Del Taco

From the pages of Restaurant Franchising
Radical Del Taco is passing the savings on to franchisees

Del Taco franchise

Del Taco is proud that its core menu delivers great taste and has strong value appeal for customers without sacrificing margins.

Del Taco is passing that same value equation to new franchisees.

Through October 2011, Del Taco is waiving its initial franchise fee of $25,000 for qualified franchise projects. Furthermore, 60 percent of royalties in the franchisee’s first year are reinvested to offset opening costs and supplement the franchisee’s marketing investment for their new Del Taco restaurant. In the second year, 20 percent of the royalties normally paid to the company are used to supplement the franchisee’s marketing investment.

In addition, the company has created a prototype store that lowers the cost of the restaurant building by 30 percent—a savings of $150,000 or more depending on the location.

The first Del Taco opened in 1964 in Yermo, California. In 2009, Del Taco posted 518 units—231 of them franchised. The average unit earned $1.1 million, and sales system-wide were $568 million, making Del Taco the second largest Mexican/American chain in the United States. The company’s growth plans include development agreements to open 75 franchised restaurants over the next few years.

Del Taco’s breakfast, lunch, dinner, and late-night menu includes a wide range of value-priced meals and premium items, including the Macho line of burritos weighing in at more than a pound. Quality and value are key components of Del Taco’s offerings to customers. The menu includes things one wouldn’t expect from a typical Mexican quick-service restaurant, such as Double Del® Cheeseburgers, premium shakes, and Del Taco’s world famous Crinkle Cut Fries. Items are prepared upon ordering, and quality ingredients include lard-free beans made from scratch, chicken grilled fresh each hour, real cheddar cheese grated on-site, hand-made salsa, and fresh produce.

A franchisee taps into Del Taco’s sophisticated site selection metrics to help identify the perfect location according to demographics, traffic patterns, competitive landscape, and psychographics. A “Menu of Venues” of building facility types includes free-standing, inline, end-cap, and conversion models. Training happens with the most experienced Del Taco professionals at any of a number of locations around the country.

After a store’s opening, training and support continue for the franchisee, including a business advisor to help with managing finances and operations, and a local marketing “toolbox” with community-based programs to attract customers into your restaurant.

Sophisticated market planning and site modeling is resulting in some of the highest opening sales for new locations in the company’s history.

Successful Del Taco franchise owners share a few key ingredients, says James Lyons, the company’s chief development officer.

“You have to be an entrepreneur with the financial resources to start the business. And you have to be a restaurant operator with a passion for the business.”

Even in a down economy, Del Taco had positive sales in the last quarter of 2009. Finding ways to decrease costs has been a large part of securing good margins for franchisees and improving their profitability.

Lyons believes profitable stores are what franchisees care about—not bragging rights.

“We’re not fixated on being the restaurant company with the most locations. We want to have the most successful locations and provide opportunities for our franchisees to grow,” Lyons says. “At the end of the day, we want to have a strong, profitable chain for us and our franchisees.”

For more information about franchising opportunities with Del Taco, visit www.deltacofranchise.com