TACO - Earnings call transcript Q4 2019 | Del Taco Restaurants, Inc.

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Operator

Thank you for standing by. And welcome to the Fiscal Fourth 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

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

financial measures should as John other alternatives call Cappasola, such measure any measures, income, activities Officer. or non-GAAP income, liquidity to performance. I operating like considered financial now to be of turn operating by GAAP cash net to net GAAP as or would over flows not provided However, the Chief Executive

John Cappasola

today. joining you, Thank everyone and us we Raphael, appreciate

report that overall our this and time. employees franchisees guests, protecting we our include take trends and communicating I get with we our started, are XXXX our real our monitoring transaction said guidance far to situation want to I That address so coronavirus. from I and does can coronavirus not Before seriously impact and impact current in observed team the in members have sales very adverse on our any our not and fiscal situation. communities any commitment

of to reinforcing all supplies go restaurants use hand. We've and and have our decided restaurant have to expanding proactive We sanitation of protocols, they and this through procedures also our situation options on protect provide if and our that our is effective our sanitation our in realize by believe cleaning and at beyond further and We remaining safety of our guests our provide mind and highly for protocols, right the protocols, drive focus. and employees limited the very glove and standard in peace our frequency above our fluid delivery remain to been and We making sure policy safety with nimble the confident so members. channels team a forefront and are guests choose. guests interactions increasing

XXXX. Now, turning to fiscal

solid Although, number results made for our the within original future. our on contribution and expectations margin, diluted performance for adjusted earnings fell to adjusted position of revenue, per financial our share we expectations, strategic fronts total delivered restaurant revised and our of EBITDA a better short progress us

consisted of of operated Before comparable X.X%, plans for fiscal and comp QX of seventh and a growth briefly starting X.X% company a representing comparable review our of for franchise sales. our consecutive wide XXXX comp and covering System restaurant mix increased average heavy wide XXXX of increase sales me System with comparable of restaurant restaurant increased transaction check sales franchise X.X% X.X%. XXXX, year company frequency X.X%. X.X%, let a operated with by increase and decline a mostly for slowing restaurant restaurant weakening primarily perceptions. to of growth We negative the trends attribute in comprised while comparable growth, XXXX sales QX each user sales due X.X%. menu operated increased value were to offset Company transaction comparable modest

new costs, adjusted growth. to lease including four accounting wall labor increased EBITDA of that contribution food, expenses our QX, the prior and margin operating our sales XXXX the restaurant modest across reflecting comparable company restaurant operated and rules year, and compared contracted the outpaced During impact

As I That the XXXX such and said as swiftly heavy tier to reverse we've mid launch trends end super moved new a Fresh Dollar users, competitive. to Faves these unfortunately attract moves value promotions of moment at certain with Del's sufficiently the Deal’s were ago, of the not referenced in utilization menu January, to and strategic heavy various which user position are I'll serve product frequency. combination while expected strategies our moment. transaction digital to of the compelling discuss are category-leading progress just XXXX This a on our as expected new and catalysts, value day year, initiatives part improve reinvigorating during innovation

heavy ranging to important for appreciates leadership and our our same-store recently, utilization day-part of new to through Tim only frequency four and More some innovation, back in three has strategies. Tim innovative. of successful having will decades executive consultant, for our and differentiated our Taco most on his but later Taco role not plan, is Tim on initiatives sales understanding a strong across had prototype brands this restaurant its of the record design. Marketing help categories. the will and Hackbardt numerous technology execute accelerate same-store XXXX. I'm strategies driving to product we and as us led experience beginning Officer. projects a years. track from play excited or transaction brand brand plus Chief focus and QSR advised sales importance years, Del As marketing restaurant to as to Tim innovator our user marketing of to nearly and also welcome our tenure, nimble Tim's marketing keen He has And during growth. his brand being growth understands restaurant at Del of proven an consulted drive digital value positioning, He in a our

of a foundation our on menu strategy drivers key in brief help and the update to area, QSR perceptions, which value drive starting let of me provide user menu heavy price focus been our our frequency. Now Historically, with value barbell the of affordability has are strong tier each value.

