Del Taco Restaurants is among the brands that is leaning into its drive-thru, carry out and expanding its delivery options.
As the COVID-19 pandemic continues, many restaurants are increasingly leaning in to off-prem, including drive-thru, curbside and to-go operations. Del Taco's dining rooms remain closed “which has helped us stand out as a trusted brand for safety and sanitation, while driving significant operational efficiencies,” said John Cappasola, Jr., President and CEO in a Q3 earnings call with analysts.
“This is validated by improving guest satisfaction scores, labor efficiencies that were also aided by our new workforce management system, increasing guest engagement in our digital channels and of course, our business results themselves.”
During Q3, system-wide same-store sales rose 4.1% including a 6.5% increase at franchise restaurants and a 2% increase at company-operated restaurants. A full earnings report is available here.
The QSR brand has continued to introduce new products including fresh guacamole, a new Epic Burrito lineup and a Crispy Chicken menu. Del Taco plans to stand out from the competition and drive brand engagement through creative advertising “… more reverent and humorous branded content to bring new products and brand messages to life in memorable ways for consumers,” Cappasola explained.
To promote the new Cholula menu items, Del Taco is sharing ads on social media that pay homage to '80s big hair bands while delivering the marketing message in a fun and memorable way. Check out: pic.twitter.com/Szzf87fp2q
The humorous approach is paying off. “We are already seeing significant improvements in our consumer engagement across social and digital channels as a result of their early work,” Cappasola said. “In fact, our new approach to deliver must watch, brand creative has increased social engagement and buzz by up to four times.”
Digital Diners & Delivery
Del Taco continues to increase its one-to-one digital engagement with fans through its Del Taco mobile app and delivery channels. To date, the Del App has grown to more than 1.2 million registered users, up 38% from the end of 2019.
The brand is also “aggressively promoting” Del delivery as a contactless ordering option with Postmates, DoorDash, Grubhub and Uber Eats across all company restaurants; more than 90% of franchise restaurants provide delivery through one or more DSPs, he added.
“We believe partnering with all four leading delivery platforms to maximize consumer convenience channels and leverage the trend toward at home delivery provides us with a clear advantage,” said Cappasola. During Q3, delivery represented over 6% of system-wide sales and its company-operated delivery check average is approximately 1.85 times its restaurant check average including a company delivery premium of 20% that began at the start of fiscal Q3.
Cappasola sees an increasing role for technology and the consumer experience. “…The consumer adoption curve related to accessing and interacting with brands through technology has accelerated since the pandemic, and this trend will likely strengthen,” Cappasola explained.
Del Taco will invest and focus on technology in two key areas: next year the brand plans “to develop a holistic CRM platform to further digitize Del Taco by incentivizing and rewarding guests.” And two, it plans to address increased consumer demand for off-premises dining by expanding the access and convenience of drive-thrus and adding outside order takers to improve throughput in high-volume restaurants. Plus the brand plans to leverage its delivery channels and the order-ahead feature in the Del App to expand limited-contact service occasions and modes. And Del Taco will test curbside pickup.
New Stores: Smaller and Modern
With 600 locations in 15 states, Del Taco is looking towards the future, remodeling existing stores and new store development. Cappasola said the brand is looking at smaller, drive-thru only concepts and increased real estate availability. “To help capitalize on these opportunities, as well as shifting consumer behavior, we are in the final stages of developing our new restaurant prototype and a menu of venues initiative,” he said.
“…The new prototype will include a modernized design, improved functionality, and other operational enhancements that will refresh the brand and position us well for growth in the future.”
Cappasola did not give a timeline for the first prototype, adding that, “We’re right at the finish line.
“We are excited about it and the additional functionality we've added now, given the pandemic and COVID and some of the things that we see moving forward like, the ability to improve throughput, as well as pick up at the restaurant level, those things have been integrated along with some smart strategies around the kitchen, that makes that kitchen more scalable to multiple menu of venues ideas that we have like drive-thru-only type of venues that lean into drive-thru and mobile pickup… As we enter into 2021, we are going to have a real concept.”
Del Taco continues to refine its remodel program as well as it looks to adapt to evolving consumer needs. “… Our brand positioning is exactly where what the consumer is looking for these days, fresh, flavorful food, great value and of course convenience. And we can provide these relevant attributes through limited and no contact channels."