Del Taco Restaurants (TACO) 9 Mar 212020 Q4 Earnings call transcript

Thank you for standing by, and welcome to the Fiscal Fourth Quarter 2020 Conference Call and Webcast for Del Taco Restaurants. I would now like to turn the call over to Mr. Raphael Gross, Managing Director at ICR to begin.

Thank you, Operator, and thank you all for joining us today.

On the call with me is John Cappasola, President and Chief Executive Officer; and Steve Brake, Chief Financial Officer. prepared will our to the deliver questions. your we remarks, open we lines After me that remind discussion let first, But everyone include statements. today part forward-looking will our of undue of These not upon future reliance should performance them. statements not guarantees and are placed be therefore not SEC forward-looking at operating We the more discussion filings date, for undertake a press earnings risks update condition. to financial impact and of future you a results refer today's to Del that release later these do statements and and Taco's could our detailed earnings release as reconciliations the EBITDA, contribution, Today's press financial to also measures measures. with adjusted and includes such along of non-GAAP measures GAAP adjusted these non-GAAP net income, nearest restaurant

or measures considered measure loss, not be or financial by GAAP net as cash non-GAAP flows measures, or activities liquidity should GAAP operating net other loss, or any provided income to However, performance. income financial operating of alternatives such as

call Officer. John now to Cappasola, turn me Executive the Chief Let over

Thank us you, Raphael, and joining today. we appreciate everyone

environment, XXXX. to All delivery as we rapidly-expanding channels. ensure implement while team and was worked our certainly up scores with the While exhibited very pleased well business practices. onset record take environment. continuity, challenging all tenacity and center our brand setting our delivered guest out, franchisees, and satisfaction Even I operating execute of new COVID-XX that the have support tough more serving new a the us, a through and for best the operational enter XXXX They staff operators, be resiliency tiredly our couldn't setting changes, challenging since in us year this drive-thru, our overall our of operating guests of in

people closed restaurant through into Across focused on stay-at-home we comparable first rooms orders system, the overwhelming COVID-related dining operated majority sales our stayed we as Still trends and continued. our quarter. core values leaned the with culture. and restrictions QX, of the During our strengthened

metrics, couple and our guest digital performance price operational aided margins, delivery, LTOs. a our exciting mid-quarter which transformation from benefited increase, a we by of across and As led experience key strong sales both

included favorite LTOs with over already the for crispy a holidays seasonal and our Our flavor chicken Tamale's a menu promotion. new the popular

franchise the and of comparable the strong in growth, second-half. a which their from sales restaurant happy very sequentially strength we with improved On resulted were front, QX, very

We franchise sales growth are its positive consecutive of in proud also XXXX. to announce same-store that achieved year eighth

at restaurants. QX restaurants at which Looking at X.X%, increase a system level, comparable X.X% X.X% included at results high and our franchise morning wide challenged to breakfast restaurant about dayparts sales disrupted graveyard and From pandemic overnight fewer behavior. a in still a are at to company-operated a our increase increased are the changes we restrictions has in and due various standpoint, people due and commutes out remain

comparable sales and early sales. were first of company-operated slightly COVID in within overall company poised Orange, for and QX, restaurant Angeles, counties rebound to QX, of a pleased very update, In COVID impact restaurant stated LA a and restaurant believe Los have subsides. restaurants, we were in generated are within other we during Clark comparable Las all business light counties positive As comparable counties approximately once these and significant strong Vegas, had notably half all company-operated positive while negative, January our sales represent

costs delivery a solid XX had outside fees margin franchisees and Absent amid of new year, discussions costs. the relevance as outcome. COVID-XX brand compared decreased this advertising, than prospective expansion franchise we view labor is were margin offset points across a Our slight and which XX.X%, increased comparable out-performance timing XX-state also they only by story which direct lower broad restaurant prior It a current pandemic, to more and real operate of sales' California. development. with to Restaurant food to on contribution we as testament restaurant to XX points mostly its higher a basis be continues geographic basis the footprint, energized the and the incremental as of

fell adjusted increased adjusted to from net profit, $XX.X $XX.X of diluted to $X.XX share while per million, EBITDA income million $X.XX year. last terms In from

we by million helped our Finally, approximately to which leverage debt to $XXX revolver million, reduced lower X.XX our drawn times. net to adjusted-EBITDA to $X ratio

