Names are the game for Del Taco

The company hopes personal introductions elevate service—and sales.
Del Taco

Will names help lift sales? Del Taco is about to find out.

The fast-food Mexican chain plans to use more names inside and outside of its restaurants. The company’s drive-thru cashiers will introduce themselves by name, for instance.

And the company is ditching the process of shouting order numbers inside of its restaurants, opting to call customer orders by name, similar to what companies such as Starbucks do.

Del Taco executives believe the names will help improve service, which keeps customers returning. The names are part of an overall effort to improve hospitality by having staff greet customers and say goodbye when the leave.

“Our research shows this type of connection has a big influence on overall guest satisfaction,” CEO John Cappasola said on the company’s second quarter earnings call Thursday afternoon. “Our goal is to make hospitality and service another point of differentiation for the brand.”

The focus on service would add another layer to Del Taco’s quiet shift from a chain known predominantly for its cheap Mexican food to one that serves an upgraded brand of fast food.

The company in recent years has upgraded its menu to provide more premium items such as burritos and plated meals. And it has added a redesigned look in its restaurants to emphasize its fresh ingredients.

The efforts have helped Del Taco generate an impressive streak of same-store sales growth that has taken average unit volumes past $1.5 million.

That includes the second quarter ended June 19, when the Lake Forest, Calif.-based chain generated 3.3% same-store sales growth. On a two-year basis, same-store sales are up 10.4%.

That was the 19th-straight quarter of increases. Revenues at the company rose 8.5% to $117.8 million, the company said. But net income declined to $4.2 million, or 11 cents per share, from $5.3 million, or 13 cents.

The results disappointed investors on Friday. The stock was down 2%.

One of the challenges last quarter was traffic. Transactions declined by 1.2% at company locations, even though company operated same-store sales rose 2.5%.

The company said it has added a new Dollar Chicken Quesadilla Snacker to its Buck & Under menu.

The item set a record for the number of new items sold. “It’s a powerful demand driver for us,” Cappasola said, noting that it is now one of the top products on the Buck & Under menu.

Del Taco does plan to continue its “barbell” strategy of offering both higher-end premium items as well as its lower-end products. “We’re going to complement the Snacker with some great premium and midtier promotion and new products to make sure we’re working toward building back that check average,” Cappasola said.

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