TACO - Earnings call transcript Q3 2019 | Del Taco Restaurants, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. And welcome to the Fiscal Third Quarter 2019 Conference Call and Webcast for Del Taco Restaurants, Inc.

I would now like to turn the call over to Mr. Raphael Gross, Managing Director at ICR to begin.

Raphael Gross

Thank you, operator, and thank you all for joining us today.

me Steve Cappasola, Brake, with Executive and call and Officer; Chief the is President John Chief On Financial Officer. our questions. deliver lines we prepared will we After open for your remarks, the

everyone to later not Before a results update I’d press upon impact today's of not today these you include and guarantees forward-looking at we and some be therefore with earnings undertake them. not of These are future like for remind future placed will a and and SEC date the forward-looking statements more filings begin, statements. our operating could to of condition. our the company’s release that to refer statements undue financial discussion risks discussion do the that detailed part We performance should reliance

also adjusted nearest Today's contribution restaurant measures with measures non-GAAP includes adjusted income, earnings EBITDA to financial press measures. non-GAAP net these and such release the reconciliations of along GAAP as

considered as financial as provided activities non-GAAP However, GAAP GAAP or cash or performance. any income, measure by income, net measures flows operating financial other measures net to alternatives liquidity operating of not should be such

Officer. turn would Cappasola, Executive I over to to call Chief John now the like

John Cappasola

on thank the you, joining Thank Raphael, you for call and us today.

transaction optimization our before stimulate help initiatives me company on experienced our refranchising an due as growth. where operated trends progress focusing improvement well and made portfolio sales summarize Let driving first we efforts QX furthering long-term to in QX as on have since strategy and to transaction

P&L. loss of with at operated the coupled a pressures restaurant inflationary resulted sales comparable positive across in slightly company QX, During leverage restaurants

and of check X.X% menu of including X.X% restaurant of sales comparable at Specifically, decline transaction approximately grew operated restaurants X.X%, a X.X%. consisting average of growth company price

driving quarter Franchise system-wide in recall in QX transaction sales sustained comparable and restaurant X.X%. comparable our launch second outpaced then company similar trends July August began X.X% transaction during call, may that operated trends. of sales until foreshadowed while helped grew key that our were initiatives restore to restaurants the through You softness transaction we conference QX restaurant increasing

approximate expense, approximately from accounting Turning an advertising pressure basis timing excluding the contribution of XX rules to from margins points from reflects and restaurant restaurant lower basis new contribution, restaurant the margins of point food, slightly operating last declined and dollars. points yielded lease basis inflation which positive XX and approximately XXX across This impact coupled restaurant cost year. expenses sales labor comparable with contribution

Adjusted approximate million declined accounting. including XX.X EBITDA from year last lease X.X from million of million impact an X.X

QX, a our to cautious results as as our on our date current stance revised more annual well Given XX-week we guidance. have

activate value transformation, on driving As focus embed this evolution initiatives our is transaction to we’ve discussed innovation. including brand recent and and year our product calls, our digital

innings as early relative are beginning Beginning digital with the still establish have our of that to characterize digital, initiatives results. an we encouraging would to but to we certainly see channels opportunity new I transactions,

live or capability. Our Del currently process now Del adding mobile delivery XXX all in restaurants exceeds the accepting XXX,XXX the pickup orders through plus company franchise restaurants this over or users and App registered are for App are of

we As are in focused base leverage. sizable we’ve growing our before, into XXXX mentioned database a of consumers to on

guest techniques enabled into CRM capabilities segmentation scale. improved enhance move on we targeting to ultimately further we XXXX, will returns As through our drive and investment with engagement

immediately we adoption. QX, launched realized across restaurants In Postmates addition, in and favorable all company late fiscal

only rate tripled which more the marketplace had prior during our than one compared run fact, delivery recent In we incidents provider. weeks four party the to third

are most operating have brands not significant hours many extend capacity QSRs well by graveyard the as casual We over-indexing they are also late and encouraged as also past fast of delivery dayparts casual as of who during and the our snack open and late-night. typically

maximize to to to demand market who our channel. is the continues As DSP consumer opportunity our to DoorDash share and we end launch year a know, expect DSP and delivery our in multiple expand expand our reach further of third the through a viable goal by in the approach you of represents markets many

let’s Now to shift our value evolution.