well recently ultimate results. and been throughout has been and we introduced already across has five on of called sales we for prioritizes Fresh which received menu trusted system fleet leadership, innovation, transformation, are to prototype, convenience. of ultimate business: we we of versus franchisees Focus operations new to the long-term our our quantitatively plan earlier, play integral this with that backbone convenience. as on Del areas referenced returns. deliver drive are and our in Flex by very position It engagement, capitalize also us I role pre-COVID. four clearly drivers acceleration: our Along our This accelerated making to value improved for remodeling safe, focus and also the brand helping planning better to As And an drivers, it our foundation pandemic, if designed guests critical program using incredible Taco and all Better Impressively, throughput, as is digital will contemporize is XXXX, these attract growth. four to smile, and this there one teams dimensions level constant driving team a is effort start

midst strategy. therefore important I'll So, to will with on key value recovery, role important a updates. consumer, value continue that, continued restaurant but today's with that few decisions. leadership a me economic an comment our play in in uncertainty brief facing recognize maintain let purchase the start and a We provide the of even

menu, year value as marks. of proven high Dell's have While as value our a it Deals introduced our strategy, everyday been foundation with great always best-in-class offered across barbell has we the last guest our value menu Dollar Menu is satisfaction

through of to ongoing continue marketing top and platform will important the in throughout mind news value We new our keep product year. this everyday

delicious XXXX beginning new For strategy spans epic our Taco, instance, we flavor, up which $X menu barbell a $X Mango the Honey to Burrito. with Chicken Crispy New started with

July. during been flavors, and in Chicken other the total to launches team any seasonal XXXX We our with with strong Shrimp Crispy on XX this has more introduced back the handcrafted premium we the barbell newest menu guacamole late-March a by represents development February, innovation front, our its and team fresh great and pipeline also busy menu. and new of Chicken new product highlighted Jumbo our sales. will products, has On for working of flavor. followed Crispy is Chicken offering of brand Crispy have spanning new our and will value very pandemic, launch just brought a by strategy in new since be the menu last drive Upon QSR to mid-tier it popular consumer, platforms, the LTO which items unique innovative Crispy Crispy menu Chicken the

more which reflects transformation, available while not also regular are app over offers app than digital played our active users, effectiveness our one-to-one on from This the only our convenience. XXXX, end these the digital of also is XX% that disruptive X.XX important Del but of channels Next increased. roles users Taco Del have have involves and up enhancing in have mobile guest engagement, our the million App. delivery efforts. only registered we The expanding Today,

X% restaurant compared to last all year. X.X% quarter were of During delivery, sales only company the

delivery extending Our sure times, on for on experiences are are modes Del size. and with meet CRM at price want A and new to all XX% opportunity clear our guests and convenience making investing margins Del they in delivery and big service Taco. brands. drive-thru and focus due to by guests will order check to technology channel versus in convenience capitalizing outside and with our in business, delivery This We transactions. ways improve be brands a pre-COVID. interact access Taco. to-date about, Ultimate wherever also to maximizing high in want has it sales and drive-thru been we being effective QX meaningful daypart of We restaurants the volume expanded resulted about give of the by is ultimate our temporarily wireless adding premium using takers. and and and Consumers a our our through the X.XX believe in technology has flow they to are considering also lines been the remains are all, where about to throughput our access them permanent lunch great restaurant X% convenience we check delivery and queue primarily average enacted during care is us we holistic improve on drive-thru off-premise has lanes party faster allowed platform. with this access All

holistic to and App and which those service Flex rooms curbside looking I'll program service for it. of park Taco brings the their looking option about reward enable dine-in addition, fans our fall. launch attribution us car to In dining only will helpful The will loyalty and we for this contact This our when feature that is and improvements to are call by order for beneficial increase experiences are Fresh of further are features and and launch building, as talk we digitize modes, platform, leveraging our platform in new Del potential alternative drive-thru as also incentivize another time. our and moment. guests It are they host This for to be test to ahead data This a guests now. to closed more our well just Del Del and it's their the for we CRM for get limited launch us to which will certainly it's program, App, a our personalized frequency plan loyalty. capabilities over to a include drive as and valued and the sales