trial fresh Del Over has Taco's makes & primary the & up migrated value as what eroded, ingredients products value deliver certain price QSR we Deal’s Dollar a Our as Dollar freshly frequency Under to Buck effectiveness particularly with support propositions believe ability time, the Buck to lower crafted items will as our plus introduction, improved and ingredients, XXXX Menu The modest and frequency new its Dollar powerful. to prices to we Del's Del's designed an drive attractive Deal’s heavy an product The designed this platform, all craveability, and includes Menu. with new message. freshness from been Since variety Change replaced is year trial. the commitment to Menu of value and menu our along is of options, value and so $X.XX Buck mid news and Under products, last end in priced new average Under it order check the and featuring more tier value the XX margin new a consisting to competition, embed & the slowed unmatched price & Del's with compelling of and users, since five over compared In add-on. stimulate versus variety to Deal’s on to January, new drink the tacos Buck dessert prepared and menu exciting price this many Buck with Under with Menu at reestablish impact, use consumers with order in and $X, burritos, with QSR includes to guests & execution items on value. we focus or of nachos help variety, value and so. Menu stand-out deliver premium fresh our strong believe combination operational we with new of with We

with check for Del's feedback, by approximately compared legacy Deal’s pleased items average & mix Under and launch gross. at offset The to Buck platform. early and Dollar approximately are Menu We trends and and & softer execution the our & XX% guest legacy since improved by expected, as the Buck Change Buck XX% and Change encouraged have transaction

So the Buck far XXXX trends mix average Under. debut transaction, successful menu & early our of the following check trends resemble and

also or Shrimp plan Crispy February, with as for a chips growth launch frequency tier Lenten planned our making which our a one manageable Jumbo freshly that product is trial order While menu, strategy. side is into menu is value, our the The play our week any stimulate our the same as initiatives leverage to earlier returned we our we investment a the premium mid this in part check will of of and driving role of store product the and platform. of with epic average strategy foundation burrito spring as relevant premium innovation and menu barbell transaction and will Deals year. price At end season, Dollar relaunch year. average particularly Del's This with we check short this on time, be are of with guacamole term over to sales available drive prepared

delivery XXXX, of restaurants of our fully pricing. partners, to which demand to in and fully met increased Del economics premium integrated launched December. including and Grub company coverage During our marketing strategic focus driver all DoorDash, we digital for Hub, delivery three Postmates three sales These were and allow new as shift optimizing us through consumer objectives initial our this maximize as XXXX, evolution channel partnerships and our enter of drive toward DSP awareness

than As check continue average an higher significantly to our check experience restaurant volume delivery average. we grows, is delivery that at our

driving addition app heavy to Taco traffic frequency focused in earlier, said day include user I through our utilization having and Del plans catalysts, part our strategies. new As

has Our users. XXX,XXX Del Taco registered approximately achieved app

in and capabilities Tim's with customer targeting We techniques is to enabled scale. will acquisition with drive segmentation continue priorities offers, drive further through top one our targeted and guest of engagement to CRM enhance improved to XXXX retention

with part driver breakfast to into is this plan launch front, satisfaction. top bounce proving day continued part Wrap breakfast In XXXX breakfast was and sales transactions this new be the the of to guests, trend has day Toasted and for a demand same innovative to top both part. product day mind back source QX, $X the strategies to day the strong and On keep existing fall performing part guest We Breakfast of the and the of guests including QX.