our early the points at helped continue X% Faves drive fill plan platform of of our with part menu like Fresh addition quarter. value did and first evolution reinforce value. mid-tier news everyday the to The Fresh over and $X new the embed during was Faves to QX, $X $X, which of on we key in price mix We boxes to opportunity the

remain relevant our is complement of our sure tier evolution Faves the lower the Fresh in The making value spectrum to and highly premium of next on key innovation. we part order

Del recently value given the During highly for $X our of the to perceptions we maintain to focus end and Taco on spectrum, and the launched a value we enhancing enhance two a promotion in value lower QSR. plan landscape affordability QX, competitive

not became best-selling reenergized also sold daypart breakfast comping ever our QX a new Toasted of number product is product since has $X in at only debut which the daypart Finally, chorizo Breakfast price portable breakfast highly great featuring by one new but or sales This product fiscal late relevant point. and units this product to become highly led quickly terms the Wrap bacon of was launched. our a innovation craveable product the

part a of the developed an we’ve important to strategy for pipeline our innovation across robust and XXXX. marketing barbell Product be will continue

for driving to resulting fiscal improved by the to As noted improvement transaction led earlier, softness QX transaction sequentially that specifically transaction QX. compared company our QX, trends restaurants address in from initiatives operated have date

breakfast a presence daypart, this affordability. and the of sales that channel value new hero Taco promotion They launch that expand important in included $X recent the Del two for successful reinvigorated uses reinforce Breakfast to our Wrap new our Postmates to the $X product our and Toasted

of Beyond QX our In popular our addition, return benefiting program is the Carnitas platform. from and

merchandizing. new QX menu resonate limited over at and mixing continues at during QX, guests and to during X% Beyond existing despite X% approximately with fiscal

momentum capitalize fully on of expect ourselves to of time as relevance the mid-November seasonal indulgence, DSP DoorDash as our traditional new LTO up approach set for holiday multiple the expected in activate Mexican the added launch late the we as ahead, the QX we for from new year. Pork this of to first launch success well Tamales the Looking authentic

On and the XX two system open Taco QX we have this our franchisees during expected development XXXX. two openings during operated Del be opened which are XX company XX openings fiscal Including opened far week, so front, construction, currently will to restaurants restaurants two of restaurants. year and we this there under restaurant

skewing XXXX openings. franchised This our development would slightly guidance at achieve toward least restaurants, XX new of

company and high-volume purchased During operated restaurant. opportunistically QX, franchise also we one a restaurant Southern California closed

have non-core portfolio we asset purchase be to optimization agreement to of market our now now expected have executed a two franchise refranchised. strategy, Each letters and covering an one refranchised for to be is Western markets to intent group. other market Turning signed different

a multi-concept unit groups multistate operations records the will multistate a other Two franchised is Any development. All include group new these existing growth demonstrated and high in multiunit, store and meaningful franchisees track markets. and groups with and three adjacent are very franchisee. in transaction new multiunit, are commitment quality operators future

franchise financial agreement the specifics, highlights share themselves. Since are any definitive restaurants development in through late QX complete to although we We to currently a we refranchising and XXXX. expect of terms, purchase, series QX going transaction into we relevant not related and transactions first will markets still to of the three are the finalizing share

reductions, in these of from G&A currently million restaurant restaurants of in immediate margin company restaurants existing and $X.X XX an $X.X XX%. annual future Net of adjusted forma revenues approximately and reduction have The markets operated approximate the three million we an contribution pro a approximately AUV EBITDA. franchise expect

Looking but confidence highly and continue franchise the growth also into will provides the long-term increased believe scrutinized that future. forward, growth expected future of will creation, completion commitments we lead these growth their value enhance only to not our transactions story related

gain markets. of operated markets emerging a In we greater AUVs planned Vegas footprint with addition, and Western Angeles in of completion core margins to as upon a sharpened presence our seed focus Los a and as refranchising, strategic remaining with strong our of in the Las company predominantly operational well restaurants restaurant expect

markets restaurants we in at least The and Oklahoma in to restaurants emerging growth support were are franchise these growth by pleased will growth designed allow that to to company progress these infrastructure markets. expect future and we to supporting as XX company This as surrounding nearly the have XXXX, on Georgia. in system-wide of limit originally seed areas franchise establish us focus long-term and well in markets end future XX as seed for we plan

focus transactions real refranchising construction company in of franchise to strategic mid-term, approach and with and persists. cost more opportunity and a growth the planned to growth the particularly also provides reflect to estate slower high alter continued near pace our Our while us

company remaining into seed seed open annually X infill to XXXX, and operated limited markets, in reflecting existing development our new starting XX starting we XXXX. Western selective development and in restaurants Specifically, late expect to in company core markets markets