Now, Fresh designed Flex future and growth. To Flex scalable which our this new exciting earlier discuss we is announced prototype, recap, year. let's for flexible, briefly Fresh

franchisees. guest First expand with was estate opportunities; growth experience; modernize and the new real and existing propel foremost, built and it to

crew franchisees to contemporized goal enjoyable guests, Our is and alike. feel. and convenient members a is possible distinct the evokes and environment design plus The for most create QSR efficient,

market parking the was to go. available mobile lot double curb that of also prototype real expand real ways, unmistakable and design can including eat to with provide color conversions flexible Del the in us we're vibrant we development. Fresh are Venues. clearly new investment drive-thru in end Our drive-thru new all, footprint which With lower pickups like attention top stations, to dedicated number palette, look areas and Taco and developers options both multiple welcoming to our park, forward and models, driver new Flex now and includes Orlando that, expanded or grow new Menu able backlit this net prototype around lanes, in this to freestanding build-out our what estate of Thanks sites. delivery the Taco. With the company appeal building seed caps, you our small estate to priority dedicated see Del We're pickup and scales in a nature, and for All we which let opportunities, excited only access through first maximize third-party offering Innovations in can our lane unique access. drive-thru to active towers help call about designs are kitchen, can which a later delivery orders give year. a turn now to this to

our led system as select new locations infill Orlando. remaining on will in market be by our in XXXX, opening the our focused growth franchisees seed core as markets, with company well For

ubiquitous expect our broad related open unique franchisees are We national barring to and system-wide at believe to begin franchise we growth. on our and poised brand new We appeal units dozen track, the get four menu as any delays back to to pandemic. and restaurants a least accelerate drives position further company

remodeling. seeing. coast-to-coast. franchise the consecutive are a states with Flex and drive opportunity comparable spans age continue development through optimistic new accelerate portion Flex new franchise about of we we'll addition the by with age program with broad our with Fresh the and across legacy great functionality remodel design systems that prototype, type that of ranges that across our are Our both growth well our are sales with mid-year. and prototype based that image The cost the in are non-California fleet along integrate years growth With we to pipeline, to can both brand this to $XXX,XXX facility over improvements mind, of we geography a a proven franchise success design $XXX,XXX believe design Fresh new pipeline ability XXXX, franchisees test from are targeting especially the time. remodel of the as new this test the of eight restaurant XX per XXXX up through on and existing to the we AUV Along is restaurant, our as expand our we will the positive in based franchisees We in apply

Ultimately, will an appealing We of to at move cosmetic growth restaurants the expect should generate while AUV is the phase formal range, lower lead in mostly to the the the testing XXXX. upgrades. ROI remodel and older higher this we XXXXs can that that into the system-wide believe come of a in we will we compelling program come restaurants closer with built through to franchisees of end the range since as final end

me discuss let our I driving it returns. shareholder to approach to Before over quickly turn Steve,

$XX commitment initiated repurchases returning shareholders. value excess reduction million strategy capital. we enabled on strategy; helped flow business; key our drive returns by plus to XXXX. ongoing levers: drive our cash To we As operating and which is our a recap, consistent aggregate core This in cash in debt deploying a quarterly of historical that announced January, is three investment reflects strong share our over disciplined deliver our dividend, to driving shareholder briefly to focused early back and

continue business core flow. for our earlier, margin expect strong performance, average we discussed volume I to and unit well will As is cash which strong generate positioned growth

the we new Taco Our a five grow we finally, remain franchise to capital. the leverage And where excess investment accelerated set position disciplined primarily expect Fresh able a has return up program similar Flex years, and are to in to last through that will strategy design. to Del our remodeling growth brand

Now is repayment the that on accompanying able with Fresh in-store Taco are five development Del for including as focus and an and top move and our better our a to continued pandemic. great dividend combination despite operating quarterly on of we to dime, In a COVID closing, stronger we XXXX, set continue sales innovation the fuel the a to to drive expanded to basis are about program from along line up emerge we continue crisis will cash what that share prototype solid and Between a uncertainty performance to we our debt. acceleration in company. drivers strategy, excited for repurchase of is from drive sales intend strategy, of Flex believe culture this

to fourth over financials. call Steve the turn our I'll Now to review quarter

franchise of revenue Total sales and restaurants in million $XXX.X $XXX.X year million to $X.X XX% by by restaurant This re-franchising X.X% with fewer ago decreased Company additional from company-operated comparable re-franchising the X.X% restaurants, company-operated from last quarter. year, to million sales. year, sales was franchise-operated period. in in decreased X.X% ago primarily compared million driven increase restaurants. driven restaurants, from The our John. increase fourth $XXX.X to $XXX.X last due coupled increase by was to activity. comparable million offset primarily restaurant the a to year from partially revenue year. Thanks, activity, positive System-wide at our restaurant the increased Franchise increased decrease last compared the to million comparable franchise X.X% X.X% growth at $X.X restaurant year-over-year consisting sales