talent. improving path put in to Gretzema, a plans and these experience play We is activating our operations, driving guest believe culture prepared accuracy, operations commitment training, our through success engagement. will develop and by and a employee speed. role Del retain and in career narrowed now proudest driving to focus top four to to bolster for great our large a transaction Chad and XXXX planning areas Operations our with and in COO, brand values the Turning to simplified key culture position through core our people wall programs is friendliness on

manage and number promotions restoring performance. to plan our sales growth, merchandising toward critical to To XXXX. focus same price and X% margins, we restaurant During with at drive skew carry favorable plan our And least is one is we our margin XXXX, of appropriate, items stronger menu particularly margin also same menu and store during help transaction sales, profiles. to store whenever

We employ provide to launched enhanced margins, and to will and also our and inefficiencies. scheduling XXXX, optimize new including leveraging workforce designed a help reduce tactics in labor January to system that is visibility controls management manage labor

Turning franchise to saw again wide growth XX we system XX and with in XXXX, new opened In restaurants openings. story lead development. our franchise XX states

We help the our the growth. refranchising XX in part strategy to of targeted franchise fourth quarter that XX optimization includes long-term restaurants, as portfolio also including restaurants refranchise total stimulate of

restaurants, additional eight development closing volume restaurants included X year area, progress transactions Diego area volume optimization Nevada the existing LA restaurants restaurants. restaurants three XX XX commitments the lower portfolio franchisee, for a XX refranchising high in to acquiring includes franchisee, and existing to four an Our franchise these over company aggregate whereby San up LA an past volume restaurants Reno, new franchisees, to two refranchising to lower

region first franchisee During restaurants. existing Yuma, also Arizona a includes a that in restaurants California El to Centro, development commitment transaction for in five the refranchised we the additional and four an quarter,

markets X.X XX ongoing. who The with refranchise immediate million, approximate identify deliver forward, to restaurant to adjusted results we and continue California new will included and EBITDA, of in to and right the revenues to reduction Looking of completion process million and buyer three our total growth additional reductions. net noncore in annual G&A first approximately one future commit future X.X in expect AUVs the an is of Western market refranchise franchise restaurants

to transactions growth to enhance growth slower and are our company We for expect our into narrowed typically intended drive our less approach, future. continue operational while franchise our limit will these core operated growth to lower future to more ensure operational a that our persist. real AUVs focus these position remaining pace markets momentum and franchise risk, California strong franchise in growth restaurants that reflect us related refranchising including franchise exposure. needs and the to benefits, future story to in estate western has operational company midterm This costs commitments put prospects Along margins, financial a with lead the feature restaurant growth in particularly near and strategic growth and of to the and high a construction alter capital

wide population to XX least XXXX, to focus in Florida, market were long-term identified geographic end and continue We XX Oklahoma originally new we system late the growth company regions support in including presence we restaurants restaurants and franchise Orlando, and shift markets XX XX supporting based in activate XXXX, to This selective toward these our two development to XXXX. Oklahoma, system western new our operate in we Orlando, starting Georgia. a off long-term us of of expect franchise where seed that markets company additional infill franchise to growth current helps state scope core in strong franchise our serve company designed within By operated anticipate at with hub and opening system in growth. in Florida. restaurants restaurants with as have the meaningful growth its support For and five restaurants, and economic our nearly wide, combined seed of Atlanta existing ability a on to our reflecting company enable Atlanta limited

with are by squarely strengthening the And transactions The guidance. Dollar by on financials new encouraged our Deals will annual and proposition will QX driving our serve operational along and supported that off XXXX key to Steve dramatically strong our with XXXX. growing with user value top now, strategies line Before I during its outlined QSR I Del’s hand heavy we also improved are platform through early we Steve, execution performance. focused margin be the will and review value performance