XXXX, near-term move test and opening investments to well franchise restaurant a with generate in performance continued enabling equipment return with again pace we currently capital to restaurants, company technology a slightly profile. as For skewing cost development through system-wide will closure we and transactions and toward forward, remodels XX preserve design paired anticipate The optimize as X% capital help new the to as us slower rate. refranchising system-wide existing up of enhance

and returns our through enhance debt provide current as authorization has to expected to $XX.X the also repurchases repayment QX. are and of fiscal transactions The end share shareholder remaining million greater of opportunistic means total

Taco Gretzema promoted lead to support, Chad a our new years our the to brand Del training strategic at Officer. operations to even which contributor and Chad teams This I innovation, and leadership past and invaluable planning, believe to was will who led Chad and been successfully congratulate I role has having one from Finally, is facility over seven recently Operating asset greater want Chief an company support. success. restaurant

franchise critical even our to help results who businesses, development. superior passionate deliver how to support has partners cross franchise as teams expand and He strong functional we is a our on be focus voice grow their someone been knows which help ensuring more franchise also will successfully and operations

review And our now, Steve will financials. QX

Steven Brake

of line, with top two-year X.X%. system-wide revenue of XXX.X and to third increased total third increase ago the comparable our restaurant sales a quarter from X.X% restaurant resulting X.X% sales X.X% the year lapped quarter in year comparable Beginning quarter. third John. during XXX.X last million million rose in Thanks, System-wide

million mix company X.X% from in XXX.X restaurants XX which first three restaurants restaurants. unit period, average of quarter year and Third driven was volume to by low an ago company franchise sales quarter of primarily restaurant high-volume volume million in terms from of of impact XXX.X the acquisition refranchise including increased operated improved the

million revenue Franchise X.X% comparable comparable in as approximate by an in X.X% partially company to as including restaurant quarter including X.X% check, as increase in from X.X additional decline The increase were in driven comprised and operated transactions. last operated early was offset by XX X.X% X.X% sales year. increased restaurant well last mix by restaurants XXXX a franchised year, franchised million increased to were Third increase refranchised of menu stores growth sales year-over-year of X.X%. X.X compared that a

Food percentage. slightly of our inflation margin approximately of sales exceeded which lower Turning to Beyond X% over as XX.X%. which our price impact XX.X% expenses. to basis driven year-over-year from and costs company XX of restaurant plus typical from menu food percentage This approximately increased than X.X%, was a points have increases offerings paper a by

lower including net than Breakfast Looking percentage products X% promotion over as ahead, Wrap, two expect Del new during impact inflation or a from QX, Taco Carnitas. products, $X as of the Toasted the well for Beyond that LTOs and typical our margin food feature we

Expected which and from currently in inflation inflation African impact food less absent XXXX we anticipate fever X% we approximately fiscal XXXX, is a continue monitor. now to more swine material slightly

rate to offset an as compensation California to insurance California a and by $X partially approximately favorable based from company This group was payroll XX.X% reduced minimum inflation trends, hour, expense XXXX. restaurant driven from $XX a compared increase related change to tax Labor by and basis expenses on reduced our wage percentage underlying increased sales of wage points XX.X%. workers’ XX the in

last California our we will and QX in basis approximately less favorability and tax QX, with most in benefit year. rate in the of the realized QX in full XX experienced QX payroll we was that lap Recall points much that

competitive California Looking increase a and an XXXX and and ahead, hour inflation pricing fiscal $XX consumer, by strategy although in fiscal $XX currently of from elevated our expect be informed wage X% will driven XXXX we to related labor expect at we pricing of trends, $X to least primarily X%. minimum menu up macroeconomic by

year. basis restaurant and of expenses Occupancy XX.X% expenditures approximately percentage other This basis XX.X% increased points higher XXX last by from a due of outcome advertising included operating points XX as company to sales positive the basis of and new deleverage well points from approximately basis trends restaurant XX slightly from of which approximately sales. adoption as accounting lease inflationary to as outpaced comparable XX rules timing points the approximately

this basis points million performance, in was to year approximately XXX restaurant and compared from the XX.X on Based XX.X%. million prior decreased contribution contribution to restaurant XX.X margin XX.X%

impacts points from the and declined from last accounting restaurant contribution XXX basis approximately of excluding However, advertising, rules timing lease margins year.

