News

Del Taco turns in 21 straight quarters of comp sales growth

January 14, 2019

Del Taco today announced preliminary unaudited fiscal fourth quarter 2018 sales results for the period ending Jan. 1, 2019 with updated FY 2018 guidance and initial FY 2019 guidance. The chain said in a news release that system-wide comparable restaurant sales grew 1.9 percent, marking 21 consecutive quarters of gains. 

Other key highlights include: 

• Company-operated comparable restaurant sales grew 1 percent, marking the 26 consecutive quarters of gains.
• Company-operated comparable restaurant sales growth was comprised of average check growth of 4.9 percent, with 1 percent menu mix growth offset by a 3.9 percent transaction decrease. 
• Franchised comparable restaurant sales grew 3.2. 
• Total revenue of approximately $157.1 million, representing 7.2 percent growth from Q4 2017. 
• Company restaurant sales of approximately $146.7 million, representing 4.4 percent growth from Q4 2017.

The company expects to release financial and operating results for its fiscal Q4 and FY18 during March 2019.

"Preliminary comparable restaurant sales performance during the fourth quarter reflected sequential improvement from the third quarter despite continued competitive discounting, and again included stronger results from our franchisees which supports brand portability due to their broad geographic footprint,"  Del Taco President and CEO John D. Cappasola, Jr. said in the release.

"Our comprehensive plan in 2019 includes pricing, menu mix and transaction strategies designed to achieve positive comparable restaurant sales in 2019, and to protect our strong restaurant margins. This plan is buoyed by key transaction initiatives designed to enhance our core value program, deliver exciting new products and expand our digital presence through our new App and launch of multiple third party delivery providers."

Cappasola said the company plans to "surgically evolve" its portfolio to "stimulate growth in new restaurants and existing restaurant AUV's." He said that effort will begin in Los Angeles with acquisition of three high-volume franchise restaurants. The company said it will also refranchise 13 lower-volume company restaurants during the first quarter of 2019. 

"Further planned actions include refranchising non-core Western markets to new or existing franchisees with proven operational and development capabilities which would shift our approximately 55 percent current company ownership to approximately 45 percent by the summer of 2020," he said. "Our portfolio optimization strategy positions the brand for accelerated franchise growth and focuses company operations on our core Western markets and strategic seed markets to support emerging market growth."

The company therefore updated its fiscal year guidance to: 

• System-wide comparable restaurant sales growth of 2.5 percent. 
• Total revenue of approximately $505.3 million, representing 7.2 percent growth from fiscal year 2017. 
• Company restaurant sales of approximately $471.2 million, representing 4.2 percent growth.
• Restaurant contribution margin of at least 19.5 percent. 
• Adjusted EBITDA of at least $71.5 million. 
• Twenty-five system-wide restaurant openings, with 13 company-operated restaurants.