TACO - Earnings call transcript Q2 2021 | Del Taco Restaurants, Inc.

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Operator

Hello and thank you for standing by. Welcome to the Fiscal Second Quarter 2021 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, good afternoon and welcome. John Chief and Financial are and Executive call Brake, Steve Officer. today's Cappasola, Chief President Officer; On After we deliver the lines our prepared remarks, your we questions. for will open today that But of remind let forward-looking everyone first, our me discussion will include statements. part future guarantees should placed These them. therefore, be and of are undue performance statements upon not reliance not more the not do and these our you that today's to update filings refer operating Del release SEC at Taco's and of statements condition. results We forward-looking to detailed for impact could and a earnings risks undertake date a discussion press future later financial Today's non-GAAP restaurant adjusted contribution, as release nearest non-GAAP earnings and reconciliations net with the press these of also financial measures measures. along EBITDA measures includes income, adjusted to such GAAP

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

now over me the call Cappasola, Officer. Executive to turn President Chief Let and John

John Cappasola

Thank achieve to thank year. Taco report Once to for I all another again, set and we track you joining this delighted today. we on to quarter are us at am and had great accomplish Del earlier what out that Raphael, you,

new Although new convenience through scores. wide system we maintaining the the drive-thru, our and through product while we industry to XXXX. accelerate of launches strong our new loyalty guests inflationary headwinds execution pleased our and providing excellence, with and our pipeline unit also positioned pandemic, guest our takeout We're ultimate exceptional to sales by impacting as in remainder and emerged, navigate satisfaction are franchising deliver channels initiatives operational by well team's our our business delivery through have drive growth to led program through restaurant maintain X% new

growth strong managed significant and input contribution and sales our costs, comparable EBITDA QX, leveraged trends adjusted restaurant During restaurant against in resulting also our margin we expansion. very effectively

short franchise restaurants our QX Del restrictions. Taco during across breakfast, on contrast has this grew broad outside restaurants fewer company term XXXX, Let at also to performance same-store System prior long at basis XX.X% comparable and the operated of QX compared that XXXX, the same-store increase to company To Geographically digit neutralize sales high of compared while wide quarter were has from at appeal XX since pandemic compared states moving of operating brand a a the increase flat all reflects XX.X% approximately rate franchised the primarily approximately generally are to Also of to highlights review at operated grew to on to mandated same-store during briefly the restaurants XXXX. before except to our lapping which grew an initiatives. compared Again, for compared double and basis single which improved XXXX. dayparts the basis over on California California on restaurants rate. of a impact consisting XX.X% year, sales me our a a discussion franchise grew digit a restaurant non-California X.X% while during at positive X% earned QX grew that restaurants. our XXXX,

were of flat menu the advertising to year primarily comparable pandemic. despite to leverage coupled during including as top basis margin Restaurant performing we Importantly, near as the I reduced advertising increased sales the offers trends. inflation, with in points delivery contribution by we growth food pricing, Late lapped restaurant XX.X%, from XXX where dayparts by graveyard a term aided last strong snack believe cost this opportunity increased due and X% explain daypart and strong will shortly. QX onset

per income increased from million X.X of $X.XX XX.X% EBITDA adjusted of adjusted loss XX.X year. share terms million or XX.X net from to adjusted to last share profit, million, diluted diluted per $X.XX net increased In while

in and XXX our QX times. million EBITDA to net repurchases debt during ratio reduced lowering dividend our share million to we to quarterly our to returned X.X aggregate of capital adjusted debt and net approximately leverage Finally, shareholders X.XX also

to Turning which that's These ultimate ensure over year value digital executing we've innovation, recall are business, menu leadership, the of on drivers transformation sales the and five been engagement, acceleration, past convenience. our brand pillars framework our focus guests employees are providing with strategy improve the with relevance better as by anchored connectivity brand. the to us experiences and execution outstanding they provide and that our for we

Let better. me and with for focus start operations

are is this this brand our the strategy faces the People four availability of ahead a now been strength pillars the more of important this there has than leverage approach. people stay engine as and never industry curve first key of the to labor challenges. unprecedented One of time and business

