News

Del Taco wraps up profitable 2018, launching proprietary plant-based 'beef' in next quarter

March 19, 2019

Del Taco wrapped up its sixth straight year of sales growth, along with its Q4 2018 on Jan. 1 thanks in some part to reports of higher check totals. For the 2018 fiscal year, system-wide comparable restaurant sales grew 2.5 percent, while total revenue increased 7.2 percent to $505.5 million, according to results published by the company.  

The brand, which said it now ranks as the second largest Mexican-American QSR in the U.S. reported that Q4 system-wide comparable restaurant sales grew 1.9 percent, with 3.2 percent growth in franchised comp sales and 1 percent in company-operated comp sales growth. In the fourth quarter the company opened 15 stores, including seven company-operated and eight franchised restaurants.

Other key Q4 results include: 

• 7.3 percent total revenue growth to $157.3 million.
• Adjusted net income of $7 million, or $0.18 per diluted share, compared to $6.2 million, or $0.16 per diluted share in Q4 2017.
• Restaurant contribution margin grew 40 basis points to 20.3 percent, versus 19.9 percent in Q4 2017. 
• Adjusted EBITDA increased to $23.6 million from $23.3 million in the fiscal fourth quarter 2017.

 Other key FY 2018 results include: 

• 2.5 percent system-wide comparable restaurant sales growth.
• Total revenue grew 7.2 percent over the previous fiscal year to $505.5 million. 
• Adjusted net income grew to $21.6 million, or $0.56 per diluted share, compared to $20.9 million, or $0.52 per diluted share in FY 2017,
• Restaurant contribution margin was 19.7 percent in both fiscal years;
• Adjusted EBITDA  grew to $72.0 million from $71.5 million in the fiscal year 2017.

Overall last year, the company opened 25 stores system-wide, including 13 company-owned locations and 12 franchised.

"We achieved our sixth consecutive year of system-wide comparable restaurant sales growth in 2018," President and CEO John D. Cappasola, Jr., said in the release. "This was led by strong franchise comparable restaurant sales growth across a diverse 13 state footprint that supports Del Taco's brand portability, including 25 new system-wide openings across ten states during 2018 of which nearly half were franchised restaurants. 

"As we move into 2019, we remain focused on our mission to be the leader in the value oriented QSR-plus segment. Our transaction-driving initiatives are well underway as we enter 2019, led by our digital transformation including the new Del App which has now eclipsed 400,000 registered users and our expansion of Grubhub delivery to all company-operated restaurants."

Cappasola said the brand also recently improved its value offerings with the addition of $4, $5 and $6 Fresh Faves box meals,  with Q2 launches planned for the brand of the Beyond Taco and Beyond Avocado Taco, using a proprietary new plant-based ground protein that tastes like the brand's current ground beef. 

"Earlier this year we began optimizing our restaurant portfolio to stimulate new restaurant growth and existing restaurant AUV's by acquiring three high-volume franchise restaurants and refranchising 13 lower-volume company restaurants, all in the greater L.A. area. 

We have also begun preparing to refranchise our non-core Western markets to new or existing franchisees with proven operational and development capabilities. We expect this refranchising to help shift our approximately 55 percent current company ownership to approximately 45 percent by the summer of 2020, positioning Del Taco for accelerated franchise growth and enabling a sharpened focus on company operations in core Western markets and strategic seed markets to support emerging market growth."