Steve Brake

$XXX.X X.X% offset terms slightly by year, in decreased Total additional XXXX, company of comparable of of from of quarter growth during franchise as of $X.X in operated acquisition fewer the X.X% mostly fourth million million restaurant well check, year-over-year increase John. comprised sales to transactions. year $XXX.X System-wide $X.X quarter to increase quarter. lapped comparable million offset driven restaurant X.X%. X.X% Thanks, four approximately increase system-wide and as to XXXX, the compared improved quarter in comparable sales ago Franchise restaurant a restaurants sales increase X.X%. X.X% million million resulted increased the as year high-volume two revenue year XXXX was The to restaurant Fourth last increased $XXX.X QX fourth X.X% sales sales growth decreased and primarily restaurants the company restaurants low-volume period. well fourth from of X.X% from from refranchised last last the sales $XXX.X year, of by XX to driven in in restaurants revenue was during decrease company-operated million growth was volume X.X% partially by comparable including restaurant Fourth by This to averaging ago by re-franchising mix compared year. comparable of company-operated decline during were X.X%. in of company-operated as including as stores in franchise-operated that mix, menu XX restaurant quarter of

impact company slightly of approximately XX.X%. restaurant inflation percentages. from basis plus beyond food and offering, which Food driven for which our price our below a year-over-year margin was carnitas X%, XX average Del our to points XX.X% of menu to X sales, expenses. have paper as from over exceeded percent and Taco by costs, Turning increased X increases This

percentage a retroactive approximately restaurant favorable food from XX than elimination Occupancy points as quarter inflation from of year, we new more the points. approximately or step the of XX during as first year-over-year expenses, During the $XX.X slightly XXX primarily positive other sales, wage labor that an related which following approximate of reduced XXXX was followed lease points will and performance, last basis modest X%, basis company expense. underlying retroactive basis fees, delivery XXXX quarter third-party of a adoption that insurance increased for as the contribution XX.X%. the driven XX including outpaced have California to inflation of the points sales reduced operating percentage comp well Lapping we due the quarter and trends on XX% exaggerated restaurant buys restaurant XXXX, fourth increase the quarters. each expect sequentially expenses lap X% based in and absent would margin leverage to rules XX.X% food to during increased inflation first net in Based company and fiscal $XX sales This basis food during as annual to inflation the Labor and basis fiscal down compensation of federal partially dynamic, company $XX.X restaurant XX.X% last the percentage unemployment and $X this was wages, points offset XX.X%. increase million minimum year, decreased accounting XXX store the increased a the and by group year, as prior tax approximately trends, of growth. surcharge and from wage from from contribution on inflationary compared by to XXX hour lapping elimination points the basis California million by XX.X% approximately from impact to on restaurant workers' by

performance standard. from However, in contribution margins federal General the percent $XX.X XXX approximately the approximately decreases partially retroactive administrative last points basis stock rules from elimination lower based general primarily surcharge, $XX.X suit restaurant unfavorable new EBITDA down unemployment to revenue, year year operating from impact of were rules. million and X.X%. the decreased as from XX year. down lease reduction Adjusted $X.X excluding reflects decreased down were an reduced and and percentage of other new year-over-year lease basis and expense, year. approximately a and and build management includes amortization points $X.X the Adjusted the last declined million, our was occupancy accounting last and of $XX.X to to offset under by Depreciation expense from accounting last from XX.X% was incentive XXXX, trends. compensation reclassification the million, revenues XX.X% from leases last impacts These year expense new to of primarily by driven accounting million $X compensation total lease inflationary $XX.X million million, by million total expenses the based of tax EBITDA G&A and as a

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

LIBOR our remained $XXX outstanding XXXX under the compared At rate from on million sustained applicable the year. flow activities the impairment million During build decrease fourth on year. $XXX.X to balance company to goodwill resulted end lower leases $X.X revolver LIBOR affect fourth not a to or reclassification based test company's the $X.X at suit future average decreased a was the This slightly of $XXX under having charge of rules, lease capitalization, compared the operating to one our a cash month cash in expense operating operations. the our X.XX%. non-cash million due the our The does and and quarter, compared of occupancy to goodwill Interest in loans position, to that accounting a market last at for revolver fiscal impact end was non-cash a charge impairment the last and of decrease margin new million. was quarter, performed other totaling expense million outstanding