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uniform month and our the along members. notes and theme treats you During personalized with we providing team foods other to have days are thank scheduled fun

simplify along first maintain restaurant significant to job a a operational continue our prospective be culture The includes pay, adding acquisition, talent daily aid our benefits we bonus. communication for by partnership ability to with We excellence our with strong and of our our testing and are on boards and our to people enhance leveraging teams. how offering applicants. will recruiting guests us foundation reinforce supportive layers are digital to referral important increase strategy To presence new our people like

a Taco of X.X-inch is platforms leadership value everyday QX, innovation Chicken marketing, by across introduction relaunched signature value keep and barbell large atop with Crispy Honey fried with our and focuses our our Barbecue flavor, ingredients value and tortilla. platform sales paired our with recipes menu newest Chipotle with supported the our menu freshly we Crunchtada on new Del to to fresh great In innovation interesting. ongoing strategy and Turning menu

Our like queso. positioning will ingredients popularity remain fresh $X, up to our satisfaction $X to guest lineup and their and through features Crunchtada price quality highlight a focus to platform QSR trade summer. and scores this Crunchtada with guacamole to drive $X points and high plus Due

product on We leverage front. the also daypart to innovation new intend

in as sales in Just approach breakfast as the breakfast continuing school. near and term today, point seasonality $X. Namely, breakfast return breakfast this morning to introduced at our kids as normalize a with we two new our platform jumpstart price of Tacos. can repopulate, new Queso fall on Breakfast and shredded features centered to cheese taco Blanco believe routines catalysts. starting Each we We offering Cheese offices cheddar person Double freshly signature returned

call this that of as Quesadilla XXXX position innovation puts a current a designed ingredients leverage of taco takes are more us This we summer, from half the guest up shell later of with Tacos. and platform. and the fan daypart combination and driving grilled crispy exciting momentum folded carne flavor. a tacos and great during menu asada Lastly, tacos our another chicken into new favorite yet in our excitement platform Blanco to and and new shoulder generate activities more stuffed trade XXXX. both and news shape These entering back launch core Stuffed with will Quesadilla adds Queso to This chicken. creamy We or product

us elite platform launch sales tears and the data new to including include feature App Our Del with based a continues digitize reward Del to overtime. host program, for personalized grow of the CRM of further attribution and holistic well for fans to this will and increase September as valued a provide experiences solid and App features loyalty frequency as Del The foundation will incentivize which improvements our and for will our their launched to Taco loyalty. and rewards and guests and membership exciting that capability points our drive attractive launch

that encouraged development, momentum. is now we system franchise lead growth Turning gaining to Del Taco's are very

our Flex Our three open this Fresh will construction already nine will seed open is fourth new restaurants first our company under seven Orlando. operated market have this and franchisees which opened restaurants are construction. of also in year, year the of prototype two opened which company already Four have under and in new

for announced for year, restaurants seasoned agreements Panhandle. this group development XX XX in restaurants earlier southeast recently franchise signed two agreement QSR Florida multi-concept the another we the across with we an Following the

room these we broad are demonstrate, grow signings recent signings as significant traction these brand. ubiquitous our appeal. believe that As enabled agreements to drives QSR+ a menu gaining We pending have are unique in development southeast positioning and where by additional we the and

which eight opportunities states net the and strong of experience. consecutive Flex to across modernizes growth our new Fresh investment real record lower comparable XX also of and track years the guests sales expands restaurant franchise attractive Our relevance estate help prototype, of

new franchise our our progress restaurant to with existing and new pleased franchisees. for We pipeline are very we continue development both as build led

wide commitments believe in longer three the ahead, unit Flex this start we position growth signed a wide system in backlog term on our of XXXX, XX in expect Looking deliver franchisees announce, for puts On and this to openings restaurants soon expect to new so the a we starting XXXX. development far us agreements new compared a basis, step in prototype. new to back leverage XX Fresh as modest get existing year, track expected the up expanding plus and we restaurant new agreements year, to additional X% system

includes design, of to transitory. and Also, the level. our XXXX. investment growth. for returns. environment XXXX expect of we including up per continues is whether a near present of with months to formal system prove In wide extensive summary, to program cosmetic up foundation lower testing coming remodels we facilities and to will be remodel our XX Fresh sets XXXX at And believe of beginning upgrades current is our we will we remodels term a share is commitment into third pressures, program the the test This to primarily and ten operating prototype more although our challenges final Our during dividend Flex largely expected and as remodels XX in and $X.XX us continue remodel to remodel older cash complete second to modern help strong announced continued delivering facilities in lead quarter of phase determine half shareholder these our ongoing inflationary integrating

new Del on led and of pipeline along Looking new plans sales launch innovative next to the App to program and and several of this growing the developed focus driving years our includes franchisees. and growing new be a products by loyalty our platforms, restaurants introduce of over September, base with our ahead,

the turn of call how XXXX. to our view the I'll Now, over discuss QX and we review financial results Steve back to half