expense. and reduced including expenses ongoing an in performance-based and X.X Opportunity recorded million of increase related reserves by partially incentive up and the Employment General million, X.X%. transition percentage XX complaint offset increased with total legal last points from as XX.X management expenses to revenue. increased compensation and basis Equal compensation were by lower approximately by administrative G&A driven Commission connection filed This year-over-year year by was stock-based executive costs, primarily a

XX.X percentage Note includes total revenues from XX.X% approximately XX.X and was impact an XX.X% lease EBITDA of the down unfavorable the million as quarter adjusted million, EBITDA million new of last accounting year. from from adoption last standard. year of Adjusted to a this decreased that X.X

Depreciation each reflecting rules. other million operated year, the new to X.X was of our consistent build-to-suit by restaurant the at reclassification accounting leases lease company offset approximately larger and under base and amortization occupancy expense operating expense the

and As basis to XX depreciation a X.X%. percentage declined total amortization of revenue, points

under X.X by The suit to new partially one-month due decrease offset increased other last LIBOR million the build-to- an to rules, year. was million our expense Interest accounting to lease last of reclassification compared occupancy compared and to expense was leases year. rate X.X the

other million to pricing refinanced additional extend our applicable remained we achieve the with loans the under and term end XXX for margin improvements X.XX%. our grid Early its of revolver and outstanding QX, fiscal At our and to LIBOR and covenant at QX, revolver flexibility. in

an to held-for-sale value Our property equipment balance caption a and third sheet these XX.X goodwill totaling required associated refranchising the reflect quarter a of to progress and reclassification their million. carrying related amount to including restaurants,

and assets adjustment reclassified non-cash estimated assets value also within and million within held-for-sale of A adjustments direct assets and loss of net to sublease X.X net costs to held-for-sale liabilities. selling recorded realizable the of reduce assets was goodwill on disposal to

loss This adjustment on contributed impacted to also pre-tax a third rate. effective quarter and tax

approximately quarter of loss as X.X XX.X million XXXX effective this resulting created permanent despite tax the expense reclassification X.X pre-tax an non-deductible million, during Specifically, of of our income goodwill for a to third million unfavorable difference quarter tax an book XX.X%. was in third compared rate

$X.XX to Net loss was X.X income million million or a loss of $X.XX last per of diluted net or share year. diluted share compared per X.X

last million quarter and $X.XX share share income In addition, and other income, year. transition of of to loss income charges, adjusted executive long-lived was we assets assets, or sale. diluted assets restaurants, closure are adjustments for costs to in closed net impairment disposal million sublease for reporting the X.X Adjusted restaurant per held income net which diluted X.X excludes $X.XX compared per or on

referenced, of an are as progressed. driven guidance the call, our annual transactions momentum finalized updated QX fourth during which July, our transaction the John early our On as quarter. provide including second that unexpected expectation two conference current believe would in we slowdown half initiatives refranchising began we driving Finally, year our the we although XXXX discussed fiscal traffic fiscal

outlook during current second sales sales These XXXX delays expected our and of date approximately fiscal opening the and timing of and impact Although restaurant to the date new materialized, with its QX. to comparable magnitude of total lagged results trends, expectations for now and occur reflecting sale refranchised consistent X% outperformance expectations to our company as include revisions with guidance. revised sales momentum revenues restaurant our franchise from half markets has and warrant reduced comparable currently two well restaurant results as system-wide store

adjusted also These revenue share margins, necessitated in reductions revisions and earnings to adjusted restaurant contribution EBITDA. diluted per

including opportunities. stronger innovation a ahead an we digital we well product year, service menu well pipeline with as expect a as in to capability, to enter benefit provide believe providers positioned next exciting mix Looking we of transaction to three are year XXXX as full delivery to

and a expect our company we result expect transactions. program optimization portfolio pending slightly As XXXX food benefit and lower also menu a currently refranchising the of from in compared pricing noted, to healthier we inflation as elevated to portfolio

in thank As always, Del interest Taco. your you for

answer may And we you are have. now happy questions any to

Operator

Thank now Instructions]. you. We’ll session. be a [Operator conducting question-and-answer

Our first question Badishkanian comes Citi. from the with line of Please Greg proceed.