favorable points increase XX%. variable increase our of mainly an XX the exceeded from menu workers' in Turning of XX.X%. to favorable XXX labor company increased along of effective direct expenses labor higher XX.X% menu COVID-XX XX.X% paper to incremental management of impact points as costs. of advertising and from XX as the X.X% basis operating related Despite a year basis This now X.X% with restaurant decreased as which compensation percentage other of delivery $X well trends. percentage was X%. wage point expense reduced a last X.X% restaurant over primarily based to expenses, driven sales, a on and to a by restaurant basis pricing restaurant sales, of minimum food as XX.X% to year. company approximately points underlying XX.X% expenses approximately as driven food in compared our costs from and price grew delivery of sales, hour, XXX fees by Occupancy $XX California percentage to last sales basis sales This and inflation primarily to due year-over-year by was to increase approximately decreased increase as This was of X%, expense a and company to a

a an the contribution Looking XX.X%. from delivery to as were despite XX year and year XXXX, incremental leveling ahead, to cost and year $XX.X just which year, increase expansion the a COVID-XX minimum of expected margin expenses prior is reduction by of last view of million, This during vaccination outcome points wage. this approximately our XXXX, growth direct same-store prior was of as million basis incremental California with and Restaurant XX.X% first in and decreased our followed was line in in increased $X percent second-half while to points over total featured in X.X%. revenue item sales the the and modest from and administrative costs, compared points of the million fees, delivery a elevated X% COVID solid company-owned contribution XXX to experience General $XX.X to in fees expected basis quarter improve as basis XX progresses. margin rates million, up restaurant $XX.X potential approximately $XX.X concluded a compared

million, a $X.X decreased last and to out amortization primarily new on driven down partially expenses, from compensation laid reflects last increased primarily the offset $X.X impact reduced offset performance call, percentage million re-franchising. on we Depreciation XX.X% total was based we from increase incentive by last as of last last $XX.X XX.X% was year. assets, partially Adjusted year, by addition XXXX management $XX.X and travel increase negative legal expense EBITDA lapped revenue year higher our million, by from the As performance-based up the a of the was million expense. as of year and bonus

a $X.X a X.X%. and million $X.X last rate, XX to As to of percentage was year. balance compared decrease increased Interest amortization revenue, average one-month expense LIBOR lower revolver was basis points to total and XXXX. lower outstanding million, compared to The depreciation due

availability credit to fiscal XXXX reduced million to under year-end. facility revolving fourth million of $XXX borrowing at the million, fiscal end the revolving at compared the credit year quarter, During $XXX.X our outstanding remaining we $XXX the facility was and

end balance sheet [Ph] adjusted In addition, XXXX. debt, [first] cash ratio to quarter, at of a at declined to net leverage X.XX, the X.XX of our of of compared approximately to fiscal the end EBITDA the approximately ratio

an under $XXX.X million. also repurchase authorization. million at XXX,XXX compared million of end quarter At $X.X shares $X.XX fiscal $X.X year. income price a We of approximately repurchased during diluted our or of per million of stock net total share common $X.XX share, XXXX $X.XX $XX.X of the per fourth remained average Net of for to $XX or loss last share per diluted million the

adjusted identified or million per million adjusted items $X.X year. Adjusted the which net excludes of compared diluted to income reported of last or our share $X.XX $X.X also release $X.XX income net in approximately various earnings income, in tables. financial net diluted We per share,

on uncertainty its to be our surrounding Lastly, provide COVID-XX the due for we with full to XXXX. business, outlook won't able impact a you continued and

discretionary X%, twice price of COVID-XX due to chain; supply during minimum expansion, impacts travel compared year XX salary return primarily to Total restaurant fiscal the General per compensation the modest and and over inflation of a on approximately the of related as openings, revenue, which commodity reflecting $XX in the expenditures slightly impacts for XXXX low can to from Effective wage California half to investments. X%; restaurants, expenditures hour achieved technology of program menu of range, tax X% regulations is underlying remodel January approximately and increase X%, However, approximately modest contribution XXXX. our of from test adverse various and of XX.X% restaurant a enhance of mandated margin excluding following approximately the progresses. which G&A rate and minimum Managers; restaurant in expenses inflation, expectations Xst; or wage, on California total any of normalized company-operated our XX%, and increase including began guidelines: our that maintain minimum including at labor offer XX the our inflation capital level million approximately existing we including incentive related

which restaurant of opened already openings the one franchise for and openings, For has already which opened eight system-wide dozen restaurant one a company-operated has openings.