Steven Brake

last by driven XXX.X XXX.X ago to million from coupled sales XX.X% comparable John. the year sales. from XX.X% ago period. increased The X.X consisting year-over-year, and System restaurant year. driven million increase year. XXX with increased was operated of million growth to increased X.X was increased compared period. franchise revenue million primarily increase at the restaurants. XX.X% million in a restaurant company restXaurants primarily in additional to sales, The last by XX.X% the from at to XX.X% comparable XX.X positive XX.X% operated year franchised sales Thanks, restaurant million Total restaurants increase in an wide restaurant comparable growth revenue Franchise Company franchise

paper driven of inflation. Turning our was flat price approximately by and XX.X%. food restaurant increase year-over-year primarily to and of basis costs as company to XXX approximately X% menu a food XX.X% sales percentage from points decreased a approximately expenses, This

expectations, original during I input last year of that we food inflation second Looking of point beef, our costs. in resulting to up beyond QX, expect to the during in freight inflation Therefore, X% QX, full particularly pressure recent X% areas and year approximately oil, has inflation X%. other out want forward, half of now and to food inflationary soybean compared materialized

Although tell our will this QX, of basis result increased increase extent to may to inflation of is sequential in over points be QX a much during what transitory. expected percentage this food inflation compared to XXX in to prove time

the inflationary hour January $X example to well a the an manage we we in For minimum pressure to appraising in meaningful are XXXX. yet pullback instance, increase recent temporary to $XX through. in [ph] would wage of California one positioned that point carnia Despite is thought

was compared related driven Our including sales points comparable restaurant and labor impact growth, our minimum as the to restaurant partially unfavorable increased and a decreased to California the effective XX XX.X%. based management offset favorable trends the variable This from X% of percentage impact workers XX.X% by year. our labor expenses sales company by expense of of basis from wage, compensation on and menu last strong underlying pricing

during Occupancy rate talent approximately modest restaurant partially COVID-XX from by John July attract drive percentage pandemic strong expense as well restaurant to second pricing, sequential the XX.X% uptick a by onset labor retain to expenses, cost, sales X, reduced comparable as deliver advertising wage and was direct and advertising is XX of the from year, during Although labor This very and recent last compared wage our to the excellence, sales XX.X% efficient, expect to $X including in top growth, labor during other lap menu a year. spend XXXX. due decreased operating minimum our This points of reduced increased from as remains we as X% the percentage restaurant increase to to Nevada the the to operational we percentage the last availability year. offset decrease leverage basis primarily the on half performance challenges referenced QX. to pressure X.XX of due

expense will advertising approximately our sales. approximately of X% restaurant ahead during we of QX XXXX a compared X% muted spend to Looking advertising of lap typical

our which summer million as compared addition, pressure our sales sequential from Restaurant trend contribution XX.X to prior will QX months. XX.X% consumption the expenses always in during year. percentage to grew increased a In face of operating during million due the the XX.X utilities, to highest

approximately margin from basis increased to XX.X% While XX.X%. restaurant points XXX contribution

restaurant last compensation The XX.X% a XXXX increased revenue stock We to as million X.X million based percentage an from points compensation, well original we year million lacked as compensation. year, based XX year General as total was inflationary exceed restaurant and to basis grew X.X%. performance are down million as our primarily margin compared and total expenses to last contribution EBITDA to position amortization X.X% was due depreciated and despite the a were percentage month during compared basis, increased as administrative legal of performance year, was our impacting decrease to million Adjusted up increase this year, assets accrual XXX compared average very and percent expectations incentive expense due compared this on contribution the modest Interest incentive fully X.X performance to a solid balance expansion year. and of year. a of The last labor. rate X.X from from aforementioned increased pleased X.X fees million revenue driven and great last impact a trends last to XXXX. was for to non keeps upon outstanding and XX.X deliver XX.X QX total in us to or lower food increase decreased annual to by million the as in due strong cash LIBOR basis an points to that performance minimal one of revenue. XX.X% to million Depreciation revolver X.X XX.X lower XX.X% management