Spencer Hanus

could the quantify additional This deceleration little actually Greg. color QX you’re if just wondering for provide you And is just to seeing? then was can Hi. Spencer you on date Hanus the comp in third the trends quarter. a that on I

John Cappasola

more was to key bit since. added we’ve of the said Let areas in specifically me last that QX in and address initiatives you similar months a July and little performed softer traffic August we’ve Obviously, we the drove that color. give traffic what the couple the

So a tipping further nearly point with launch of delivery this delivery with should third our key late a saw I this incidents Postmates, year said, summer let party improve me bit. tripled and walk area that as and in you through launching DoorDash markets the that some as We really well. in we

We and with focus turning had other the Faves also along performing as Toasted driven and intense the saw Wrap more lagging breakfast into operational launch the Breakfast of breakfast Beyond we and on focus top dayparts really the with initiatives lunch daypart. Fresh an dinner the of

as these $X aligned. the we’ve on the focused and strong one were two we and And for particular over Chicken over initiatives to which Fresh we spectrum the felt cycled promotion. with Snacker we obviously as seen launch follow in that could shore value are initiatives mid-September the deployed LTL more and And Beyond of breakfast then Carnitas the $X of then value historically, end mid-tier premium as for brand Taco as our price was a with strong can been Burritos and summer the was Faves. Del with when low have be performer So we the it up innovation in not

So far that why that’s improvements really there’s softness of a more traffic returning the the we’re little color saw seeing QX. type and kind so QX traffic we in in QX traffic to on of

Spencer Hanus

makes talk little mentioned Beyond Can now you think X% in little prepared about platform? there? seeing QX the versus talk a a in that you’re remarks XQ. bit just then at mixing date more you in sense. of a you’re bit slowdown just you I And That X% can to about why the

John Cappasola

taken of we’ve of it’s primary Mainly secondary the got and Yes. message off merchandizing. from it message a so main some a marquee merchandizing, down gone it’s to diminished

continue market familiar So happen protein. as to with so for past programs We course ability We premium, alternatives happened average. actually merchandizing relative merchandizing. excited a continue well the a plant-based X% continue definitely And looking higher to we’ve there diminish it done we typically also as type other has protein check a it’s to with traditionally Beyond that the has animal the those to still the consumers the that program. similar ultimately sales drive when in and for at healthy we become to we see to sales don’t think of about to programs once are think that mix be and more as start forget and the priced is us dynamic really delivers of

LSR our Beyond grow. to protein we consumer continue menu. you’re forward on do that plant-based to in the for continue is for that space a with a to differentiator see role will moving familiarity and believe Mexican going again us nice It So

Spencer Hanus

Perfect. Thank you.

Operator

you. Thank

Jefferies. proceed. Alex from Please line comes question next of Our Slagle with the

Alex Slagle

Thanks.

using and had seen if we’ve else Just up additional understanding better, now anything and satisfaction been few or I’m metrics just guess Beyond on digging a different on the you’ve insight want added product the into out or of sure a in levels you’ve commentary I to groups follow little you consumer months geographic differences? guest but sort any differences the

John Cappasola

with and you, it that really And scores users to guests we experience trading trying OSAT product. The majority of Beyond let mix although came up ratings, found these top not came pleased their at visits. average Alex. the most level the for try necessarily existing our essentially product clearly and hit from gains guests incrementality on are increases check drove the Yes, based just sales the of me really and to the related existing from

the their Taco So for mixed it opportunity Taco they to just course to necessarily folks. of very last Del into group the trade the those are users incremental much because little up category on in about options making regards we they’re Del heavy in menu was a of those platform. incremental upside light vegans those vegetarians represents most general as call a into came smaller versus folks, The of talked and users. They visits it population. and bit those visits category are users the lighter that They’re as not a that

although from enough did brand to with transactions volume wasn’t just we receive and of high there group. marks that group that visits So overall folks, incremental against register