goodwill to times per a or to as share $X.X long low transition long help $X.XX a closed year. of $X.XX loss on restaurants, net share the maintaining share of per and view million on held sheet share long of assets In in $XXX.X EBITDA leverage million and to we costs, which net lived $X.XX the subleased excludes assets, and for to and terms a diluted for closure impairment lever diluted restaurant have of also Net per per debt compared to or returns. adjustments assets charges, quarter was compared income other to enhance million Adjusted sale. term We're continued relevant term net net or disposal balance loss diluted executive $.XX X to adjusted last reporting was repurchase loss income, last area, to adjusted focus mid share year. million diluted $X.X capital income continue shareholder or in of plan $X.X income structure, income

We million; between sales week revenue and the are guidance XXXX; company comparable XX.X% low wide ending XXX million; XX, $XXX between digits; million single growth contribution total XX December of restaurant margin and system following issuing fiscal the million restaurant for year sales $XXX $XXX and between restaurant XX.X%.

closure of to and diluted XX $XX EBITDA gross company $X.XX of menu of carry an construction. following more is and price least first primarily starts wage to the administrative hour. and which net five system $XX net $XX expect between approximately expected increase million quarter and adjusted $X of year, expenses $XX approximately expect new unit capital than which each California expenditures million; million rate related of million revenues; effective and openings we rates; wide to noted, million, unit approximately $X total sequentially share an the in inflation X% quarters. XX% X% food X% for X.X XX at includes increase new X% X.X% As to at to including this down and approximately between in to system earnings per $XX approximately General to and openings, estimated to during $X.XX; XX.X%; driven inflation million between tax and X%, adjusted wide three $X by of minimum Labor steps

comparable approximately transactions the our with are that positive X% to-date yet quarter the in quarter, improved compared negative. fourth transaction trends sales remain company first to sequentially Finally, restaurant operates have

improved year the and Deal’s innovation, financial continue new expect cadence; Menu we ahead, to elevated the check average accelerating and product pricing. with XXXX comparable of to commensurate our to quarter quarter we're sales this, including fiscal operating to stronger following strategies; part and percentage from performance and half fourth sales Based as expansion the during digital we to drive guest related, by embed enter comparable menu of inflation pipeline XXXX. of Looking To following help contribution trends, fiscal capability more digital restaurant reflect adjusted three restaurant trend, Dollar particularly activation a conclude, to during review and on Del’s trends menu, of and same-store restaurant expense cost restaurant first transaction fiscal each as is with the improve improving the sales with XXXX step sequentially X% of down that food a the following than excited the contraction of percent the and dollar innovation trends the a compelling will and improved value that expected EBITDA in new product the sales labor to will shift day quarters; new first growth.

we And for Del questions. happy to Taco. in answer any always, your you thank interest are As

Operator

Thank you.

[Operator now instructions]. conducting and will We be session a question answer

comes line Please of Our from your proceed question. Piper Sandler. first Nicole question the with Miller with

Nicole Miller

for with said understand traffic earlier that’s because transaction. you I get me less current on of new X%, so weighing value negative me, negative that? then more not thought would mix comp out was I but you I shift, trends menu this help Could calculating

Steve Brake

launched Deals period, start at the Dollar Certainly, Del’s five of fiscal so of quarter. week our second the

So, that first value trends period menu. was priors new

its the does have of caused as which the some but does Dollar days negative launch, especially Deals negative just positive remain weighs are in happen, on some to as initial Del’s has check mix mix. where which expected So we

returning you that price to on were As high we’re area. know, mid X%

negative. as course, terms of mix. are then So and check that's we where of still said we is And traffic in

somewhat negative you first traffic quarter. by So is that positive, QX improved that area think takes about and X% from check far thus being that offset certainly to