outstanding under to revolving the XXX.X was During availability our quarter, XXX fiscal credit million remaining second from million. credit the borrowing was facility million, the facility reduced and revolving XXX

balance second fiscal cash times X.X cash compared second repurchase At of million $X.XX to million. loss repurchased EBITDA income compared debt his year. total with net our and second also per quarter approximately quarter the the million to share Along end million end million during times remained at XXXX. an dividend, $X.XX share of paid $XX or XX.X fiscal a quarter, net per X.X our quarterly our at sheet second fiscal at totaling Net approximately of a diluted $XX.XX X.X ratio to this last under declined X.X adjusted of to or for million with leverage diluted authorization. approximately of shares per reduction, price stock the share XXX,XXX X.XX debt we of average X.XX of addition, common In the the end of

release net We $X.XX share in net $X.XX various also XX,XXX approximately loss reported identified Adjusted excludes adjusted net our which X.X income items was the income earnings year. last in per share or to adjusted or compared tables. financial of per diluted million

$X.XX of quarterly XXXX August per third be close record our that XXXX. XX, XX, August of announced business of stock on of at to shareholders on common paid also We dividend would share the

are to we comparisons, of chicken. the crispy to very fiscal a the we sales soon of lap more successful XXXX launch in of start, good and our off middle date, will as challenging terms QX, starting face In same-store QX

we half our company that to two second similar of is franchise the and recent same-store XXXX, During growth anticipate performance on a currently basis. sales QX year

Finally, today's earnings our to please release refer fiscal press for XXXX guidelines.

inflation, system restaurant reiterated at of approximately to which is as total said estimated earlier all new have We projected XX% wide of tax now commodity additional the a them concludes That with remarks. higher exception opening our of XX. a formal as X% well and up rate one of slightly as XXXX for I

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

Operator

be from gentlemen, [Operator Joshua we a your your Sandler. Long will Thank question-and-answer you. Ladies question. the live. at Please first time, is of line Our Instructions] this Joshua session. Long with and proceed comes conducting question with Piper line

Joshua Long

if initiatives and trending the of human that's even little the year pipeline, whether store for for and into just question first Obviously, a you the of level, see might level, wanted the contextualize of some about first that Great. in or XXXX. taking Thank But understand a some into if and today. place. building you you I talked with you bit we those could update is started people lot you initiatives capital so you at there. that can the how my able dig that got growth into with to better and initiatives manager support be to next

John Cappasola

industry that challenges several everyone first Yeah, I the hi, general right to faced staffing over thing I here like just considering about overall, we're think, say now feel operators categories have listen, and good is at where last these our our we the be And the guest their in we in are first across months. with and today statement, a - belief Josh, doing wasn't people where job, culture without Del an with managing and if our wouldn't just people in staying are the focus really on our We their satisfaction franchisees outstanding for sales Taco. focused driving here situation. strong having it at as

been And that operators, make practices restaurants, the staffing to average. year, part providing the to experience seeing of industry amount and that ahead tools core prior is in member I best are although track curve did an slightly team are with during provides at referenced. level crew resources strength And and These brand. stay we're below and leveraging by these very I we've the those five of unbelievable plus we sure we that attribute of really still performance important environment. our up active years' stable in turnover versus They steady important are everyone we and like really stability. we folks. These Second, are really members have to our continue COVID. this these during trying said, to team of the to the those that They

So crew. executing turnover staying here. as game core increased great is we they're then And important, with that not mention I we're a part that holistic And we're piece of strategy that seeing ahead think that the piece. of is feel really about - the I'll last

limiting for immediate like recruiting in efforts, hiring the stores need or practices. is more And some could of some where perhaps have starting So new some little not in be are or macro hours, hotspots stores the to process hiring solutions exception, going things room hotspot like dining then source. we've which restaurant those those include got micro norm there's in at are our and friction those but help. micro the of restaurant referral situations and those we increased some bit the to And and bonuses a that wages, cases, ways digital even certainly increasing and reduce more solutions solutions,

on very So business, important we're a in it. lot be our a very said now there, it's and right focused but piece