Alex Slagle

Okay. do low the can end price barbell? think you offerings, else like What And the do sounds end start. a value good then that here that you of on for the have of the you on $X, two

John Cappasola

for so our regards Fresh that to menu in end with We ready low be doing of other two that we is the like really are getting to now. really programs the mid-tier value, strategy in filled value. more XXXX. Yes, sensitive complementary addition think clearly program what that void on Del have similar hit that test in Faves the $X we’re and/or right Faves to programs lower used think price barbell value And Fresh in user, to Taco that end to we

platform $X Under nice the at be now. that one-two think price into you is within value a within the Under & punch think Under price can a & point, to can punch. Buck as or Under so as can nice think far play and la end of right innovation the believe & role, really à that $X, to be an Buck barbell the there’s carte ability one-two Buck and a continue the happening box barbell also that a amount that’s about against as We We & low we $X, Buck barbell trade of a

now how we’re moving XXXX. about right that’s thinking it into So

Alex Slagle

Got it. Thank you.

Operator

you. Thank

next of proceed. question the Wedbush with Securities. from Our comes Setyan Nick line Please

Nick Setyan

you a the category, Thanks. guess of category, a it little if QSR and driving their with I what you. and the seen is category think strength do competition to we lagging have sales can why this the kind rest just different of you step what year-to-date? a think your relative what and John, strength you’re guess do in we’ve the back question is trends. of kind that’s guess up you a we their I do bit example that’s quite catch about for from think to been of some the of terms for take I expectations of

John Cappasola

Sure.

right. you’re Nick think I

with to for all doing right share we restaurant believe in fierce a are We’re stomach that growth that to to of some And continue and service driven brand by we we’re the think competing technology the traffic. same-store things transformational limited continue for cycle now. sales competition right position I and

new to that strategy of be as course of [ph] think buttressed positioning. it part even continue us we development larger many gap leveraging build all in is close pull, to We’re which innovation about can by while a which will levers and throughout on our focused continue QSR powerful to gives development our and key and more barbell, our and plus delivery leverage digital our the the we competitors with technology the product bringing

on we’re a we to our little Admittedly, ability of about compete. catch digital feel front. playing the So, good bit up listen,

innings that that As be I in we XXXX, we’re as we’re going but said, feel stronger we’re to area. the that good we making. much progress about early move in And into

Nick Setyan

what launch more we’d versus see you in it’s but both of Yes. you how I what’s if average about it’s whether kind the Postmates of kind and DoorDash, once talk transactions, breaking you driving mix transactions, incrementality can check, we the look mix specifically terms out driving forward there? result of to see and maybe

Steven Brake

their real addition tripled lead more we area really there. most mentioned day market of we’re in Steve. the strong Hi, with seeing. than for per as a we Nick. provider. one LA so store weeks four delivery Postmates, incident, The what Postmates, We a had in It’s our when so versus terms Yes, back recent uptick only with nice excited very per happy is

We transactions. average delivery that to in continue to X.Xx Xx area have check on the

a price premium we ways impact area of before, As we of towards are goes party for which that delivery good managing mentioned taking third XX% modest the commission.

we’re a steps two out to three-legged at into program, on launch to more progression. of So our end built and with with get really into the metrics, here by next year, fully a we journey this year deck of as that better per the the very store absolute point encouraged we’ll but be far day position in about metrics talk broad with in cetera, per terms et so DoorDash

Nick Setyan

some QX X% point above the And are we could pricing so in X.X%? pricing at that QX last on taking XXXX, question then just in be

Steven Brake

year we’re about this end over now where end we’ll year. the to little carrying going right That’s a We’re – X.X%.

last at in is level We quarter chance intention. all into XXXX. to for won’t year’s carrying have quarter, or price X% of actually that January, we’ll of increase the to there least As that lap is up we’re the quarter first the where a goal price step and that’s so, we day be mid the the a get begin we’ll course but to begin point year of first one the over

Nick Setyan

you. Thank

Operator

you. Thank

question proceed. Our from of with Saleh next BTIG. Please Peter the comes line

Peter Saleh

similar to the amount labor side the and least from XXXX be you’re it will of Great. food Thanks. on at a the XXXX taking. sounds inflationary John, and like cost year pricing that

attacking to LTOs going same any at be in in it to like the the market your maybe on different, guys any in year on strategically come next as side, very how look to maybe anything XXXX guess much just it a this did you different environment’s of I way given different So you change doing the sort XXXX? looks plans

