Del Taco's ‘QSR Plus’ Position Continues to Pay Off
Del Taco menu items such as the Huevos Rancheros Epic Burrito are part of an evolving upper-end menu aimed at customers who want to "trade up."
Five years ago, Del Taco realized what it had already been doing for five decades—onsite prep and cooking of fresh ingredients—was truly worth highlighting as it sought to reposition itself from being seen as a price value brand to one viewed through a quality value lens.
That repositioning of Del Taco as a “QSR plus” concept is working, says CFO Steve Brake, and last week the Lake Forest, California-based Mexican brand reported its 23rd consecutive quarter of same-store sales growth for company-owned restaurants.
“Most traditional QSRs have always been know for value and affordability, but they aren’t traditionally know for quality,” says Brake, speaking today at Franchise Times’ Finance & Growth Conference in Las Vegas. “Our idea is, by leveraging our fresh prep and being, frankly, loud and proud about it for five years, is helping us tell the story.
“The goal is simple: separate from traditional QSR,” continues Brake, not by trying to be like other fast casual brands, “but enter the huge amount of white space between traditional QSR and fast casual.”
Systemwide sales reached $784 million in 2017 through the brand’s 312 company and 252 franchised locations, and company units have an average unit volume of $1.49 million.
With the bulk of profitably coming from company stores, Brake says that means in whatever the company does, decisions are focused on driving top line sales and being creative to drive the bottom line. He cites the continued success of the Buck and Under menu as a way Del Taco appeals to value-conscious customers, while an evolving upper-end menu allows customers to “trade up” for items with fresh-grilled chicken and steak, slow-cooked pinto beans and pico de gallo made from scratch.
Del Taco wants to grow in the western third of the country, where it sees opportunity to infill markets with 300-plus locations, along with active emerging markets in Florida, Georgia and South Carolina. The company, says Brake, is focused on having a development pipeline with the right real estate, the right franchisees, “and then support the heck out of them when they open.”
“Franchising is definitely a big part of our growth strategy,” adds Brake, as Del Taco seeks experienced multi-unit restaurant operators to sign for a minimum of five units.