Joshua Long

recently? disruptions or if maybe for or second to further you seeing able in around date I seeing be been what might the you've here most - to more you about quarter in And some curious just believe right be which might of COVID you little trends, half context dig that. are there's XXXX trends a on or just in seeing year thank similar a talked give conversation getting what of the a the and encouraging. Great, basis, what bit consumer obviously, is to there that two XQ be around increased concern lot of what new now. to rebuilt of And patterns you variants saw potential

lately guidance daypart, that our curious that so you've that some just you'd of attention? in embedded terms be to anything here anything if of might call And consumer in changes patterns, seen in

John Cappasola

challenging Yeah, aspects that that it's delta commentary here closely, different surges it during that's business all our very we point, the we been can seeing say the just but yet at that pandemic. considered we're the acknowledge continues to in country, from be certainly I'd The this watching the of tell not environment did to what variant today, relative impacting COVID. we're around the certainly and like we

think recipe for well sales great as that our good to excited for of keeping sales concern a our And sales combination a got XXXX some on upcoming able and to product that perspective due just be from going in app going of We're we've back about think continued adapt to the year catalysts we'll growth. crispy chicken we to launches, experiences see of driving that compared definitely sales strength Our heard half, that new a teams, that as to is about the you Steve these main guests believe as program. we especially to monitor be momentum protocols and with say launch basis over guest same-store year, In to great our continue to make the our last but yeah, two regards commentary employees great needed. menu and safe same-store we we're half XXXX. really the and and - loyalty back always as

Joshua Long

in when might I you you early. which room those dining namely about lead some is But breakfast Great, either where you some patterns dayparts, think we're these of be to if that you the see the thank about solutions, particular, line the Does that. that system. of revisiting for sight but it in chain of rebuilding operating can of for a hours? on some some at some being that or the little that or point store operations rebuilt revisit maybe accelerate thinking a bit the exciting. overall, know the micro you're of mentioned And of just some you closures yet of level

John Cappasola

Yeah, it's early to make that call right now based on what we know.

We here amount eye it. dining through. months, of have last to service modes couple going substantial real opened a our we're is got rooms so And over news serve of to on our good the guests keep we've close multiple the

delivery access, you dining, a have we front when thus aspect and access, about that it. takeout nowhere tepid and a by they in think one little of bit you giving were near So been about drive-thru the when momentum, although But far, rather spot. way, we're The want results, of pre-pandemic. building think it's in guests that's on where however good

Joshua Long

operational as the helpful. availability either your or levels of bit, there product of just slimmed a high to levels and and system, menus, you pulled and service commentary, if commentary think a maybe the Great, for maybe you were we're just of product manufacturer last you thank from seeing across the hard inflation be to maybe the some me. I could is one down is on in adjustments little or the on to system, understood which there's addressing I customer the provide that seeing you're through very would in that scores and second satisfaction then how get keep service back being those layer restaurant, what some

Steven Brake

from very Steve. been have shortages, Sure. standpoint, which been a experience doing issues good fortunate as again, Overall, team been various supply the working managing chain operation we've nimble but little supply material fortunate packaging we've said, sheet in availability food being packaging chain not a with packages, those that is to bit they That job impacting we a in for really recently, is solving great shape. products. This arise, any of issues

and very So proud the nimble being operator chain for of there. team and supply the focused

And remain it challenging does environment everyone a so good, but so knows. far, as

Joshua Long

Got you that. it, for thank

that On there's that or of seeing the that is are everybody into there. moves maybe just is imported curious just items as are packaging that lot a specifically, product, just packaging something lower a and more off those competition premise, supply

Steven Brake

root staffing cause is challenges heavily all tied businesses availability, to largely labor today. are Yeah, domestic, the the that facing essentially

So really our that's cause root issues. the of

Joshua Long

it. it I'll pass Thank Got you. on.