John Cappasola

and Yes. us focus I we’re Del said an transaction of Peter, improving transformation our CRM earlier strategy on going to App will of to digital side and on that. our side focused both sciences data for be the ongoing the the capabilities momentum continue like through

to some piece. got we there as value to we’ve transformation think the grow in Obviously, that continue on I into mentioned database. delivery Steve scale opportunity get

You’ll innovation will with for about Fresh sorting lower little well see move a Under end $X to XXXX. platform new to obviously coming year with tiers we the of then are through the launching Buck which aggressive products some innovate I we’re will part the throughout exciting additional more as help our like complement doing we & come That brand two development. out what And Faves. new with to move we some value some ingredient and we Del planning help will Taco of from news as really bit talked programs strategy. there of as our in as product develop leverage product news as the barbell that on news pipeline new a and new QX really new mix the In deep well. marketing a be continue

coming And So model feel we fence compete the to about COO made then to role, to new really Chad recently AUV. side reinsert the ability more news, meaningful couple innovation a of solutions the on we our in with that combined you continue operating with I product into think technology way. through for innovation, good overall our more move disciplined the and

Peter Saleh

kind us are Has do in year? Great. the through? give that flat over drive going where And terms Has an you course of XXXX? deteriorated the you it times in where on of then it see of lined? service can just And this you update

John Cappasola

have we Overall, couple it’s Peter, of Yes. from over plateaued years. the seen what last

say speed. XXXX and similar in XXXX to So I’d regards looks

fast. We’re

We’re not getting much faster.

that be this in right that situations. a high now then outside plateaued that to could We’re testing making improve with still may we’re technology the been has new some that expand that’s investment is and bit about there help order better, through drive into things drive think component. think an key through. the taker platform we’ve a well doing a XXXX, throughput as We order testing we year. at speed platform through accuracy some getting In regards volume we the to And as and

and in franchisees sure through through by company to we as the our really way. accuracy Chad’s that dining is of make as window working one So charges the at and that operations that’s our experience well the room the are delivery delivering with lead

we’ll XXXX our focus in year those So four end the this areas the we move walls. into that as and of to are back

Peter Saleh

had just then want out is like said you Is versus question, what platform a different I that? the dollars I you feel you in of think guys the platform the primary getting a Beyond did to was Why to Beyond just – shift the or that you XQ. And message now platform? Great. expected last weren’t secondary it you message guess

John Cappasola

focus, it launched in it’s essentially of Beyond months primary right, so. kind June, call really been in so April, pretty August a we and so We it May, as July, or think kept about four

plus QSR of to sure this driver across and fresh to a news category maintaining deployed. a that appealing make our is we’re transactions level broadly across in new So consumer of of that keep we’ve big that barbell got strategy the kind healthy order we’ve base

way to as an to LTO reinvigorated, a launch a way able was primary that daypart great being great highlight meaningful consumers get Taco. able to way Carnitas another message being a breakfast So bring to Del in into as

So you’ve a we top see drive so or though if to it’s it been on make. absolutely through going And and it’s likely on wants be menu. experience it’s going mind the it the it, driving to have choose there. it even still several to into months, you’re to then Beyond merchandized. present able should been that – of walking one over you’re to last the choices And if diminished you’re the it’s secondary dining bit And up to merchandizing, a the it’s that room, and message absolutely be

we’ve how do So There’s we’re the the for that about the it. short on got priorities think multiple to and we that’s just the in going to make business that are ones term. sure focused best

Peter Saleh

very you Thank much. Great.

John Cappasola

You got it.

Operator

you. Thank

Our with line Jaffray. next comes the question Joshua from Long proceed. Piper of Please

Joshua Long

just most competition? and you strong value and year? of you’re year pressure you’re to you’re that see taking seeing comments next some you terms the Great. – could beginning compete You share high Thanks the if opportunity to seeing or mentioned question. curious into what seeing and of start Wanted a the the some the but of level the little different with industry have think the just products have in during call, you across what of on where you you’ve initiatives going on and for offering strengthened most a where end the

John Cappasola

Yes, so color just the a bit on more little category.

