Del Taco’s same-store sales rose 2.4% systemwide in the fourth quarter of 2017, marking the 17th consecutive quarter of positive sales growth. CEO John Cappasola attributed the growth to the chain’s everyday value approach. “We’re the only QSR to offer 15 items for a buck and under,” he reported during Del Taco’s earnings call on Mar. 14.
That menu strategy, coupled with higher-priced seasonal LTOs and new products such as queso blanco, is driving traffic—which was up 2% year over year, compared to a 0.5% decline in Q4 2016, Cappasola said. The queso, introduced in August to compete with Qdoba’s version, is used across the menu in everything from $1 Queso Chicken Rollers to the $5 Epic Queso Chicken Burrito.
The rollout of an all-natural queso worked better for Del Taco than it did for Chipotle Mexican Grill, which had to go back to the drawing board after its queso bombed with customers. Although Chipotle’s comps also rose in Q4 2017, the number was smaller—only 0.9%—and traffic has been declining since July 2017.
Going forward, Del Taco plans to expand its midpriced items to drive dinner business, Cappasola said during the call. Menu innovation around nachos and tostadas is in development now. “The Buck & Under menu is still relevant, but we see the biggest opportunity for growth in midtier,” he said.
Delivery is another part of the business that will get more attention this year. Del Taco is currently testing delivery via third-party partners in 50 units, and plans to expand in pockets of stores where it makes the most economic sense, Cappasola said. Check averages in some of Del Taco’s locations double with delivery orders, he added, but a national rollout of delivery is not planned for 2018.
What is planned is the release of a new mobile app during the third quarter of 2018, featuring enhanced online ordering functions.