Operator

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

Alex Slagle

it to outlook. thanks pretty before for guys, the touch and I thoughts want on question. acceleration growth development levels Hey, the peak like from And sounds notable previous versus XXXX.

start new thinking if markets, Just and some more you're versus you fueled with kind new can of color much versus existing how wondering get by on you about franchisees that. could existing and how of is this

John Cappasola

initiative. we've consecutive as Hey, front lot types Menu really of about from Fresh excitement yeah. talking the prototype the Obviously, just relative to the regards the this Flex that got gives growth we've on as there out year first, us Alex. franchising Well excitement optionality been estate, coming of launch of standpoint Venues of eight it franchise much Sure, the and to well real the into XXXX. years sales same-store of a building and in positive of

in by the here we new franchising back fueled has been on us, our seeing is now across with high and been agreements, signed, when track over the it the our based we're see really talked strategy So, look several on certainly They but for opportunistic these Flex what we've starts probably that here prototype leveraging there. is pipeline And And feeling beginning strategy and does Fresh lot XXXX. on of franchise you with those we side that the about existing the new of what that capabilities we new we we to lot Flex looking quarters, growth today, on be that company system real we'll I momentum also post-COVID momentum position have that in I in out we're we'll see as multiple And the environment. both probably in on front, to getting of at think in be will happening on, range, capital existing we'll what we'll range. do be some continue expect - yet existing said company to about to we're good some they'll our to be that been, doing think ability be obviously announced franchisees, about And our But that seed when that feel franchisees items mentioned. past a basis. digit have grow of build franchise company, future with as a our in we've infill franchisees and are through. and franchise you that single talked and agreements, with the - pipeline build, that and outs build to then that Fresh continue by LSD a and acceleration just market the there's an states

Alex Slagle

is Got that a number? that it, X% is gross - the

Steven Brake

system number a That's of gross.

Alex Slagle

recent around initiatives some if talk metrics. just your Okay. of speed wonder around And of some could then you of service the and I

far some throughput improvements think, in about And I solid XXXX. kind seems through so improvements like still some talked XXXX. of

he staffing going. and levels of Just sort perhaps all wondering and you're that as momentum you keep more how that hiring how able training and kind kind of and going employees maintain of in this challenges see to more face

John Cappasola

other said I And it's like fortunate somewhat and issues. than staffing key. been dealing we've is earlier, critical, hotspots some with some that really, Yeah,

seeing we lower staffing in Although area around an widespread operating year-on-year, it's play is are issues metrics. bit bit a where operating and/or we're a turnover year-on-year, hours little higher - not little not

your you which improvements, good the seeing are over the we and our news. need really delivery, something hours satisfaction amazing operations point, overall our And business us well our that's at to scores overall we're strong speaks is both as day wall So for franchisees really speed as last both improvements important as strong with been the to really and where throughput as absolutely level capability, and that solid key four really year. part satisfaction on year during of is of this and well the which a really that's on team maintaining

all all job. outstanding our team, doing franchisees are So in operations an

Alex Slagle

I'll on. And it thanks. Great, pass

Operator

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

Nick Setyan

top you momentum to continue hear the line in on it's expect and second you half. the the to Thank great

XXXX, 'XX gap of up would between on the now modest that modest around growth we following X% kind given in appreciated. rate there unit we just Just 'XX? interpret said how where and should in the you Any be I are in 'XX. think guess I help acceleration

Steven Brake

- clarify to Yeah, just

Nick Setyan

sorry, I'm 'XX.

Steven Brake

unit modest be this up XXXX by followed from your rate on XXXX? about a in Yeah, gross that the X% growth so XX question will new basis XXXX, year step a

NickSetyan

clarification in helpful? the be modest given Right, XXXX, further just yeah, very any 'XX, X% in on would maybe what

Steven Brake

points number a John happened modest number the up be a XXXX. in year, versus have above position numbers And more data something Yeah, step puts up so have And that on really XXXX up teens, so that trends. expect pronounced conviction current of those current soon in frankly certainly touched the is XXXX in love, year be well from good the in the we what are step year, be of XX signings about have that our announced, we still you'll us notable notably where recent but that deals a more to expansion the pipeline of them. feel we this and this step to that's as in would certainly that XX

John Cappasola

this January in Flex of up, will of Fresh and Flex start popping if will be I launched Fresh Menu XXXX, the there those you power be XXXX. really Flex we prototypes so that Fresh think - probably But Nick, see Venues few piece a really you'll into really which in remember XXXX. year, get to starting And in of