But We’re at displaying a check is driving negative still that transactions large category speaking, through those are transactions. generally seeing are that same-store it not, right. few the the are category but folks kind sales essentially. on of doing There’s generally negative

spur low loss led in that’s value seen looking try type essentially. of the highly leader the frequent market the price low what seeing – marketplace, you’re side user some type to on where to kind in deals So approaches that, at that value on value we’ve is margin offers

seen seen with of some with and a the brands that into We’ve obviously some the the move larger all months summer not we’ve scaled over big digital So some happen especially brands, brands. also with but brands.

leveraging digital So just delivery transactions. in scale through you both general see that really that and

biggest to that where that’s we’re Josh, these the regards get our development and we things reinforce kind that in we’ve planned embedding I’ll and sure into why create familiarity to the just continuing with here consumer. strategic doing. and good them need market initiatives of relative So, competitive this we’re seen a the to with offense we’re but to all think doing them I make set, the moves the And exactly that’s pretty we’re year

Joshua Long

of or we role an that focused a the on restaurant be team? the just to new how thinking into Absolutely. of testing. the COO remodel we accuracy maybe And equipment should on, into about new his as list around Should COO maybe also but there, about opportunity to those lean opportunity think then some think things a the by that? more acceleration technology, opportunities is sounds of order addition you some about like focus and of the It talked committed dedicated

John Cappasola

what definitely is you partly just mentioned. It

us make in it’s with efficient Chad four bring us. restaurants. together come sure and with and role a invest associated improve and sometimes those both I we’re that right forward putting think needs two can that market collaborate do and as move company supporting franchised be will different possible the between is and opportunity It company it be support think think And will a certainly what strategic be table. both, will needs programs is for franchisee we the strategic you franchise areas, what I and a it walls There move forward. for I and to right agendas an as the the and said the to that’s programs these and to operator. to and nuances on bring We to to operations of company very some structure continue critical those and key and focus to different as to

Joshua Long

between evolve, some and/or lot franchisees of for time? I level just Great. relationships could franchise Thank through come about terms curious to industry to high California state, also be restaurant up categorized perspective, mean the of what might there in should your at you. you could the it like at like franchisors. seems we we legislation potentially still of there of things going and thinking home in economy And a how but still commentary the being are around employees or some brand players kind just have of wrap some it if one this provide this high targeting me a level last in one from just your imagine restaurants, seems but and how gig some this

Steven Brake

Steve. this to it’s threats tell, At we’re from that time-to-time are it’s still very watching I definitely would too juncture arise that absolutely things much we that but something say legislative early and other carefully. Josh, to watch. continue

Joshua Long

Thank it. you. Got

John Cappasola

Josh. Thanks,

Operator

you. Thank

proceed. Group. Maxim the of line comes Our from next question Stephen Anderson Please with

Stephen Anderson

Good afternoon.

[indiscernible] point what’s – going guests of to in economic spike the of some want just certainly I gasoline ask to some our whether more, Coast. be their am the they with East than I frequency maybe reduced level and maybe about hurting high California interesting. this order question prices whether seems Another and these lower in on on is vantage your have

John Cappasola

driven is across being that of to wage aggressive that the high offset have we’ve Hi, regulatory definitely we some been nation. the kind Stephen. leading and time more think about competition noticed What And in California Gas for board. been California pricing increases have in prices facing. on you

So new necessarily that’s news. not

used really to certainly dramatic not consumer elevated that in thing difference markets. to think now of I at seeing compared other the happening in here that is right in cycle, sort but point we’re traffic California this

certainly or in that causing factors on close concern call we’re definitely California there’s be short could nothing eye to it but heartburn that yes, So today. is influential mid-term, the us a in that here keeping

Stephen Anderson

you. Thank

Operator

no the closing over Thank to management to you. hand questions for further floor With allow time, in remarks. at this back queue me

John Cappasola

Okay. Have look in Thank sharing progress and you everyone our to Del interest for certainly Taco. calls. your we We day. it on forward a appreciate great future

Operator

This concludes today’s teleconference. Thank you.

disconnect thank may time You participation. you your lines and for at this your

Del Taco Restaurants (TACO) 21 Oct 192019 Q3 Earnings call transcript