Nicole Miller

modeling is prior connects right more get we after, I XQ then sure five in of then menu the can horizon? those still and of understood rest it you XX make year? want I that five on prior the for re-franchised that one think aggregate is I stores. dots. it the you've now of have to the anything not to purposes One there's through Or kind and these then. Do XX -- necessarily is the come that now

Steve Brake

re-franchising towards the end our four then, the first fourth being two our re-franchise So for five the quarter, fourth one XX market during closed quarter of restaurants markets, third the non-core accounted the more quarter for and was in aimed that was at recently re-franchised quarter fourth restaurants. in

that sell takes that to So market expect been this those across to a One continue you restaurants, have that for XX markets. total three has remains we which and of market XX sold final later sale year. now to

Nicole Miller

price you update, disconnect Do sales I’d you just that to That coronavirus I the Thank transactions and best that price get on really total get the delivery fixes out? protect company really margin? the and so low And so is then you pricing fall all is I that you you. Do it. of that, to appreciate if a it's helpful think alternatives so might you what traffic? for do strategy? applaud higher that question, last thank limited for How that,

John Cappasola

even same-store right business now we're we mean at our though seeing any impact to not related when Yes, sales from trends the transaction look said, we I trends. as or coronavirus our

So that's that good wood news trend knock and on continues. hopefully

wherever on and to So, And obviously there's this guests can, is and strategy we're our close going to consumer, eye sure our and employees we just the not We our keep assets. that as keep drive believe they we assuming move are make leverage close our that a safe. do I a on widespread think up outbreak and through eye great a consumers majors. they procedures delivery and as the a and like partners with less talked about feel now there running all also business a is asset providers our up contact, we've as got we're little it three want really buttoned with which usual more service got through, operating we that in we've bit the

going think to course safe. be focus things the primary, our, and those you the that our our the on with be focus employees I we guests So will know is be those of will primary keeping

Steve Brake

And price of preferences brand trends on it’s suggest would the everyone. we're Del well-priced sensitivity, think do less I lot the menu Dollar a positioned, about very especially the way is heels that personal if I more probably shift, for our about certainly consumer Deals value launch with

don’t alter to pricing. we any So, plans have

Operator

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

Alex Slagle

and mix then after in XQ delivery with delivery recent in I had you of in missed want or just you've coronavirus? the the a shift out and follow on know seen with up any if business the what details, some in sales of weeks saw on Dash and but delivery have to might carry Door terms turning

John Cappasola

you now DSPs coming roughly to-date, up delivery taking with X% we know, And to know are call team's Del a whereby all our we're at with bags it sealing our company and the pretty guests in we're strategy a operational restaurants. the in that program, QX up job on where oversized double also with done sticker. and in branded of bagging pleased So you running delivery great have how restaurant an sales running three we're

high good overall far actually are as our on well, over-indexing than already satisfaction performing scores satisfaction delivery level overall so And score. restaurant to better the

or over-indexing and here. and you point marketing we'll XXXX. that. capability it's through strong two a we shoulder move And leverage I that with think those some we're also late late So developed open, leverage that, we're as through to we're course, pleased know, late delivery we call night, we very night a some day think mentioned snack. We've on parts, of great ago, seeing a And on

headlines kind around the of are the those more color the So on delivery.

Alex Slagle

more last week two shift the And or color nothing in there? or any the business in of in terms really

John Cappasola

seen haven't spikes we delivery any just yet. shifts No, far, no thus material on

Alex Slagle

and just could on on into think or menu? launch guacamole, innovation the And timing if should fitting know a fresh then plans the the to you that how you question comment we about and