Nick Setyan

And that'll hopefully, too. we'll million that be need, so to you able X.X help

conservative? the any the prove G&A, have that of the could in year half bit of X% line, terms guidance a obviously, in momentum second In terms we little chance of top that

Steven Brake

revenues of to in any a at are is inform run obviously and probably look QX sales goal going that fair rate. terms ultimate quarter The to overall

down So probably lead the with of area that flexing likelihood more would the you to probably lower conclusion this that fair year. X% is

inflation some now term have allow subsequent basis sales stays is inside our modest a our to term to said post-COVID, a it inflation, certainly that before normalized basis on have which sure after tends view on and us we've achieving that to to revenues, As while G&A control longer overall in pace XXXX. downs and longer into will start growth step move in years making

Nick Setyan

Perfect, thank you.

Steven Brake

You're welcome.

Operator

Our Associates. next with Please proceed of question. King Brooks & line question Todd comes with from the CL your

Todd Brooks

Congrats done. momentum Well in on Hey, the good the guys. quarter. afternoon,

One, talking platforms. those help How here. and a half sales can we are you you're loyalty customers? are chicken how last more color the were looking about planned the about give going of at of around a the crispy And we talked launch crispy the the kind year driver much setup employing the lapping promote couple and for program? about But launch and program? the questions launch that? same-store So us of lapping chicken the back new tactics What a to from in you you of loyalty product

John Cappasola

yeah. Sure,

the important. the it using to momentum, And think is going is our characterize important. program really And I right. getting expectation folks it's really is would I as that build launch

So excited in these the - you, what be I'll actually massive to guests about field Yeah [ph] though I that rewards. tell to there. you name It's program for there's we're of think it, solution you going is Taco is when this a the our Del tell leveling But Del could I'll do and It brands., loyalty moving this something think going playing called is and a on think forward. great you overnight, don't with about for be. I right really turn the brand it's what some catalyst that bigger

and It's as it's tiered brand. want So a points program we're excited loyalty a exactly reward to with fun and where behavior. to It's we based be motivate that. a about structure really designed

the what's really be along experience important we a that with to here the do engagement guest will your the and and benefits the higher more then your the like and collecting great and to team that one and have, higher guest we'll use, tier, we've brand. challenges enhance and internally, provide tier, the with frequency you been customized the data ability to partners So things more have more unlock, new essentially, ultimately one building

you into can, guests as early absolutely we're and going to many So we imagine, want get often. can as as this to program

push over around the this when an in effort it And sure and to that this be ongoing so time. program make there'll level launches September, marketing building we're at the restaurant

Todd Brooks

them great soon. sounds That's excellent. them and I to love have

where staffing hot us on up this, problem? think had not you drag about markets a had the think fronts, material was the labor in sales there from spot quarter two challenges you operating have you hinted where I to from or side follow same-store one, you'd curtail at Was but aggregate Just hours. question, to an that a

Steven Brake

tried there, to its the a clarify, we've mean, store markets. discernible not stores the to metric of question, any not just I No, to hotspots literally are definitely clear means here performance. which store John is on actually, fortunate, impact isolated fortunately, been there make your quite overall or no, really very

Todd Brooks

restaurant, points, to back the you of on XX chance we too being think line? down we're you're within of staffing Thanks, half feel Steve. about context that over performance year. how about a And And levering because labor labor the any that efficiently in like there need thinking the basis of the the do is then looking levels at the you're that, little actually the running

Steven Brake

the that the there's right follow. of can we the really time. a rigid formula floor kind at feet there makes fair but mean, I sure that the risk, It's are a on right right - no, be Generally and prescribed restaurants very formula balanced

if in QX a then, was year kind heart as COVID. for So of and recall to of the the at as general comfortable ago far overall just leverage, we very us be

teens. concept fixed of there that well. of hourly health include your on guess which would lease waiver, So element even leveraged managers, of really really, that as your outcome is the is heavily the premiums I of elements staffing to informed It's elements variable and high by with some hire insurance a or this staffing, fixed

really saw that we enabled So that's what QX. levering the nice

Todd Brooks

again. Okay, great. Thanks and congrats

Steven Brake

Thank you.

Todd Brooks

Thanks.

Operator

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

John Cappasola

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

Operator

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

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

Del Taco Restaurants (TACO) 23 Jul 212021 Q2 Earnings call transcript