into sequential report XX-weeks fourth demonstrated improvement, pleased the continue and Lastly, and compared company-operated restaurants quarter restaurant to both positive we the that are franchise generate sales to I'm and comparable have quarter nearly first last year. to

we the the remainder should comparable expect in the we and lap Del accelerated performance For of quarter single-digits initial Taco franchise for COVID-XX growth the impact system. as the that company high in quarter, for double-digits of mid first first and low single-digits restaurant our result sales for the

ahead, we the As look performance we second through expect continued quarter. accelerated

the In of ongoing believe of modest year the coupled acceleration management basis. restaurant results formal drivers our facilitate help margin expansion our remarks. drive an margin second-half our addition, and strategies with on annual concludes That contribution we will in five

to always, you in for Taco, interest any and As we happy Del answer are thank questions. now your

Thank you.

now We you. question-and-answer Thank a [Operator session. conducting will Instructions] be

with question. your from Alex with Please proceed Our Jefferies. question Slagle first comes

Hi guys. question. for Thanks the

think the gap the decline for it franchise first and you to like getting looks same-store and quarter quarter-to-date the the bigger, that comp partially see maybe year, we way that the you think I look the ahead it? question, that's starting right about that of sales, On to the the answered but and is bigger company my of been rest between to as sort outlook

what here don't certainly QX said, different QX last interesting. what That think year. dramatically to of or why and would that Yes, first will clear of weeks light the saw didn't? doesn't, we we overall, the we both does second-half I in get differential say, gap the I once little saw from the quarter, the be more it couple naturally extent -- exactly be post next

started by really rain weekend the a store COVID Our that's then when lot impact on the ago the AUVs with week, here in sales. drops coming year began have leading precipitous up and consumer, XXth of to investing a

of quarter final comp as obviously our very that a ago, year an naturally QX as in go XX-week stay-at-home be into week XX we're well. will much orders continue Our and outsized we

volatility does, that geographic So, general, we're but over the it area it's as gap going similar what the in really might exactly in we've hard past. in story to say, be again a given a covered and

more a mobility it. you the to it Got anything, as That about if And or types call or it? and other restaurant of consumers you're more for performance [on tailwind restaurants in sort Does broadly ease serve Taco, that California and of there's you've can dynamics drive formats, any seeing of sense. what recently? Del think makes out business] is then, should as seen started to we restrictions have how kind send it [Ph],

of drop, room at next room Yes, about room capacity, dining environment time in we allowable continue then more sure. get as the bit a a the capacity, restaurants perhaps move to we're we in the guidelines local all Well, dining it's most states many loosen year I first here And company year, normalized. to and take next in we right off, in. the think it's of allowable California will is important obviously allowable numbers so to are currently becomes that into in get up obviously things and tier XX% restrictive dining now to states, Obviously bit California X% and operate note to XX% the and eventually to that capacity. and are as our the follow continuing

our that talked and again the they're So, strong of continuing obviously having call to January we are fair and begin but Clearly to on do counties today. stores believe dynamic then demand poised in struggles, that regards still their to counties bounce to about early normalize. those things in fairly back impact, we California those as once across also that share see

you will. you that's to by value going the to And on convenience, activity to will service in-between going consumers know, a and continue reopening On and if juggle kind in know, business for we a Alex, are is be move remember reopening, for in one, again of of Del think actively going about to of the out and moving you the reopening to just and goes to restaurants out a them I participating activities and along that We'll being thing driven good So, be work, of continue these theaters question, things forward. offices the lot we things, other a our it's quick reopening, good retailers, important is the good all to reopening movie also that front, they're year. gradual address of as with a category, value just Taco. right? are convenience means the and I see are run, that think through in and economy, and school maybe believe that as it overall, return about you're category because QSR people are we and mean really

Great, Thanks. that's helpful.

