In 2019, systemwide same-store sales increased 0.9 percent, the chain’s seventh straight year of growth. That breaks out to a 1.3-percent lift at franchises and 0.5-percent uptick at corporate stores. In Q4, systemwide and company-operated comp sales rose 0.4 percent, while franchises grew 0.5 percent in the quarter. Corporate same-store sales in Q4 consisted of a 4.1 percent rise in average check, with modest menu mix growth, offset by a 3.7-percent drop in transactions. Del Taco attributes the negative transaction trends to slower heavy user frequency caused by an ineffective value platform.
Revenue in 2019 rose 1.5 percent to $513 million, while in Q4 revenue decreased from $157.3 million to $157.1 million. Twenty-four stores opened in 2019 (10 corporate units and 14 franchises) and eight stores closed (five corporate units and three franchises). Del Taco refranchised 31 restaurants across Reno, Nevada, and Southern California markets.
To increase same-store sales and manage margins, the chain will carry menu price of at least 4 percent in 2020. Menu merchandising and promotions will also be skewed toward items with favorable margin profiles.
While new value and product innovation are meant to drive transactions, Del Taco is investing in digital initiatives and daypart strategies to improve traffic.
The Del Taco app has about 950,000 members, and the brand plans to continue personalizing offers and enhancing its CRM capabilities to drive engagement. In addition, Del Taco has seen strong results at breakfast, thanks in part to the $2 Breakfast Toast Wrap that launched in the fall. In Q4, breakfast was the top performer in terms of comp sales and transactions, and that trend is the same thus far in Q1.
In 2019, the brand integrated with Grubhub, Postmates, and DoorDash, and each were fully launched at company-owned stores in December. Cappasola said delivery carries a significantly higher check than in-restaurant. To date, delivery represents about 3 percent of sales.
“We feel very good about being able to over the course of the year work that check back into a more typical healthy level that we historically run,” Cappasola said. “And at the same time, obviously, it's all about execution and further innovation and product development and further embedding Del's Dollar Deals with the guest to make sure that traffic continues to accelerate. So, very happy thus far.”
Cappasola said the company hasn’t seen any impact from the coronavirus yet in sales or the supply chain. The company has increased the frequency of cleaning, mandated that cashiers wear gloves, and moved lemons, sauces, and unwrapped utensils to behind the counter. Del Taco is also reemphasizing drive-thru and delivery procedures in case customers move toward those channels.
In 2020, Del Taco plans to open 15 to 20 restaurants, including five company-owned stores, and a 1 percent closure rate. The brand has identified Orlando, Florida, as a long-term growth area. It expects comp sales growth in the low single digits and revenue between $503 million and $513 million.
“We are squarely focused on growing transactions with the heavy [quick-service restaurant] user by dramatically strengthening our value proposition through Del's Dollar Deals, and we are encouraged by its early performance,” Cappasola said. “The new value platform, along with our key topline driving strategies that I outlined, will be supported with strong operational execution and will also serve to improve margin performance during 2020.”