Del Taco ended Q3 with 596 units—295 company-owned locations and 301 franchises. In the quarter, one corporate store and four franchises opened. The brand expects to open two more franchises in Q4, including the first in Ohio.
Through the first five weeks of Q4, comps are up in the low-single digits with franchises performing positively and company-stores trending into the red.
Cappasola gave several reasons for this dynamic. He first explained that franchisees are spread across geographical regions while the company stores are concentrated mainly in Southern California and Las Vegas, which have been hit hard by the pandemic.
The CEO also said Del Taco delayed its fall price increase to November to “further read the consumer and just to determine the appropriate strategy for 2021, with the key there as to maximize flow through.” Stores are also competing with the launch of the premium Carnitas LTO in September 2019, which drove high average checks. This year, the brand is utilizing the $1 and $5 value Crispy Chicken program to drive transactions. Cappasola said one must also consider disruption of the breakfast daypart, especially with Del Taco lapping the launch of the Breakfast Toast Wrap last year.
However, Cappasola said transaction volumes and comps have improved since the launch of Crispy Chicken, and Del Taco is maintaining those increases. That trajectory should continue with more Crispy Chicken news and a normalized advertising spend. Additionally, the company is planning to launch a Tamale LTO, which will be on the premium side.
Company dining rooms remain closed, but Cappasola noted Del Taco has been able to make up for lost dine-in sales through the performance of its off-premises business.
The restaurant plans to address that even further in 2021 by placing employees outside near the drive-thru lanes to enhance throughput at high-volume stores. The chain wants to also leverage the performance of its delivery channels and app to test curbside pickup and develop more bundles to grow its share of party-size occasions.
Wading further into digital waters, Del Taco is also envisioning a more holistic CRM platform. The brand created a vice president of marketing technology position and appointed Erin Levzow to execute the strategy.
“Our brand positioning is exactly what the consumer is looking for these days-fresh flavorful food, great value, and of course, convenience,” Cappasola said. “And we can provide these relevant attributes through the limited and no-contact channels.”