Del Taco Restaurants Inc.’s mobile app has surpassed 1 million users. In fact the QSR’s mobile app and delivery have been key assets during the COVID-19 pandemic, says John D. Cappasola, Jr., President and Chief Executive Officer, in an earnings call with analysts.
For the first 10 weeks of Q1, Del Taco financial performance was on track “although conditions changed rapidly beginning in mid-March due to COVID-19,” said Cappasola.
Total revenue decreased 3.8% to $109.8 million compared to $114.2 million in the fiscal first quarter 2019. Comparable restaurant sales decreased 3.1% system-wide. A full earnings report is available online.
Most all of the Del Taco’s locations remain open, and more than 85% of orders utilize the drive-thru.
Del Taco has made dozens of changes to its operations based on government requirements “to be ahead of the curve to enhance employee and guest safety” and “with the goal of standing out as a trusted brand,” Cappasola said. These changes include social distancing procedures in the kitchens and for guest carry out, closure of dining rooms, gloves and face masks for all employees, increased cleaning, and employee health and wellness procedures. Many of these new practices are here to stay. ”We expect many of our safety and sanitation changes will become a permanent part of our operation,” he added.
The brand is keeping a watchful eye on the details and it is paying off. Daily scorecards are being used to manage key metrics including sales by restaurant, by hour, by day, etc. and include a focus on labor and productivity metrics. “This focus has leveraged our new labor management system and led to reduced operating hours in some restaurants to further enhance profitability,” said Cappasola. Zero employees have been laid off or furloughed, he added.
“We are proud to announce that these changes and the guest service we are providing recently has resulted in all-time high order accuracy and guest satisfaction scores.”
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Del Taco mobile app and delivery have been key assets during COVID-19, Cappasola said. The brand has reduced its traditional marketing spend and is leaning into digital offers.
“The app database has grown to more than 1 million registered users in part due to regular disruptive offers only available to app users such as a free chicken crunch Burrito on National Burrito Day, and turning our Tuesday Taco night into an all day offer while harnessing the power of one of our delivery partners to engage their large, hungry user base.”
Its April 20 taco promo was the most successful ever, yielding the highest redemptions of any app promotion to date, he said.
Free delivery through third-party delivery marketplaces and limited contact options have helped accelerate delivery volume from 3% to 8% in Q1. More than 90% of franchise locations have at least one delivery service, and Uber Eats is on track to be added during Q2.
“Our digital transformation strategy coupled with the great value and variety provided by the Del’s Dollar Deals Menu will serve as foundational elements of our marketing strategy to deliver on guest expectations moving forward,” he said.
Cappasola is optimistic about the QSR’s future. “…As consumers begin to experience stay at home fatigue and grow tired of pantry stocking, they become more willing to order at the drive-thru window, carry out and increase utilization of delivery options.”
Del Taco operates more than 580 restaurants across 15 states.