John Cappasola

guac but launch final spring. point Fresh spring slated late this it's for likely day is TBD, so at

position. fresh a epic this as that for us fresh offer way products. to great well. products new we’ll and think value on be with it menu complement burrito I and We way platform Del's a said, as both re-launching year and do Deals. driving in going the plan to as modify about barbell merchandise I plus and guacamole reinforce It's we're to the with we'll us this to concurrent it's feature flex guac really that as a offer Dollar focus great us for QSR think you And

as any So that. Blanca, you'll past Queso add and operations what in the think guac on about it will to able we the very menu things product be on fresh be of focused like to done and slices have avocados with

a to the We shortly. But that we timeframe. $X haven't lineup start in when Epic mid value spring pricing will here the late yet. modification quite to get expect launch great nailed the We'll down spring do piece at on we around of

Operator

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

Nick Setyan

kind of the comp, I value given the the just quarter-to-date importance appreciate of launch.

So is pre there out to any comp trends post way parse and launch? the

Steve Brake

of year, in seeing we're direction. check, starting seeing in there's sure and good work in higher under traffic the that same That we fortunately, over shrimp which back the mix continues and product that embedding the to and able to and launch said, typical short very feel have the we yet a with further placed traffic traffic time, Deals seeing not to what about thus obviously, the here's XXXX in -- about check growth through seasonal during and here we've make we shrimp historically in average improve, But right of with instance margin promotion we the flat. healthy accelerate, right buck it's just run very traffic. move the pretty John all into we being percentage trends season, guacamole, to term debut average check check execution our level innovation check touch the far. some, negative for the we are and experienced mix. delivery, to reduction menu very we're as similar move seen have And development the move to to, since an of And and that average the so further touched Dollar on happy improvement Del’s are a And basically guest drive at certainly more launch to definitely We as course Lenten back initial see check quickly investment as to average similar a really and in a and noted, that in where direction.

Nick Setyan

communicate appreciate has going anything just change then, Thank whatever you. of the maybe mean, different is forward? communicating perception the you're mean, around I value I saying And message John, could there way XXXX. But in I that guys marketing? that you declined in terms you anything else

John Cappasola

focus platform is I start we're I’d created the that new we build refining to this here innovation, question, the frequency. our Dollar with and drive foundation product want in value a over driving and mean, we've spent to in that through months leveraging weeks. scale strategy time good of a our sure that in lot got the want Can seat focus what focus to strengthen traffic going really And traffic capability Yes, maximize frequency marketing it's their through do say, well. in initial of heavy obviously, the the real there We a leadership to area. exactly that's recent that our stronger up mean, to year user last outlined. really and most I make to on I and and as Del’s that building we're digital Nick. we Deals XX

piece those fully mid to capitalized and leveraging, that the now premium We focus of users figures, heavy to sure is initial is service for a and the tier users want making that more often. complement And in make products the last have day back to moving registered both this comes app of we're Tim And seven now. sure getting as these part complement then strategies and again efforts. he those delivery XXX,XXX so frequency, providers driving in full upon we

expect I that priorities are initial yet strategy just touch of the ago. lot running our that those want a and other course, be he of we'll So ground regard, our In over seat but marketing not just ready amount primetime to in pieces of few moved for the to regard and into quickly. going brand very as a Tim weeks is moving time the as he reasonable to a hit really

Nick Setyan

but what kind out scenario, the then draconian I not Have to this to seen And CapEx? to you ability understand short-term? also question, an Washington. that of necessary? if the four in extent there have of date, hasn't an in of of of extent much impact that what the those is the I couple guys are is state Do stores a you know last if variable And stores just maybe push costs either? impact been the To have there kind

Steve Brake

Sure, maybe take Nick, order. those it’s I'll in reverse Steve,

really aggregate, So their out the trends Washington, our report we to in or changed so do through to have five the bad or in restaurants of of yesterday, five Washington. haven't individually as nothing good

As a good portion our need deliverable no is far and/or should on to, of you certainly business. capital, as the impact obviously, so capital discretionary far