You're welcome.

you. Thank

your question next proceed Please question. Wedbush. comes Our Nick with with from Setyan

thanks. Hey,

XXXX? expect growth of unit an single-digit at the growth, acceleration on Just is reasonable by to rate the franchisee XXXX mid to it sort

at unit that reasonable, that I look you was could we what within think franchisee sights. is I think growth, is do in said growth our taking back think our get particular, XXXX We Yes, Nick, in unit to a XXXX? that

our by expected to system-wide I And said XXXX. said, the you in publicly forward, that. I about at be about to as system-wide about -- way growth, least I expect at system-wide continue eight think XX it it it of franchise-driven. -- XXXX, think that a moving we in be then is followed growth we're franchise during we I around and XXXX, we be will think said openings as by think led excited those And modest in going improvement will that's will openings be look if to

about to XXXX during think way is more pronounced think right in it. step-up And to then a I back the probably openings XXXX.

also prospects So, we're year, obviously existing to had coming call, the about Fresh table, of the we high-quality eight get and said pipeline, track same-store fact that, brand positive on and we'll franchisees Flex begin and franchise if you this to our about on the as and seeing prototype, and year building consecutive sales growth. excited next years we've are back will, the franchise excited more

So, that good those feels really too. folks to

beyond, think heavily we will momentum impact that XXXX XXXX in area I new this in and expect So, signings but year. obviously

of Nick, just back we remain XXXX, on to And in growth, you the not company out terms more XX at the as I a necessarily of that clipped. the context level absolute franchise number franchise modest really of system said the think because add of more to grower, context of focuses openings, a opened we in laid absolute year, but openings, as that's

Understood, helpful. understood. That's very

a to just You many because remodels? there. is focus initiatives, so guess, since like have line in of 'XX remodels guys I opportunity stores Can how And how on you I great many curious us of remind just have the task the includes? top lot the to-date was you

Sure.

just we team's since to certainly The end very downtime, has a at think the it's five, saw the areas, impossible not very that such a two additional due other past positive happening, particular, trade trends then prior very favorably. since overall modernized the in done in a over employee it groups, heavily to nice -- feedback So, did restaurant, that's double-digit future. COVID The restaurants guest the positions years, five any impact that also modernization recent older in can hard, assets which lift COVID really We working the great five ones COVID view and very five if we discern pre-post protect I COVID, us and in job look great the prior for course COVID, to remodel it that that versus impact well sales than during SoCal helps more in individual mentioned control, sales lifts we remodel area. year process. control limited of process to

this So later up are heads in that more that's of kind where current to going launch journey of year is we system-wide year. that formal naturally in a the test the wrap

be so, And will in 'XX? how there many remodels

to facilities was cosmetic portion the more Up limited more more them Flex. our be capture being and full effective, Fresh investment. that's more help the the a to of XX modern Then on of also the essence the appeal cost in number

up inclusive to of XX the Up already to XX… or completed, XX

Year. in No, XX incremental the New

And okay. timing launch? just the on is initiatives, there Okay, on lastly technology the loyalty then, a

work year, last into we Nick, have technology had obviously, that Yes, we've done off put digital in our of transformation ultimate able as pull platform, said CRM seamlessly strategy, restaurant we then to be off of with ultimate able did to positioned fall building to investment be this and that well the launch the we're we of invested we technology more that deliver year convenience fall our our XXXX. to our obviously And XXXX, continued this in we platform. in platform on through as convenience,

So, we're be think And timeline. to year. being well excited. to that We're we're I to positioned this able deliver excited later that about able hit

much. very you thank Great,

Welcome.

Thank you.

Joshua with from question proceed Our next Please comes Piper question. Long Sandler. with your

gone in into this through But COVID, thank as and and terms know we've today. you to back you've pipeline just on for that have of the Great, consumer digital what thus you year. to digital launch through more as question forward? consumer kind learned that Loyalty the fed wanted I that to what of there you've through we'll your of that the towards gone taking learnings mentioned fall be you've I far going and circle launch investments, going about to curious learned about come Loyalty what's the

as on has been XXXX, of the has restaurants, consumer the order number be think one I technology Well, restaurants. quite to access technology is adopt impressive premise really to access to off able been in forced to be and restaurant occasions, to in able adoption both

our be able that was trend and around to convenience play that that strategy trend, really designed into convenience access. to clearly, ultimate So,

to dining saw drive-thru rooms obviously, you the into accelerate closed down our really timeframe when depending saw you're low we the measuring. mid-XXs, So on that

quarters we happening and over in And with the to a so Throughput delivery, from executed X% able was clearly more the that We obviously, being looked to we us. a lunch of certainly of saw at up for X% demand lot put key talked were area drive-thru. the about delivery delivery against obviously of being trending focus. actions the efficiently X% in sales due pre-post-COVID what's And recent consumer. about in then initiative height

