timing of that will be dependent on the economy and our Company’s performance. We 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.”