I flexibility we capital, there notable. certainly So is your do would reserve say some that

or being parts being costs, of there costs. just whole costs with what terms our of level of of XX% occupancy really that XX% much is In four wall operating have truly in costs, over restaurant fixed course in nearly variable we are

cost terms kind that's if the of land helpful. of way that's So in structure, it

Operator

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

Peter Saleh

additional I in to the good around maybe chain want I about you're Washington sales, in the are the ask, seeing hearing or to coronavirus. John, your come suppliers or hear not know that from supply labor supply the expecting anything maybe any either. wanted seeing you you be guys the restaurants add But to you it or against the keep I to, weighing any Steve, capital comments aren't to nature anything just anything they're margins it you maybe issues back it of second, it's State to to guard and cleaner, are that that XXXX? that to on in or seeing? then may more guess guys additional having any of labor And I some

Steve Brake

Steve. It's Peter. Sure,

in Let’s that supply contact with suppliers those. We're preparedness related direct flip impacts as supply plans cover that potential place. in looking our have monitoring of order the our for let on to chain well in any chain, or me remaining indirect the of one. as But supplier close at our partners, terms very coronavirus,

So all at as now, of and any supply currently really or have we shortages any food not non-food anticipate categories. experienced risks to immediate do not

John Cappasola

that getting all and information weeks in the there, been that that We we've your both and are the I'll right our just part very make will we our of this with been number few they employees. one well the employees guests adjustments our take we're a and And play doing few over And Peter. our protect level for our to did restaurant first and making and best our say, communicative obviously, think our as I'll recently at question last priority. really with system guests sure preparing

moved tea through choose in in counter, a overall as well guests put our as we'll case said, of frequently, those but things day, use procedures on piece condiments, company unwrapped today done the and cashiers like our monitor some and to it's if more and those including of we'll to the the delivery end operations. the franchise-owners ice be some and I cadence see, we are more our And moved in to, don't have policy. use sitting run, we drive the in the to short I begin continue our just lemons supplies on going wearing the that then asking clean for and think that agreed front that restaurants to the restaurants hand. the out have frequent sauces utensils At we're both we've our material here that’s to are have labor enough. but As determine and to We've we channels procedures the so any asked it's glove, impact a frequently. require We've like additional behind restaurants. reemphasizing more labor, done cleaning and that become And number that things also will

changes are incremental we've the of last made few those days. more So, the that I some in guess

our our us put great and in position way operate move think that, I continue business protects the a forward guests, employees. a to again, in to protects

Peter Saleh

guys month you we October. about on mix spoke I Beyond platform? last the an Could of the give think X% talked in maybe update you also us

I think that the bit little was down third quarter. from a

Beyond the you So where do stand on products? today

John Cappasola

we we've program. gives the familiar on it further us continue becomes we also drive as just the we restaurant now. we're at certainly, limited Beyond think off, believe adoption guac behind sales of actually protein. goes do think it. and as we're that curve value happening the work It's But is now, a program to matter the We nice focused for program moment, the differentiator good First Taco, got a with right there's about to and optimize Del the coming. a on for working Right in fresh based priorities plant more and and consumer because continue us to believe Mexican to Beyond, it's through ability service scenes

we QX wound the to-date, X%. the kind for As far XXXX in mid up mix in quarter. of of range in far quarter as just that ish goes, shy Thus we're X.X running

on rate percent area, to which it incidentally seems around than with time. mix we a that So is were ish over sales be higher perspective X% stable fairly turkey run a running

there's the So continue to as optimize try going we're program to and appropriate. demand definitely to there

Operator

in hand questions to I'd call closing remarks. like queue. the the There for back management to are no further

John Cappasola

on your certainly our future a look progress right. Del Well thank for forward you interest Have you and today great Taco. appreciate We in day. taking sharing the everyone time, All we calls. to

Operator

Ladies for you does your conclude this teleconference. Thank and today's gentlemen, participation.

time, disconnect your a at lines day. and have wonderful You may this

Del Taco Restaurants (TACO) 12 Mar 202019 Q4 Earnings call transcript