convenience greater brands. into need I plays wanting So, that the all from Josh, and consumer that is a for access think

parking guest food and be to Basically at to hang take they to and leverages that tests as And Burritos, Epic continue the to able as consumer and and their it a place want under to be have like have and we if out the great them we in can well again, in and XX lot the some that So sit just look underway. do order relax park out opportunities from order car to a get brought experiences well with deliver want integration minutes that to their to right. it technology enjoy to currently phone. they that our mobile tree able allow

want the to brand because we'll with these step and consumer that able mechanism to have CRM to our we'll kind that them accessing we platform meet platform through a give and for obviously our And different wherever take that reward great of channels. then, and they be are, now experiences further a So loyalty incentivize consumer brand. really

the holistically, as together for will I even it's the backwards if nicely around reopening and unlikely think all and shifting move very believe that think continue convenience, are their that it us we enter that environment into regards forward. step the consumer we fall, here rooms So in need and we to dining want to is comes we'll

as be a that well to want to brand we So positioned to do able be

the see provided sense menu about we that makes and innovation when an today think you talked update That about work excited and on. unfolds to how that

by daypart, an how or different any that's of And be then the those increasing -- consumer some it's to optimizing of thinking really do done in recovery important be and terms about if those So whether you you've appreciate forward. role you're expanding still then menu, the sure think great how a and I'm And as update by of going on that plays protein might of job that, provide we can just areas that normalized we trend anything breakfast there when well there holistically. can able and about graveyard. that's just an overall, value the help appreciate or rates is the that into whether those really or mobility getting terms in Is or look you've vaccination a what to dayparts more dayparts. driving drive of mentioned to other back and done forward in of to the really the going meantime that forces

Okay.

address your bit both, of me Let both let that a to and impact questions. me get little

drivers Menu acceleration, off, standpoint the and our we foundation continue from sales there. for particularly, well Deals I innovate We'll barbell XXXX. like strategy. you I our need that that us we're talk value market five of positioned first in that And is and heard feel against think Del's of value think menu Dollar about the of the out to

year Our new pipeline two. new and really is good get the products and product strong to as in as perhaps innovation new a the menu both to platform later table and entering we this news terms year, feel we're be about or bring the we'll able what we in year the calendar and around of

the way and the that. just CRM about And launch a convenience good feel entering space we So ultimate I digital in that our about big we're through in fall. talked into obviously then

two taken that question solid address, hit to on this of incrementally and of curtailing there I five right? you of nail part your of there store the not the there has performance a dayparts the the is those lineup hours of with the is one demand here circumstances. these across dayparts related kind depending just a innovation, to one there So acceleration. Josh, the and second because behaviors to consumer gets at think driving changing regards on the lot that occurred of store due some optimizing pandemic drivers to important and and gamut head of runs that then really hours demand In of to two here very The is factors profitability, sales an so we've

returned as for of normalization have night same-store-sales, normalized stores activities. in things both of and some to the some poised factors those an starts of will well that that opened we'll with refresh, and graveyard opened back are we're We And care the that as things top all mind start both occurs as gas pedal, well So these of once on acceleration them. meantime, a innovation, to as and towards some breakfast if dayparts start have to take consumers have stores start some open see up happen. the the those themselves, like of to up, keeping do them more once in believe more to to are late back that And we press activity that you perhaps messaging hours. doing breakfast that

as talking that summer to when back. starts it's graveyard going come to time again, consumers a can demand activity to to months, regarding that late an start to relevant great And So and example, we back and about we late be that always and night the be certainly daypart. pull to come lever start in hope, night that's

as normal it'd of to and we would be about to school great perhaps back enter more occurrences great that. it So great going be able work, some breakfast talking And folks had it'd to be are be normally, do the to returning then. are to fall. folks We be

thinking up have But a that. regards we're little So we to marketplace watch consumer what about to and heads in got and bit just the the of how a happens. clearly see

for we to other of put the help outlined, one kind million talk that that new modeling on possible you've that just it for units, last think in pieces sharper in buckets point low or to the corporate about then CapEx. me, to of side? $XX of of a Would initiatives maybe rough size, digital And when about terms Understood. the some be

maintain largest be bucket enhance the and Sure. Certainly the expenditures to fleet. current will

down activity last know, year you did we slow especially first when of As some COVID hit.

degree. this maybe some bit to catch of So happening up little year a

definitely So that's the bucket. biggest

the it's as level, finally be first at technology deliver within that's drive spend to company as the XXXX. because open opening, we well the restaurant kind that through year. about on expect quarter, auto And new big some discretionary The technology four back certainly spend remodel other whether ones we meaningful or is initiatives, of towards four program the of investments around year then first-half that opportunity, convenience. investment, a walls area the real on whether of to excited would that two very also units that'll touched this Typically there's we're certainly following

putting some operations overall. yes, money throughput and that restaurant speed So towards help drive experience

guideline. kind that size hopefully that you of So helps

Great, thank you.

