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FRANCHISING FOCUS: DEL TACO GROWS ON QUALITY, VALUE

Franchising Focus: Del Taco grows on quality, value

When you've been around as a chain for more than 50 years, you learn a few things about what Mexican food lovers want in a quick service restaurant. That's the case with Del Taco, which continues to stay fresh after its founding in 1964 in Barstow, California, by remaining true to its roots with continued great value through features like its Buck and Under items, as well as keeping a spotlight on fresh ingredients, with full kitchens at every location.

From its humble single-store location 52 years ago, the chain has grown into Del Taco Restaurants Inc., with 545 stores in 16 states. Of those stores, 298 are company-owned and 247 are franchised, and the number of employees has grown to 7,264. The fee to open a Del Taco franchised restaurant is $35,000. In 2015, Del Taco had an average unit volume of more than $1.3 million and same-store sales growth of 6.4 percent.

What works?

Del Taco has mastered the art of providing menu items with seemingly opposite characteristics of higher quality Mexican staples at lower price points.

"Tacos and burritos have always been popular items at Del Taco," said Paul Murphy, president and CEO of Del Taco Restaurants Inc. "Our premium epic burritos are some of our bestsellers. These items, such as the epic carne asada burrito and epic grilled chicken avocado burrito, were created to expand the choices for guests seeking larger, higher quality burritos with unique flavors. It's on par with a fast casual offering, but at a quick service restaurant speed and price."

Del Taco's "Buck & Under" menu features items that start at 59 cents, and come in 16 different options.

"The unbeatable value and variety offered on our Buck & Under menu is a favorite among Del Taco guests," Murphy said. "In fact, expanding our Buck & Under menu with our new $1 chipotle and ranch chicken rollers in early 2016, has been one of the most successful product launches for the brand."

Balanced offerings for different customers

Murphy believes the success of these different items demonstrates a balanced approach to menu and product innovation. In addition to the "Buck & Under" menu, Del Taco also serves higher priced Mexican food.

"We're broadening our occasions with our premium menu platforms, which is attracting new guests and driving more frequency from existing fans, but also driving traditional QSR visits by providing the very best in value and variety," he said. "Whether guests order from a premium or value menu category, they are getting quality food made with fresh ingredients."

A fresh distinction

Differentiating a brand in the crowded QSR space is a difficult task. Del Taco has approached this by having a full working kitchen in each of its restaurant.

"This feature, not typically found in QSRs, enables Del Taco to freshly prepare quality ingredients, including hand-sliced avocado, freshly grated cheddar cheese, handmade pico de gallo, as well as to slow-cook, lard-free whole pinto beans in house and fresh-grill our carne asada and marinated chicken," Murphy said. "These working kitchens allows us to put out fresh quality food on par with the fast casual segment but at the price, speed and convenience of a traditional QSR drive-thru."

Murphy also said that as a result of recent rebranding efforts, to better market Del Taco's commitment to fresh ingredients, on-site prep and authentic cooking, the chain has seen a significant improvement in guest satisfaction and sales growth. The working kitchens deserve the credit, according to Murphy.

"This unique attribute really is resonating with consumers."

In addition to Mexican food, attempting to serve it at an affordable price point is always part of the Del Taco equation.

"While we start with fresh, serving with value continues to be a big brand differentiator for us," Murphy said. "By offering a Buck & Under Menu with an unmatched variety of items that start as low as 59 cents, Del Taco was named 'Best Value for Your Money' by the nation's leading consumer review publication. With a menu made-to-order with fresh ingredients, an unbeatable Buck & Under value menu and a focus on product innovation, Del Taco successfully meets guests' evolving tastes and demands for quality food served at a great value."
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