Thanks.

You're welcome.

comes question C.L. with next your Our Please Instructions] Todd with from proceed Associates. & [Operator King Brooks question.

can them Hey, the good just we Is got to point? just the how with threshold have plays a afternoon and A it it on results. a the that's seed a What on new Is questions little history stores? strong in sticks some wanting about start announce pandemic allows little got markets out brand? corporate potential to a you guys. new great exciting. gives of news franchisee franchisees quarter-to-date franchisees What couple maybe to new end deals? certainty on this to here? across attracting you, prototype; You've willingness trends new bit you've for And dig a of at of the that to the more

in prototype. to thing we because be And about growing that taking then QSR John. we our with talked Fresh to a helps an through about real the The have is access think to maybe approach absolutely be of Todd, strategy, well openly that that options Well, excited we is really prototype access. they're talking the our menu hey, believe still right that are to this going about where venues very portfolio and that demand we we've just high. way excited prospects drive-through And to it's as And is main growth need environment, able right enable new franchise estate. and about way Flex traditionally

portfolio like returns think theoretically is technology then, about if access you now We've a of smaller regards drive-through and of a room. able off the about a that think will, through but a venues with that the dining talked building because conversion in venues, opportunities into smaller and prototype smaller you menu consumer integration Taco, do demand maintain of because and if you with right related prototype. dynamic to AUV, consumer on Del array leveraging our at really options that. is a or developing of integration to got approach. within is to I way technology that land cost to that a restaurant that, the enables little only earlier, menu to your of premise total for footprint parcel in And array full you're investment of down a similar the approach prototype that technology bit that of brands net So what about nice the your Hopefully of shift

is that key the table a folks So in it being really will with interested think that that. we gets piece you and really to if us

to I growth I in the about recognize. had that to X% think important really is states QX; the we're of mean piece We've other ran franchise place of to Del that positive same-store XX we we've outside sales been in our California, in years talking growth able sales eight to same-store we've growth consecutive franchise at Taco, clearly of put Coast business. out be of infrastructure Coast. support

facts. year that feel to about the Del good regards good these a coming prospects to do of of be And really to those as we Taco, franchise table. some because that prospecting at we expect So in are this

to that on kind drew frequency more your you anything customer just behaviors, and frequent a just a the their and the of and CRM ability your you in fall you of And program. I repeat pandemic to them then ability the new if do during the customers be if loyalty turn second question, brand will into the to I may. can brand And when incremental or great. this sense look That's know out the new this customer. a roll stronger But at share

consumer our on many very user mean that a been and is QSR using typically I a regular Yes. the basis participating has brands. category key in

goal So the strategy combined solution on we've we is try launched the that best from of said one to be things our always time to block. our is always

that is sales technology innovation, through is a are now with in and brand combined part things So barbell, the things more are the to draw elevating frequency the big going that operations folks strategy. of Those menu integration like critical promise delivering often.

new that standpoint wouldn't So our that of consumer, I aim. is from a say a necessarily

challenging very through already brand Del to it's these very the drive are space consumers new limited at consumer. and service a in they users. point, into I light go restaurants Likely Taco attract are coming be albeit in may some think QSR

need So, the I thought think to across play is increase frequency we the segment.

help about and because lifestyle the if brand, very for fair a we volume those So more into are come category. that's where of things think them the drive-through play, QSR you They're you really in like want bought consumers often. high to sales, territory you users medium where share light, QSR to will platform a giving have of the that's not because CRM back already fertile their and consumers

So that's we're about thinking how it.

Thanks it. John. great. Appreciate the comments, Okay, for

the floor no are closing to time. back at for There like I over further any management questions this turn to comments. would

thank well, it calls. look you appreciate the time a on your interest with thank taking forward you us and and Okay, for Have in for great day. Del our today, We do we progress future Taco. sharing to

conference. This concludes today's

your Have participation. You wonderful lines this Thank a your evening. time. may disconnect at for